JC Master Legal News Issue 999

Key Takeaways for This Issue

The China Securities Regulatory Commission is soliciting public comments on the revision of the “Regulatory Provisions (Trial) on the Interconnectivity of Depositary Receipt Business between the Shanghai Stock Exchange and the London Stock Exchange.”

To further facilitate cross-border investment and financing, promote the global allocation of production factors, and advance institutional opening-up of the capital market, the China Securities Regulatory Commission (CSRC) plans to revise the “Regulatory Provisions on the Interconnectivity of Depositary Receipt Business between the Shanghai Stock Exchange and the London Stock Exchange (Trial)” (CSRC Announcement No. 30 of 2018). The revised document is tentatively titled “Regulatory Provisions on the Interconnectivity of Depositary Receipt Business between Domestic and Foreign Stock Exchanges” (hereinafter referred to as the “Regulatory Provisions”). Public comments are now being solicited.
The carbon market must contribute to safeguarding people’s livelihoods.
Since climate change has drawn widespread attention, countries around the world have launched efforts to combat it, with many establishing carbon‑emissions trading systems—hereafter referred to as “carbon markets.” According to an analysis by the World Bank, as of April 2021, 64 carbon‑pricing mechanisms, including both carbon markets and carbon taxes, were either in operation or planned, and the scope of carbon markets continues to expand. In July 2021, China launched its national carbon market, covering 4 billion tonnes of carbon emissions and becoming the largest carbon market in the world.
Tax big data thus provides strong support for high-quality development.

Taxes are the first indicator of economic health. The “Opinions on Further Deepening Tax Collection and Administration Reform” call for strengthening intelligent tax‑related big data analytics and continuously expanding the in-depth application of tax‑related big data in areas such as economic monitoring and social governance.

Medical insurance fund oversight is advancing in depth, and the rampant occurrence of fraudulent claims has been preliminarily brought under control.
　The National Healthcare Security Administration and the Ministry of Public Security recently jointly issued the “Notice on Strengthening the Coordination Between Administrative and Criminal Enforcement in Cases Involving Fraudulent Acquisition of Medical Insurance Funds” (hereinafter referred to as the “Notice”), requiring medical security administrative departments and public security organs at all levels to attach great importance to the coordination between administrative and criminal enforcement in such cases, pool their efforts, and, in accordance with the law, crack down on illegal and criminal acts of fraudulently obtaining medical insurance funds, thereby effectively safeguarding the people’s “money for treatment and life-saving funds.”

Finance & Capital Markets
The China Securities Regulatory Commission is soliciting public comments on the revision of the “Regulatory Provisions (Trial) on the Interconnectivity of Depositary Receipt Business between the Shanghai Stock Exchange and the London Stock Exchange.”

To further facilitate cross-border investment and financing, promote the global allocation of production factors, and advance institutional opening-up of the capital market, the China Securities Regulatory Commission (CSRC) plans to revise the “Regulatory Provisions on the Interconnectivity of Depositary Receipt Business between the Shanghai Stock Exchange and the London Stock Exchange (Trial)” (CSRC Announcement No. 30 of 2018). The revised document is tentatively titled “Regulatory Provisions on the Interconnectivity of Depositary Receipt Business between Domestic and Foreign Stock Exchanges” (hereinafter referred to as the “Regulatory Provisions”). Public comments are now being solicited.
Since the introduction of the relevant policies and supporting rules for the Shanghai–London Stock Connect in 2018, four listed companies on the Shanghai Stock Exchange have successfully issued Global Depositary Receipts (GDRs) and listed them on the London Stock Exchange, playing a positive role in broadening two-way financing channels and supporting the development of the real economy. Under the current framework of the Shanghai–London Stock Connect, eligible Shenzhen‑listed companies are unable to issue GDRs, and overseas issuers are currently not permitted to raise capital by issuing depositary receipts in China. Market participants have put forward suggestions for optimizing and improving the Shanghai–London Stock Connect mechanism, while Switzerland and Germany have repeatedly expressed their desire to establish cooperative mechanisms for capital market interconnectivity with China. In response to market concerns and to deepen mutually beneficial cooperation between the Chinese and European capital markets, the China Securities Regulatory Commission has revised and refined the existing rules governing the Shanghai–London Stock Connect. First, the scope of applicability has been expanded: domestically, eligible companies listed on the Shenzhen Stock Exchange have been included; internationally, the scheme has been extended to Switzerland and Germany. Second, overseas issuers are now allowed to raise capital, with pricing determined through a market‑based bookbuilding process. Third, ongoing regulatory arrangements have been streamlined, introducing more flexible and optimized provisions regarding annual report disclosures and obligations to disclose changes in equity interests.
We welcome valuable feedback from all sectors of society on the “Regulatory Provisions.” The China Securities Regulatory Commission will, based on the results of the public consultation, further revise and refine the provisions and, after completing the statutory procedures, issue and implement them as soon as possible.

The joint meeting has arranged for on-site inspections of the Gold Exchange.

Recently, the Office of the Inter-Ministerial Joint Conference on the Cleanup and Rectification of Various Trading Venues (hereinafter referred to as the “Joint Conference”), which is housed within the China Securities Regulatory Commission, issued a letter to the general offices of the provincial governments in 29 provinces that host financial‑asset‑related trading venues (hereinafter referred to as “financial exchanges”). The letter calls for the immediate organization of on-site inspections of these financial exchanges by the provincial local financial regulatory authorities, in coordination with branches of the People’s Bank of China, the China Banking and Insurance Regulatory Commission, and the China Securities Regulatory Commission. It also mandates the convening of a video conference involving the aforementioned regions to brief them on cases of violations by financial exchanges and to set out specific requirements for conducting these on-site inspections.
To consolidate the outcomes of earlier cleanup, rectification, and risk‑resolution efforts, and following consultations with the People’s Bank of China and the China Banking and Insurance Regulatory Commission, the Joint Conference has, over the past year and more, launched a special campaign to regulate gold exchanges. The campaign clarifies that gold exchanges must adhere to the principles of compliance, regional focus, and non‑public‑access; they are prohibited from providing services or conveniences for the issuance and sale of non‑standard debt financing products, and must strictly control new business while steadily reducing financing activities involving various non‑standard financing entities. Gold exchanges are also barred from facilitating financing for real estate enterprises (including projects), local government investment companies, and other entities subject to national restrictions or specific regulatory requirements. Furthermore, they must rigorously enforce the bottom‑line rules prohibiting direct or indirect sales of products to individual investors and the prohibition on conducting business across provincial boundaries. No new gold exchanges may be established, and in regions where multiple gold exchanges already exist, consolidation shall proceed in accordance with the principle of “no more than one per province.”
Thanks to the concerted efforts of relevant departments and regions, the rectification campaign has yielded positive results. The number of financial exchanges has declined by more than one-third, while the scale of non-standard financing and the number of investors involved have dropped sharply. The unchecked expansion and reckless growth of financial exchanges have been brought under control, and risks have been significantly contained. At the same time, it must be acknowledged that, over the recent period, some financial exchanges have failed to effectively reduce their outstanding non-standard debt‑financing business and have even illegally facilitated non‑standard financing for real estate enterprises; certain financial institutions have exploited these platforms to engage in unauthorized financing activities under the guise of trading; and issues such as cross‑regional operations by some financial exchanges and the sale of products to retail investors by related entities persist.
The Joint Conference once again emphasized that the relevant regions must, from the political standpoint of safeguarding national financial stability and social security, earnestly fulfill their local responsibilities under the leadership of the local Party committees and governments, conscientiously implement the spirit of the fourth and fifth meetings of the Joint Conference, rigorously align with the requirements for rectifying the gold exchanges, carry out this on-site inspection in a solid and thorough manner, and, in conjunction with other effective measures, advance the market cleanup, correction of deviations and disorder, and risk prevention and control at the gold exchanges.
The joint meeting mandated that this inspection focus on the non-standard financing activities of gold exchanges. It is essential to adhere to the principle of “look-through” to accurately classify the types of business conducted by these exchanges and comprehensively assess their overall operations and risk profile. The primary responsibility of the gold exchanges must be officely enforced; any violations or illegal practices identified should be promptly addressed through mandatory corrective measures. Where relevant entities are suspected of engaging in unlawful activities such as illegal fundraising, cases must be swiftly referred to public security and judicial authorities for lawful investigation and prosecution. Efforts to address the phenomenon of cross‑jurisdictional business operations must be earnestly pursued. For jurisdictions with more than one such venue, the required consolidation and closure measures should be completed without delay. Furthermore, risks associated with gold exchanges are intertwined with those in other sectors; risk‑management efforts must be seamlessly coordinated with mechanisms for the special rectification of internet‑finance risks and for preventing and addressing illegal fundraising, thereby strengthening collaborative synergy.

The China Securities Regulatory Commission has cracked down hard on “fake Northbound Funds”! How much fake capital will be driven out of the market?
The China Securities Regulatory Commission stated that this regulatory initiative will be accompanied by a one-year transition period. Upon expiration of the transition period, existing investors will no longer be permitted to actively purchase A-shares through the Shanghai–Shenzhen Stock Connect; however, they may continue to sell their existing A-share holdings. Meanwhile, trading permissions for mainland investors who do not hold A-shares will be promptly revoked by their Hong Kong brokers.
At present, approximately 1.7 million mainland investors have opened securities accounts in Hong Kong and obtained northbound trading access, with their trading volume accounting for roughly 1% of total northbound turnover. Although the number of investors and the overall trading scale remain relatively modest, this type of securities activity runs counter to the original intent behind the introduction of Stock Connect programs, which was to attract foreign capital. Moreover, more than 98% of these investors already hold mainland‑based securities accounts, enabling them to directly participate in A‑share trading.
The China Securities Regulatory Commission stated that both of the aforementioned trading channels carry the risk of cross-border regulatory violations and have created in the market the perception that a significant number of so‑called “fake foreign investors” are participating in northbound trading, which undermines the stable operation and long-term development of the Shanghai–Shenzhen–Hong Kong Stock Connect.
What are the key provisions in the stringent crackdown on “fake foreign investment”?
On December 17, the China Securities Regulatory Commission (CSRC) launched a public consultation on amendments to the “Several Provisions on the Stock Market Trading Interconnectivity Mechanism between the Mainland and Hong Kong” (hereinafter referred to as the “Provisions”). In its accompanying explanatory notes, the CSRC emphasized that it will impose strict regulatory oversight on so‑called “fake foreign capital.”
Specifically, this revision primarily clarifies the eligibility criteria for investors under the Shanghai–Shenzhen Stock Connect and for mainland Chinese investors.
Article 13, paragraph 1 of the Regulations shall be revised to read: “Investors shall, in accordance with the law, enjoy the rights and interests in shares purchased through the Stock Connect mechanisms linking the mainland and Hong Kong stock markets. Mainland investors are excluded from the scope of Stock Connect investors.”
Meanwhile, the Shanghai and Shenzhen stock exchanges have jointly revised the Measures for the Implementation of the Stock Connect Programs, further clarifying such matters as the specific scope of mainland investors.
The Regulations stipulate that mainland investors include “Chinese citizens holding identity documents issued in mainland China, as well as legal persons and non‑legal person organizations registered in mainland China, but exclude Chinese citizens who have obtained foreign permanent residency permits.”
The China Securities Regulatory Commission emphasized that this measure is intended to balance financial opening-up with financial security, strengthen regulation of cross-border securities activities in accordance with the law, safeguard the legitimate rights and interests of mainland investors, stabilize market expectations, and ensure the smooth operation of the Shanghai–Shenzhen–Hong Kong Stock Connect. The Commission also stated that it hopes this revision will help standardize the return‑trading behavior of mainland investors.
To ensure the smooth implementation of regulatory reforms and safeguard the legitimate rights and interests of existing investors, the China Securities Regulatory Commission has established a transitional period lasting one year.
Effective from the date of implementation of these rules, Hong Kong brokerage offices shall no longer grant new trading access under the Shanghai–Shenzhen Stock Connect to mainland investors. A one-year transition period will commence upon the policy’s entry into force; during this period, existing mainland investors may continue to buy and sell A‑shares through the Shanghai–Shenzhen Stock Connect. Upon expiration of the transition period, such existing investors shall no longer be permitted to initiate new purchases of A‑shares via the Stock Connect; however, they may continue to sell any A‑shares they already hold. Meanwhile, the trading permissions of mainland investors with no A‑share holdings shall be promptly revoked by their Hong Kong brokerage offices.
The CSRC Discusses the Regulatory Context
The China Securities Regulatory Commission stated that it will steadfastly and steadily advance high-standard two-way opening-up of the capital market, continuously refine the Shanghai–Shenzhen–Hong Kong Stock Connect mechanisms to facilitate overseas investors’ access to the A-share market, deepen cross-border regulatory and law enforcement cooperation, and effectively ensure the stable operation and sound development of the Stock Connect programs and both markets.
In recent years, some mainland investors have opened securities accounts and obtained northbound trading access in Hong Kong, using the Shanghai–Shenzhen Stock Connect to trade A‑shares. At present, the overall scale of such transactions remains relatively small, with their share of total northbound trading hovering around 1%. The number of these investors is approximately 1.7 million, yet most do not engage in actual trading; over the past three years, only about 39,000 mainland investors have conducted northbound trades. This type of securities activity runs counter to the original intent behind introducing foreign capital through the Shanghai–Shenzhen Stock Connect. Moreover, more than 98% of these investors already hold mainland securities accounts that allow them to directly trade A‑shares. Such dual‑channel trading carries the risk of cross‑border regulatory violations and has fostered a perception in the market that a significant portion of northbound trading involves so‑called “fake foreign capital,” thereby undermining the stable operation and long-term development of the Shanghai–Shenzhen–Hong Kong Stock Connect. To balance financial opening-up with security, strengthen regulation of cross‑border securities activities in accordance with the law, safeguard the legitimate rights and interests of mainland investors, stabilize market expectations, and uphold the integrity of the Shanghai–Shenzhen–Hong Kong Stock Connect…
Why is the “fake foreign capital” problem so persistent?
In fact, the practice of mainland capital circumventing Hong Kong to leverage funds for trading A-shares has been prevalent for many years.
In 2019, the Securities and Futures Commission of Hong Kong noted in a regulatory letter that, because margin‑financing rates in Hong Kong are only about half those on the Chinese mainland, Hong Kong offers a significant cost advantage, and leverage levels can also be relatively high. As a result, many mainland investors have been using Hong Kong as a conduit for margin financing, often channeling funds back into A‑shares.
How to effectively oversee cross-border regulatory oversight has been a topic of discussion among regulators for many years. In September 2018, at the joint proposal of the Shanghai Stock Exchange, the Shenzhen Stock Exchange, China Securities Depository & Clearing Corporation, and the Hong Kong Exchanges and Clearing, the securities regulators of Mainland China and Hong Kong reached a consensus, leading to the formal implementation of the Northbound “look-through” mechanism—also known as the “Investor Identification Code System”—which marked a milestone in cross-border regulation.
However, over the years, violations involving cross-border market manipulation have continued to occur with alarming frequency. An industry insider based in Hong Kong revealed that the persistent persistence of “fake foreign capital” is partly attributable to the high cost-effectiveness of margin financing in Hong Kong, which remains highly attractive to investors.
First, it can to some extent circumvent regulatory oversight: through Stock Connect trading seats, transactions are only identified as being executed by “Hong Kong Central Clearing Limited,” and the underlying trading accounts remain opaque. “Because it is impossible to ascertain the identity of the investors making the reported trades, this significantly complicates the detection and handling of related cases,” the source said.
Second, margin‑financing costs are lower, with some foreign‑owned private banks offering annualized rates as low as 2%. By contrast, in the mainland market, the current annualized financing cost for securities offices’ margin‑trading business stands at roughly 6%–8%.
Third, leverage ratios are higher: while they do not reach the “several dozen times” rumored in the market, a 5x leverage is quite common, and some promotional materials even tout “full‑position exposure of up to 1:3 per trade.” By contrast, mainland Chinese brokerage offices currently offer margin leverage of around 2x.
Northbound funds saw a massive inflow of over RMB 10 billion this week.
The substantial inflow of northbound capital is a notable recent signal. This week (December 13–17), northbound funds recorded net purchases totaling RMB 11.466 billion, marking the fifth consecutive week of net buying. Specifically, Shanghai Stock Connect saw net purchases of RMB 6.953 billion, while Shenzhen Stock Connect recorded net purchases of RMB 4.513 billion.
However, on a single-day basis, northbound capital ended its previous 12-day streak of net buying today. According to statistics, on December 17, northbound investors recorded net sales of RMB 6.562 billion, with Shanghai Stock Connect posting net sales of RMB 3.594 billion and Shenzhen Stock Connect net sales of RMB 2.968 billion.

China Banking and Insurance Regulatory Commission: Removed the provision stipulating that “stock investments by insurance companies shall be subject to a filing system.”
In recent years, the regulatory framework governing the deployment of insurance funds has been continuously refined, with more than 90 relevant rules and normative documents now in place. These cover areas such as asset–liability management, asset‑class allocation limits, investment management capabilities, investment guidelines for specific product categories, and oversight of insurance asset management companies and insurance‑related asset management products. The regulatory approach emphasizes both functional and institutional supervision, reflecting a prudent regulatory philosophy and effectively fostering the sound and steady development of insurance fund investments. At the same time, in response to evolving macroeconomic conditions and financial market dynamics—particularly as market‑oriented reforms in the use of insurance funds deepen—certain provisions of existing regulations have become outdated and require timely updates. To further invigorate market entities, enhance the quality and effectiveness of insurance funds’ support for the real economy, and effectively mitigate risks in related sectors, the China Banking and Insurance Regulatory Commission has undertaken a comprehensive revision of selected normative documents and recently issued the “Notice on Amending Certain Normative Documents in the Field of Insurance Fund Deployment” (hereinafter referred to as the “Notice”).
The Notice comprises fourteen articles, with the following key provisions: First, it removes quantitative limits on the number of brokerage offices and custodians through which insurance institutions may engage in securities trading, and reduces the frequency of disclosures regarding investment management capabilities, thereby further encouraging insurance institutions to independently invest in standardized products. Second, it permits insurance funds to invest in private equity funds that are effectively controlled by non‑insurance financial institutions, and abolishes the cap on the fundraising size for individual venture capital funds, thus supporting insurance institutions in strengthening cooperation with professional private equity managers and diversifying long‑term funding sources for start‑up enterprises. Third, it allows sponsors of private equity funds and their affiliated insurance entities to autonomously determine investment allocations based on their investment strategies, streamlines the decision‑making process for insurers investing in such funds, and enhances the market‑oriented operation of these products. Fourth, it eliminates the external credit rating requirement for insurance asset management companies when establishing and managing debt‑investment plans and asset‑backed plans, thereby increasing the autonomy of market participants in utilizing external ratings. Fifth, it rescinds the pre‑approval requirement for insurance funds engaging in domestic‑guaranteed, foreign‑lent business, reinforcing institutional accountability and mitigating risks associated with overseas financing. Sixth, within the existing regulatory framework governing the allocation of major asset classes, it introduces additional caps on investments in non‑standardized financial products and real estate assets, aiming to guard against investment risks in the non‑standardized asset sector.
The issuance of the Notice represents a pragmatic step by regulatory authorities to align rules with evolving market conditions. It will help strengthen market entities’ investment autonomy, provide a long-term source of funding for the multi-tiered capital market, and guide insurance funds to increase their allocation to standardized products, thereby mitigating investment risks. Going forward, the CBIRC will adhere to the overarching principle of seeking progress while maintaining stability, continue to deepen market‑oriented reforms in the deployment of insurance funds, encourage greater support for priority sectors, and enhance the quality and effectiveness of services to the real economy. With regard to the small number of insurers that have exceeded the regulatory limits on non‑standard asset investments, the CBIRC will intensify targeted guidance, systematically reduce existing positions, and ensure a smooth and orderly rectification process.

Commercial & Corporate
The carbon market must contribute to safeguarding people’s livelihoods.
Since climate change has drawn widespread attention, countries around the world have launched efforts to combat it, with many establishing carbon‑emissions‑trading systems—hereafter referred to as “carbon markets.” According to an analysis by the World Bank, as of April 2021, 64 carbon‑pricing mechanisms, including both carbon markets and carbon taxes, were either in operation or planned, and the scope of carbon markets continues to expand. In July 2021, China launched its national carbon market, covering 4 billion tonnes of carbon emissions and becoming the largest carbon market in the world.
China’s experience in developing carbon markets largely draws from the European Union; however, its current conditions, development path, stages, and objectives differ significantly from those of the EU. Consequently, it is essential to build a carbon market with Chinese characteristics, tailored to national circumstances, that not only efficiently supports the achievement of peak‑carbon and carbon‑neutral goals but also enhances overall national welfare. Unlike ordinary markets for goods and services, which operate spontaneously and can achieve stability through supply‑and‑demand dynamics, greenhouse gas emissions constitute an undesirable product; thus, the effective functioning of a carbon market hinges on government regulation.
Optimizing carbon quota allocation to safeguard people’s livelihoods
While carbon market operations may appear to concern only corporate interests, this is far from the truth—everyone is ultimately affected. From the perspective of offices, when their allocated carbon allowances fall short of production needs, they must purchase additional emission permits on the carbon market, leading to higher costs and reduced profitability. In turn, companies often pass these increased costs onto society by raising product prices or cutting output, thereby shifting the burden of carbon‑reduction costs to the entire economy.
As a quintessential carbon asset, carbon emission rights must be clearly recognized as intangible assets. Serving as the trading vehicle in the carbon market, they embody both a right and an associated compliance obligation. A defining feature that sets carbon emission rights apart from other conventional assets is the government’s ability to control the total quantity of allowances issued—meaning the overall cap on carbon quotas remains manageable. When corporate carbon‑reduction efforts entail additional costs, these costs are passed on to society, either directly or indirectly. For instance, when coal‑fired power producers incur higher operating expenses due to the purchase of carbon emission permits, they will raise electricity prices within the bounds permitted by policy. To prevent cost‑inversion risks for such utilities, China recently launched a market‑based reform of on‑grid electricity pricing for coal‑fired power, expanding the allowable price‑fluctuation range from no more than 10% and 15%, respectively, to, in principle, no more than 20% for both upward and downward adjustments. Consequently, the increased costs borne by coal‑fired power companies from purchasing carbon emission permits can be shifted to industrial and commercial consumers through electricity‑price adjustments. At the same time, this round of market‑oriented reforms explicitly maintains current retail rates for residential and agricultural users; accordingly, many observers contend that rising generation costs will not affect ordinary households. However, this view is misleading: once industrial and commercial tariffs rise, offices will pass those higher production costs onto their products and services, thereby subtly increasing the cost of living for residents.
The government can promote broad-based benefits to the public by optimizing the allocation of carbon allowances. By adopting an auction‑based approach in the initial distribution of these allowances, the government can generate revenue and use transfer payments to help low‑income households cope with the cost burdens arising from corporate carbon‑reduction efforts. At the same time, the government may allocate a portion of carbon allowances to incentivize research and development of new technologies, thereby fostering industrial upgrading. For example, Canada channels the fiscal proceeds from auctioning carbon allowances back to its provinces and territories to support local budgets, while also returning funds to citizens through transfer payments and other mechanisms.
Strict control over carbon allowances is essential. The scarcity of carbon allowances determines the market price, and currently, the government allocates these allowances on a preliminary basis by leveraging enterprise emissions data and applying a benchmark‑based approach. This benchmark‑driven allocation effectively addresses the “punishing the fast‑growers” drawback inherent in the grandfather‑rule method, but it places extremely high demands on data quality. If the reported emissions data are higher than actual levels, excessive allowances will fail to drive emission reductions; if the reported data underestimate actual emissions, insufficient allowances risk hampering economic development. Consequently, the design and implementation of the carbon‑allowance allocation framework directly shape the effectiveness of the carbon market. In China’s case, building on existing allowance‑allocation data, a hybrid approach that combines bottom‑up and top‑down methodologies could further refine data collection and enable timely adjustments to allowance allocations. At present, market‑available allowances remain relatively generous; therefore, they should be appropriately tightened.
Leveraging financial tools to invigorate the carbon market.
According to the 2020 Carbon Market Annual Report released by the International Institute of Green Finance at Central University of Finance and Economics, the trading volumes of the Guangdong, Tianjin, and Hubei carbon markets together accounted for more than 90% of the overall market size. This means that the combined trading volume of the five other markets—Beijing, Shenzhen, Shanghai, Chongqing, and Fujian—was less than 10%, indicating a lack of market activity. The underlying reasons are that many compliance‑obligated enterprises receive sufficient free carbon allowances to meet their obligations, leaving them with only small surpluses, which fosters inertia among many market participants. At the same time, companies prefer to hold onto their allowances rather than sell them, prompting those with large compliance shortfalls to trade through intermediary carbon brokers, thereby further reducing the number of direct trading parties.
The carbon market is an emerging market, and many compliance‑obligated enterprises lack dedicated internal departments or, due to the high costs of establishing such units, often rely on outsourced agency arrangements. While this approach helps ensure that offices meet their compliance obligations, it hinders the development of active market trading. Moreover, influenced by compliance‑related transactions, the carbon market exhibits a pronounced “tidal effect”: as the compliance deadline approaches, trading volume surges and carbon prices climb to elevated levels; once the compliance period has passed, both trading volume and prices decline sharply. This recurring tidal pattern distorts price signals in the carbon market, thereby weakening the incentive‑driving power of carbon pricing for green investment. Under these circumstances, financial capital can serve as a powerful catalyst, injecting liquidity into the market at opportune moments and spurring its growth.
Regulation must keep pace in a timely manner. While financial forces can invigorate the carbon market, they also introduce risks—for instance, certain investment activities may generate volatility. Therefore, stronger regulatory oversight is essential. The European Union’s Market Stability Reserve (MSR) offers a useful model: operational since January 2019, it was designed to address the persistent price depression caused by an oversupply of carbon allowances and to enhance the carbon‑trading system’s resilience to major shocks by adjusting the volume of allowances auctioned. The MSR operates on the principle that, when excess allowances accumulate in the market, the authorities transfer them into the MSR; conversely, when allowances become scarce, they draw from the MSR. In both scenarios, policymakers can implement flexible adjustments by setting threshold levels.
Ecological carbon sinks will become an important complement to the carbon market.
The “Opinions of the CPC Central Committee and the State Council on Fully, Accurately, and Comprehensively Implementing the New Development Philosophy and Doing a Good Job in Achieving Carbon Peak and Carbon Neutrality” (hereinafter referred to as the “Opinions”) underscores the importance of consolidating and enhancing the carbon sequestration capacity of ecosystems, while explicitly calling for the integration of carbon‑sink trading into the carbon market and the establishment of a sound ecological protection compensation mechanism that reflects the value of carbon sinks.
Compared with traditional carbon sinks—processes that capture carbon dioxide through measures such as afforestation and vegetation restoration—ecological carbon sinks today carry broader significance. Building on the foundation of conventional carbon sinks, ecological carbon sinks expand to include carbon‑sequestration strategies in marine ecosystems, grasslands, wetlands, soils, permafrost, and karst landscapes. China has substantial room for growth in developing ecological carbon sinks. Statistical data indicate that forestry‑based carbon sinks are relatively mature and already generate a measurable trading volume in the carbon market; grassland and agricultural carbon sinks have been developed but remain under‑traded; while wetlands and peatlands have yet to be officially registered at the national level. Meanwhile, many emissions‑control enterprises confine their carbon‑trading activities to carbon allowances, without engaging in carbon‑sink transactions. Consequently, guided by documents such as the “Opinions,” ecological carbon sinks are poised to find a suitable foothold in the carbon market, working alongside other carbon assets to drive its further development.
Promote the integrated development of carbon markets and carbon taxes.
Compared with carbon markets, carbon taxes have a more administrative character. At present, most countries adopt an either-or approach to these two mechanisms; however, a few have opted for a hybrid model that combines both. China could promote the effective integration of carbon markets and carbon taxes, which would help accelerate the achievement of its carbon‑peak and carbon‑neutral goals. In terms of greenhouse gas emission control, carbon markets tend to focus on large emitters while leaving smaller ones relatively unregulated, making them particularly effective for high‑emitting enterprises. Under the Measures for the Administration of Carbon Emission Trading, implemented since February 2021, only entities in covered sectors whose annual greenhouse gas emissions reach 26,000 tonnes of CO₂ equivalent are subject to emission‑control requirements. This means that many small‑scale emitters are not held accountable for the environmental impacts they generate.
China’s carbon neutrality goal is a long and arduous journey that will require the concerted efforts of the entire nation. A carbon tax could help address this challenge: while it cannot cap total emissions, it features low administrative costs and easy implementation. Moreover, introducing a carbon tax as a complement to the carbon market would promote fairness without compromising market efficiency.

China’s steel demand in 2022 is expected to be slightly revised downward.
On the 15th, the Metallurgical Industry Planning & Research Institute released its “2022 China Steel Demand Forecast,” which indicates that, using both the steel consumption coefficient method and the downstream industry consumption approach to comprehensively project China’s steel demand for 2021 and 2022, China’s steel consumption in 2021 is estimated at 954 million tons, down 4.7% year on year; for 2022, steel demand is forecast at 947 million tons, a year-on-year decline of 0.7%.
Looking ahead to 2022, Li Xinchuang, Party Secretary and Chief Engineer of the Metallurgical Industry Planning & Research Institute, stated that China will continue to pursue an active fiscal policy and a prudent monetary policy, ensuring that the economy maintains its momentum of sustained recovery and growth. By appropriately front-loading infrastructure investment, the country will provide solid support for overall stability in steel demand. Steel consumption in sectors such as machinery, automobiles, shipbuilding, home appliances, railways, and bicycles and motorcycles is expected to remain on an upward trajectory, while demand in industries like construction, energy, container manufacturing, hardware products, and steel‑wood furniture is projected to decline.

Coal utilization technologies for clean and green transformation are poised to seize development opportunities.
More than a year has passed since the “dual carbon” goals were announced, and implementation plans across various departments and sectors have been rolled out one after another.
The recently held Central Economic Work Conference clearly stated that it is essential to correctly understand and grasp the goals of peaking carbon emissions and achieving carbon neutrality. Realizing these objectives is an intrinsic requirement for promoting high-quality development; we must advance with unwavering resolve, though it cannot be accomplished overnight. The conference emphasized adherence to the principles of national coordination, prioritizing conservation, dual-wheel drive, ensuring smooth domestic and international flows, and guarding against risks. The gradual phase-out of traditional energy sources must be underpinned by safe and reliable alternatives in the form of new energy. Grounded in China’s basic national conditions—where coal remains dominant—we must enhance the clean and efficient utilization of coal, strengthen the capacity to absorb new energy, and promote an optimized mix of coal and new energy. Furthermore, we must vigorously pursue breakthroughs in green and low-carbon technologies.
On December 20, the 2021 10th China Listed Companies Summit Week, hosted by Daily Economic News, kicked off online, with the opening forum of the summit week taking place on the same day. How should we view carbon peaking and carbon neutrality? To win this tough battle, what roles should the government and the market play, respectively? And what new opportunities and challenges will arise as the industrial structure undergoes a green, low‑carbon transformation?
With these questions in mind, a reporter from the Daily Economic News conducted an exclusive interview with Zhao Hualin, former Chairman of the Supervisory Board of key large state-owned enterprises, on the eve of the forum.
The government and the market must “turn together as two wheels.”
NBD: How do you think we should understand the relationship between peaking carbon emissions and achieving carbon neutrality?
Zhao Hualin: Carbon peaking refers to the highest level of carbon emissions, while carbon neutrality means offsetting those emissions—through measures such as afforestation and energy conservation and emission reduction—so that net emissions are zero. The higher the peak of carbon emissions, the greater the challenge of achieving carbon neutrality.
Our ultimate goal is to achieve carbon neutrality by 2060. While peaking carbon emissions is a transitional phase, the trajectory of that process shapes the final outcome; therefore, the peak level must be neither set too high nor too low. A peak that is too high would make it more challenging to attain carbon neutrality, whereas one that is too low could undermine economic development and energy security. Striking the right balance between these considerations is essential. Unlike developed countries, which have reached their carbon peaks naturally, China aims to peak before 2030 while continuing to pursue robust economic growth and increasing energy consumption. This is an extremely daunting task that requires careful study and implementation of the Scientific Outlook on Development, rigorous adherence to relevant central policies, and the concerted efforts of all sectors of society.
Moreover, in light of the carbon‑peak target, some regions are currently showing a tendency to blindly expand high‑pollution, high‑energy‑consumption industries; this trend must be officely curbed. Achieving carbon peak is not about “carbon rushing”; rather, it requires proactive planning and robust risk management.
NBD: In advancing the “dual carbon” goals, what roles do you believe government regulation and market mechanisms should respectively play?
Zhao Hualin: Generally speaking, environmental protection initiatives require government regulation and impetus, because they involve externalities—put simply, they benefit society but not businesses. Without government mandates, environmental protection will not emerge organically. To internalize environmental costs, government oversight is essential. The same holds true for carbon reduction: the coal‑power sector is mature and stable, whereas new energy sources are still developing and remain less reliable. Without appropriate constraints, companies would naturally prefer to rely on conventional coal‑fired power. However, under the “dual carbon” goals, government intervention becomes indispensable—for example, by implementing policies that support promising enterprises in the clean‑energy field and by regulating coal‑fired power plants.
Therefore, both from an international perspective and from China’s own experience, I believe that government regulation is the most fundamental measure for advancing environmental protection.
On the other hand, government and market must move forward in tandem; relying solely on governmental regulation while neglecting corporate action will not suffice. Through effective regulation, the government can establish sound, well‑designed mechanisms for both pressure and incentives. Consequently, those who take the lead in achieving a green, low‑carbon transition, master carbon‑reduction technologies, or implement clean production practices that cut energy consumption will reap corresponding economic benefits.
When the government creates such an enabling environment, capital in the market will naturally flow into these sectors, prompting offices to develop new low‑carbon technologies and adopt low‑carbon production practices. Meanwhile, investments in high‑pollution or high‑emission assets will face impairment risks. Therefore, neither the government nor the market can be dispensed with: the government formulates policies, which in turn regulate the market, while the market guides enterprises in reducing emissions.
“Dual Carbon” is an intrinsic requirement and a fundamental measure for China to improve environmental quality.
NBD: Under the “dual carbon” goals, how should we balance the development of non‑fossil energy with energy conservation and emissions reduction?
Zhao Hualin: The central government’s call for achieving carbon peaking and carbon neutrality fundamentally hinges on transforming the economic and industrial structures, with the energy structure serving as the key leverage. At present, China’s energy mix is dominated by coal, a pattern that may persist for some time under certain circumstances. Technically speaking, carbon peaking and carbon neutrality can only be realized when the supply of zero‑carbon new energy sources grows large enough to largely replace fossil fuels such as coal. Therefore, vigorously developing new non‑fossil energy sources is of paramount importance, requiring substantial investment and robust scientific and technological innovation.
Moreover, energy conservation must not be overlooked. Reducing energy consumption today is, in effect, equivalent to cutting carbon emissions. Therefore, the government and society as a whole should not focus solely on developing new non‑fossil energy sources; they must also conserve energy through clean production, the circular economy, and other measures. The prevailing perception that energy is cheap and therefore need not be conserved is a misconception that warrants serious attention.
NBD: How do you view the relationship between China’s carbon peak and carbon neutrality goals and international cooperation on climate change?
Zhao Hualin: Let me begin with China’s carbon peaking and carbon neutrality goals. In recent years, significant, transformative, and historic progress has been made in environmental protection; however, this change remains, for now, only incremental rather than fundamental. The truly fundamental shift lies in transforming our economic and industrial structures. For example, if we stop burning coal, we will no longer emit carbon dioxide, nor will we release sulfur dioxide or particulate matter. The stage of industrial development largely determines the quality of our environment. Therefore, the “dual carbon” goals are, in essence, both an intrinsic imperative and a fundamental measure for our country to improve environmental quality.
Turning to international cooperation on climate change, the issues of climate change and carbon emissions are systemic and global in nature. Our commitment to the “dual carbon” goals stems from our aspiration to build a community with a shared future for mankind and to contribute to the global environment and human development. Accordingly, we have already made a responsible pledge as a major country on the international stage. In the realm of international cooperation, however, we must first uphold the principles of being principled, office, and measured, while actively safeguarding and advancing our interests. For instance, within the framework of the United Nations Framework Convention on Climate Change, we should clearly distinguish between what we can undertake and what falls within the purview of developed countries, and adhere to the principle of common but differentiated responsibilities.
Secondly, in the context of Belt and Road cooperation, we must also encourage green and low-carbon enterprises. We have also pledged that China will no longer initiate new coal-fired power projects abroad, a move that further underscores our image as a responsible major country.
In addition, technological cooperation within international partnerships is of great importance. For instance, technologies related to many new energy sources—such as photovoltaics, wind power, tidal energy, geothermal energy, and nuclear energy—must be shared rather than kept under lock and key.
In summary, both domestic and international dimensions must be taken into account. While international cooperation under the “dual carbon” goals deserves due attention, the primary focus should remain on the domestic front; smooth progress in achieving peak carbon emissions and carbon neutrality at home will, in turn, provide valuable lessons and best practices for the international community.
Energy storage technologies are poised for significant investment and breakthroughs in the future.
NBD: To achieve carbon peaking and carbon neutrality, both the energy structure and the industrial structure will need to undergo fundamental transformations. The 14th Five-Year Plan period represents a critical window of opportunity. As the industrial structure seeks to transition toward green and low‑carbon development, what new opportunities and challenges do you foresee?
Zhao Hualin: Industrial structure and energy structure are closely interlinked. Under the “dual carbon” goals, the first step will be to adjust the energy mix—for example, during the 14th Five-Year Plan period, coal consumption in the Beijing–Tianjin–Hebei region is slated to decline by 10%. This, in turn, necessitates that industries reliant on coal and those with high carbon emissions rein in their expansion, particularly curbing the unchecked momentum of “two-high” projects—those involving high energy consumption and high carbon emissions—which have also been a key focus of this year’s central ecological and environmental inspections.
On the other hand, this also means that technologies enabling a clean and green transition in coal utilization will seize new development opportunities. Enterprises that reduce their energy consumption, or those that rely on non‑fossil sources such as hydropower, wind power, and photovoltaics, are sure to enjoy promising prospects; for instance, energy‑storage technologies will undoubtedly attract substantial investment and achieve significant breakthroughs. At present, all sectors are formulating their own carbon‑peak plans, and the banking sector’s detailed roadmap has outlined a range of concrete financial measures to support carbon peaking and carbon neutrality. Consequently, adjustments to the industrial structure will also benefit from favorable policies across the board. The central government has made it clear that during the 14th Five-Year Plan period, China’s ecological‑civilization construction has entered a critical phase—centered on reducing carbon emissions as a key strategic priority and driving a comprehensive green transformation of economic and social development. The success or failure of the 14th Five-Year Plan will determine the peak level of carbon emissions in the 15th Five-Year Plan period, that is, by 2030. If all tasks during the 14th Five-Year Plan are carried out effectively, the peak can be lower, making carbon neutrality easier to achieve.

“Plummeting” prices across the board! New-home prices have fallen for three consecutive months, and future declines may even outpace those of existing homes.

　In both the new‑home and resale markets, “price declines” have become the focal point of recent attention. In November, new‑home prices fell in 85% of the 70 cities surveyed, while resale prices dropped in 90% of them. The average price of newly built residential properties in 100 major cities stood at RMB 16,183 per square meter, down 0.04% month over month—the second decline since May 2015 (the first occurred in February 2020, at the onset of the COVID‑19 pandemic). Although many cities have recently introduced measures to bolster the market, their effectiveness remains to be seen.
In November, new-home prices fell in 85% of cities, while secondhand-home prices declined in 90% of cities, according to data released by the National Bureau of Statistics on December 15. That month, only nine cities saw month-on-month increases in new-home prices, and just three recorded month-on-month gains in secondhand-home prices.
According to data from Zhongzhi Research, in November, the average price of newly built residential properties in 100 cities stood at RMB 16,183 per square meter, down 0.04% month-on-month—the second decline since May 2015 (the first occurred in February 2020, early in the COVID‑19 pandemic). Year-on-year, prices rose 2.72%, with the growth rate narrowing by 0.36 percentage points compared with the previous month. Meanwhile, the average price of existing homes in these same 100 cities was RMB 16,013 per square meter, down 0.08% month-on-month—a decline that widened by 0.04 percentage points from the prior month—and up 3.66% year-on-year, with the growth rate narrowing by 0.38 percentage points.
Xu Xiaole, chief market analyst at the Shell Research Institute, told reporters: “In November, housing prices continued their overall downward trend. On the one hand, market transaction activity remains in a bottom‑level adjustment phase, giving buyers greater bargaining power; on the other hand, as year‑end approaches, some banks have begun to release mortgage‑loan quotas, reviving home‑buying demand. Against this backdrop, sellers have lowered asking prices in order to move inventory quickly before the end of the year.”
A review by reporters of housing price changes in 70 cities since January this year reveals that prices in first-tier and strong second-tier cities remain supported, while some third- and fourth-tier cities have seen pronounced declines.
Among first-tier cities, Guangzhou ranked among the top three for new-home price increases four times and among the top three for second-hand home price increases five times this year. In November, Shanghai, Beijing, and Shenzhen all made the top 10 for month-over-month new-home price gains. Compared with early 2020, new-home prices in Guangzhou have risen by 9.3%, in Beijing by 6.4%, in Shanghai by 5.7%, and in Shenzhen by 4.9%. As for second-hand home prices, Guangzhou has seen a 10.9% increase, Beijing a 10.7% rise, while Shanghai and Shenzhen have recorded 9.4% and 7%, respectively.
Pan Hongyu, a researcher at the E-House Real Estate Research Institute, pointed out: “In this current cycle, which began in April 2015, the cumulative increase in secondhand home prices in Beijing, Shanghai, and Guangzhou has all remained below 80%, whereas Shenzhen’s secondhand home prices have surged by as much as 116.7%. In Xi’an and Wuhan, new-home price increases have far outpaced those of secondhand homes, primarily because new-home price caps are stringent—potentially giving rise to market speculation—while the secondhand housing market remains relatively underdeveloped and may be undervalued. As representatives of rapidly rising, robust second-tier cities in recent years, Hefei and Hangzhou have seen both new- and secondhand-home price gains approaching those of first-tier cities, suggesting that their valuations may be overstated.”
Recently, regulatory authorities in several cities have successively eased housing‑market controls or introduced outright policies to stabilize the market; however, data on housing‑price reactions in some of these cities suggest that such measures have yet to produce any substantial impact. For example, on September 28, Shenyang increased subsidies for first‑time home purchases by talent; on October 1, Harbin fired the first shot among local governments in a bid to shore up the market, rolling out a package of policies that included housing subsidies for talent and relaxed restrictions on public‑housing‑fund loans; also in that month, Gansu fully lifted household‑registration restrictions; and in early December, Baoding issued a notice stating that “purchases of passive‑house, ultra‑low‑energy‑consumption commercial residences will be exempt from regional restrictions on the purchase of commercial housing.”
In addition, recently, cities including Hohhot, Jingmen, Hengyang, Kaifeng, Nanning, Haian in Nantong, Bishan and Wanzhou in Chongqing, Longli in the Qiannan Buyei and Miao Autonomous Prefecture, and Jinzhai in Lu’an have all introduced corresponding policies to stimulate the housing market.
How effective have these market‑stabilization policies been? Taking Harbin as an example, both new‑home and existing‑home prices have fallen for four consecutive months, with month‑on‑month declines of 0.7% and 1%, respectively, in November. Compared with early 2020, Harbin’s new‑home prices are down 1.6%, while existing‑home prices have dropped 3.3%; in Shenyang, new‑home prices fell 0.4% month over month, and existing‑home prices declined 0.3% on the same basis.
The effectiveness of market‑stabilization measures in other cities remains to be seen.

Taxation TAXATATION
The combined effect of multiple tax relief measures is helping businesses alleviate their difficulties.
In the first three quarters, nationwide tax and fee reductions totaled 910.1 billion yuan.
According to the latest data released by the State Taxation Administration, during the first month of the temporary tax payment deferral policy—implemented from November 1 to 30—for small and medium-sized manufacturing enterprises and other eligible businesses, these enterprises collectively deferred tax and fee payments totaling RMB 47.14 billion.
Since the beginning of this year, in the face of a complex and challenging domestic and international environment, the state has, building on previously introduced tax and fee reduction policies, further expanded measures such as allowing enterprises to claim an accelerated deduction for R&D expenses incurred in the first three quarters, implementing temporary tax deferrals for small and medium-sized manufacturing enterprises, and applying tax relief, refunds, and deferrals to coal-fired power and heating companies. These steps are aimed at alleviating businesses’ difficulties, reducing their burdens, and bolstering the vitality of market entities. In the first three quarters of this year, nationwide tax and fee reductions totaled 910.1 billion yuan, including 788.9 billion yuan in additional tax cuts and 121.2 billion yuan in additional fee reductions.
70% of small and micro enterprises are exempt from paying taxes.
“The tax deferral policy has come at just the right time, and we expect it to free up over 700,000 yuan in taxes for the fourth quarter. Having these funds on hand will provide significant support for our company’s growth,” said Guo Xiaohuan, the finance director of Henan Youde Medical Equipment Co., Ltd.
At its meeting in late October, the State Council Executive Meeting decided to implement a temporary tax deferral for small and medium-sized manufacturing enterprises in the fourth quarter of this year. This measure is expected to provide approximately RMB 200 billion in tax relief to these enterprises.
“The tax deferral policy introduced this time boasts broad coverage, encompasses a wide range of taxes and fees, and offers substantial incentives,” said Li Ping, Deputy Director of the Tax Science Research Institute of the State Taxation Administration. The policy primarily targets small, medium, and micro manufacturing enterprises with annual sales below RMB 400 million, allowing them to defer payment of certain taxes and fees for the fourth quarter, including sole proprietorships, partnerships, and individual business households. The deferred taxes and fees include corporate income tax (excluding withholding and remittance of personal income tax), domestic value-added tax, domestic consumption tax, as well as the associated urban maintenance and construction tax, education surcharge, and local education surcharge. For medium-sized enterprises with annual sales between RMB 20 million and RMB 400 million, 50% of the applicable taxes and fees may be deferred; for small and micro enterprises with annual sales below RMB 20 million, all eligible taxes and fees may be deferred.
As the fourth quarter begins, companies are facing mounting pressure to recover cash. “The tax deferral policy is essentially a short-term, interest-free loan; we expect it will allow us to defer tax payments totaling 890,000 yuan, easing the financial strain on our future growth,” said Gao Feng, head of Hebei Baicaokangshen Pharmaceutical Co., Ltd.
To ensure the timely, effective, and swift implementation of the tax deferral policy, the tax authorities have proactively flagged eligible taxpayers in the tax administration information system and issued timely reminders, enabling small, medium, and micro manufacturing enterprises to accurately benefit from the preferential policies when filing through the electronic tax bureau. Additionally, through telephone calls, text messages, and the electronic tax bureau, the authorities provide targeted guidance and reminders to eligible taxpayers on a one‑to‑one basis.
In Zhejiang, where small and medium-sized manufacturing enterprises are densely concentrated, Bu Jianglian, a finance professional at Hangzhou Qianlong Electrical Appliance Co., Ltd., estimates that in the first month after the new policy took effect, the company benefited from deferred payments of over one million yuan in value-added tax, urban construction and maintenance tax, and other levies.
To support efforts to ensure stable energy and electricity supply this winter and next spring, the State Taxation Administration has established a special coordination task force on energy‑supply security and issued relevant notices, ensuring that coal‑fired power and heating enterprises fully benefit from tax and fee reduction policies, receive all eligible value‑added tax credit refunds, and defer payments where applicable. According to data from the State Taxation Administration, as of November 30, nationwide tax reductions, refunds, and deferrals totaling RMB 21.5 billion had been processed for more than 4,800 coal‑fired power and heating enterprises.
Professor Tang Jiqiang of Southwestern University of Finance and Economics and Chief Researcher at the SWUFE Think Tank believes that deferring tax payments for small, medium, and micro manufacturing enterprises, as well as coal-fired power and heat‑supply companies, represents a crucial government measure to help businesses alleviate their difficulties. This policy comes amid persistently high commodity prices and sharply rising production costs—factors that have weighed heavily on enterprises, particularly those in the manufacturing sector—and is expected to bolster market confidence, stabilize employment, and promote the steady operation of the industrial economy.
In addition, this year the state has continued to implement the policy of reducing the VAT rate for small-scale taxpayers from 3% to 1%, while raising the threshold for VAT exemption from a monthly sales volume of RMB 100,000 to RMB 150,000. For small and micro‑profit enterprises and individual business households, the portion of their annual taxable income below RMB 1 million will, in addition to existing preferential treatment, be subject to an enterprise income tax rate reduced by half. As a result of these measures, during the first three quarters, 70% of small and micro‑enterprises nationwide with operating income were exempt from paying corporate income tax.
Stimulate the momentum of corporate technological innovation.
Since the beginning of this year, a series of preferential policies on additional tax deductions for enterprise R&D expenses have been rolled out, continuously delivering tax benefits. According to data released by the State Taxation Administration, as of the end of October, enterprises across the country had already benefited from advance deductions totaling 1.3 trillion yuan, with tax reductions and exemptions amounting to 333.3 billion yuan, thereby strongly boosting innovation vitality and momentum.
It is understood that, to further encourage technological innovation and alleviate the financial pressures faced by enterprises in production and operations, in March this year, the additional deduction rate for R&D expenses of manufacturing offices was increased from 75% to 100%, allowing companies to claim the first-half-year additional deduction benefit during the October tax filing period. In September, the policy was further strengthened, extending the advance‑enjoyment eligibility to cover the first three quarters.
“The new policy has revitalized cash flow and effectively eased the financial pressures faced by enterprises,” said Wang Xiaoxue, Director of Tax at Beijing Xiaomi Mobile Software Co., Ltd. She added that by taking advantage of the advance deduction for R&D expenses, companies can allocate more funds to research and development, thereby strengthening their independent innovation capabilities.
The dual benefits of an increased additional deduction rate and an expanded scope for early enjoyment are injecting fresh momentum into manufacturing enterprises. During the October tax filing period, CRRC Changchun Railway Vehicles Co., Ltd. took advantage of these measures to secure tax reductions and exemptions totaling RMB 176 million in advance. “The new policies have accelerated product upgrades and enhanced our core competitiveness,” said Lu Shuhua, the company’s chief financial officer.
“This policy delivers a double benefit to the manufacturing sector, helping to bolster its growth momentum,” said Liu Baozhu, First‑Level Inspector with the Income Tax Department of the State Taxation Administration. Manufacturing offices can not only take advantage of the enhanced R&D expense super‑deduction ahead of schedule, but the super‑deduction rate has also been raised from 75% to 100%. This dual incentive has benefited 186,000 manufacturing enterprises, with total super‑deduction amounts reaching RMB 903.6 billion and tax reductions and exemptions totaling RMB 225.9 billion—accounting for 57.7% and 67.8% of the overall number of beneficiaries and the total amount of tax relief, respectively. Notably, the increase in the super‑deduction rate alone has resulted in an additional RMB 57.1 billion in tax reductions and exemptions for manufacturing offices, clearly demonstrating the policy’s effectiveness in supporting the sector’s development.
Jiang Zhen, an associate researcher at the Institute of Financial Strategy of the Chinese Academy of Social Sciences, believes that the policy of additional tax deductions for R&D expenses aligns with the inherent patterns of scientific and technological innovation, capturing the intrinsic link between tax policy and high-quality development, thereby enhancing the policy’s effectiveness and sustainability.
Promote the growth of foreign-invested enterprises’ investment in China.
Foreign-invested enterprises are likewise entitled to all tax and fee preferential policies introduced this year, in accordance with the law.
According to Meng Yuying, Director-General of the International Taxation Department of the State Taxation Administration, the tax authorities have implemented a special policy on deferred taxation for reinvestments by foreign-invested enterprises. Under this policy, withholding income tax is temporarily waived on profits distributed by Chinese resident enterprises to overseas investors, provided that such profits are directly reinvested in domestic projects. This measure effectively alleviates financial pressures on foreign-invested enterprises and promotes sustained growth in their reinvestment activities in China.
The current implementation has demonstrated three key features: First, the scope of beneficiaries has expanded—during the first three quarters, nationwide tax deferral on reinvested profits totaled RMB 9.61 billion, up 50.38% year on year, while dividend reinvestment reached RMB 100.05 billion, a year-on-year increase of 54.6%. Second, the range of industries benefiting has broadened, with eligible investee enterprises spanning 68 sectors; compared with the first half of the year, the coverage has further widened, with more than 30% of foreign‑invested reinvestment funds flowing into manufacturing sectors such as automobile manufacturing, computer, communications, and other electronic equipment manufacturing. Third, foreign‑invested enterprises have expressed positive feedback. Surveys indicate that, in the first three quarters of this year, nearly 90% of companies that filed deferred‑tax declarations believe the policy has played a “critical role” in facilitating capital increases and capacity expansion, and has “accelerated the implementation of investment‑expansion decisions.”
In addition, during the first three quarters of this year, foreign-invested enterprises benefited from additional tax deductions totaling RMB 264.9 billion and tax reductions amounting to RMB 66.2 billion. On average, each eligible foreign-invested enterprise invested RMB 16.74 million in R&D. “This figure is far higher than the average for other enterprises, reflecting that foreign-invested offices are steadily stepping up their efforts in scientific and technological innovation,” said Meng Yuying.
Thanks to the combined effect of various measures to stabilize foreign investment, including tax and fee preferential policies, in the first three quarters of this year, foreign-invested enterprises accounted for 41,600 newly established market entities subject to taxation, up 26.1% year on year compared with the same period in 2020, bringing overall activity back to pre-pandemic levels. Meanwhile, the registered capital of key foreign-invested enterprises nationwide increased by 3.5% year on year.
The effectiveness of tax relief measures underscores the precision of policy adjustments.
The implementation of the phased tax deferral measures has three key highlights that are particularly noteworthy. First, the policy is clearly targeted and decisively executed, eschewing broad‑based stimulus in favor of tailored measures that address the specific needs of market entities. Second, it is implemented with precision and a focus on tangible results, enabling small and medium‑sized manufacturing enterprises to readily and accurately access preferential policies. Third, the measures are coordinated across multiple policy channels, leveraging a comprehensive approach to deliver a powerful “combined punch.”
According to the latest statistics, the temporary tax deferral measures for small and medium-sized manufacturing enterprises, implemented starting in November, have yielded significant results. In just one month, deferred taxes and fees exceeded RMB 47.1 billion, swiftly and effectively easing the financial burden on businesses and helping them cope with market pressures, thereby demonstrating the effectiveness of macroeconomic regulation—particularly its precision and targeted approaches.
At present, various adverse factors continue to weigh on economic development, particularly on the production and operations of enterprises. Accordingly, macroeconomic regulation must adopt innovative approaches to address new circumstances and challenges, effectively help businesses overcome difficulties, and promote the steady and sound functioning of the economy. Based on the author’s observations, the implementation of temporary tax payment deferral measures has three key features that are particularly noteworthy.
First, the policy is clearly targeted and decisively implemented. Since the beginning of this year, China has already rolled out a series of tax and fee reduction measures. So why introduce yet another round of temporary tax deferral policies? The reason is that sporadic COVID‑19 outbreaks and rising commodity prices have created new challenges for businesses, with particularly severe impacts on small and medium-sized manufacturing enterprises. These offices are vital to the real economy and to employment and people’s livelihoods. This latest policy is squarely focused on such SMEs in the manufacturing sector, addressing difficulties like soaring production costs by granting tax deferrals to boost corporate cash flow and help them cope with operational pressures.
The recently announced tax and fee reduction measures are not confined to universal‑benefit policies; instead, they exhibit a strong degree of targeted focus, aiming to support the stable operation of the industrial economy, the development of small, medium, and micro enterprises, and technological innovation. This underscores that macroeconomic regulation adheres to the principle of avoiding “flood‑type” stimulus, instead tailoring policies to the needs of market entities. The temporary tax deferral measures, decided at the State Council Executive Meeting on October 27 and implemented starting November 1, were rolled out in just four days, demonstrating a decisive approach and swift execution. This also highlights the importance of timeliness in macro policy: when new developments or challenges arise in economic performance, policymakers must make informed, timely adjustments—both proactive and fine‑tuned.
Second, ensure precise implementation and emphasize tangible results. With a large number of small, medium, and micro enterprises and relatively limited financial and accounting resources, how can we fully harness the benefits of policy measures within a short timeframe? The rollout of temporary tax payment deferral measures likewise underscores this precision. Tax authorities have flagged eligible taxpayers in the tax administration information system and issued timely reminders, enabling small, medium, and micro manufacturing enterprises to accurately access preferential policies. At the same time, through telephone calls, text messages, and the electronic tax bureau, they provide targeted, “point-to-point” guidance and reminders to eligible taxpayers. These meticulous, well‑tailored measures ensure that the policies are effectively implemented and deliver real‑world benefits.
Even the best policies require effective implementation; we must prioritize tangible results and genuinely enhance businesses’ sense of gain. Otherwise, such policies will amount to little more than window dressing. Since the onset of the COVID‑19 pandemic, the outcomes of China’s macroeconomic policy measures have already provided a clear answer.
Third, policy coordination and a comprehensive, multi‑pronged approach. In fact, the tax and fee reduction measures targeting the manufacturing sector and small, medium, and micro enterprises go beyond temporary tax payment deferrals; they also include allowing offices to claim the enhanced R&D expense deduction for the first three quarters in advance, as well as implementing tax relief, refunds, and deferrals for coal‑power and heating companies. These measures, operating on multiple fronts, help businesses shed burdens and better navigate challenges.
Tax and fee reductions are delivered through a coordinated “combination punch,” and similar synergy should be achieved across different fiscal and tax policies, as well as among various macroeconomic policies. Fiscal, monetary, industrial, and employment policies must avoid acting in isolation or falling into the fallacy of composition; instead, they should emphasize policy coordination and complementary alignment to jointly help market entities—especially small, medium, and micro enterprises—overcome difficulties and foster a steady economic recovery.
Faced with new risks and challenges, macroeconomic policy bears a heavy responsibility. By continuously innovating our approaches and tools for regulation—strengthening range‑based, targeted, flexible, and precision‑oriented policies—we can ensure that China’s economy maintains steady progress over the long term.

 
Show care and concern for vulnerable groups, including the elderly and persons with disabilities.
The State Taxation Administration is advancing refined services to effectively address the urgent, difficult, and pressing concerns of vulnerable groups.
The State Taxation Administration recently issued a notice to further advance refined taxpayer services, effectively addressing the pressing concerns and difficulties faced by vulnerable groups such as the elderly and persons with disabilities in tax filing and payment, thereby enhancing their sense of gain.
In response to the specific needs of elderly individuals, persons with disabilities, and other vulnerable groups, the State Taxation Administration has integrated traditional service methods with innovative digital solutions, combined online and offline services, and blended standardized and personalized offerings. By adopting a tailored, targeted approach, it has strengthened and refined its efforts to serve these special populations, transitioning from one-size-fits-all assistance to more sophisticated, intelligent, and individualized support, ensuring that they can share in the fruits of reform and development.
To enhance on-site services for special groups, tax service halls provide one-stop comprehensive assistance to elderly individuals, persons with disabilities, and other eligible taxpayers. Staff proactively help them identify their specific tax and fee‑related needs, offering tax and fee consultations, guidance on procedures, and end-to‑end support to ensure swift processing of tax and fee matters. While promoting diversified payment methods such as third‑party electronic payments, traditional options—including cash payments and bank card transactions—remain available, with dedicated manned cash‑handling counters set up at tax service halls.
In response to the specific needs of certain individuals, those who, due to physical mobility challenges or other special circumstances, are unable to visit a tax service hall and cannot authorize another person to handle their tax-related matters may, upon mutual agreement following consultation between the taxpayer and the tax authority and in accordance with the nature of the transaction and reasonable requirements, be provided with an appointment‑based door‑to‑door service.
Strengthen service and support for vulnerable groups, fully leverage the role of tax‑volunteer teams, and provide tax‑related volunteer services to seniors, persons with disabilities, and other special‑needs populations. In response to the specific service needs of these groups, tax volunteers may offer free assistance with tax filing and payment procedures.

Tax big data thus provides strong support for high-quality development.
Taxes are the first indicator of economic health.
The “Opinions on Further Deepening Tax Collection and Administration Reform” propose strengthening intelligent tax‑related big data analytics and continuously enhancing the in-depth application of tax‑related big data in areas such as economic monitoring and social governance.
In recent years, China’s tax authorities have continuously unlocked the value of tax‑related big data, strengthening its deep‑level applications in areas such as economic analysis and social governance, thereby providing decision‑making support to Party and government leaders at all levels and proactively contributing to the broader goals of economic and social development.
How can tax big data provide robust support for high-quality development?
The reporter learned that the tax authorities focus on the most pressing, critical, and high‑profile issues in economic performance, closely monitor shifts in the economic landscape, and conduct monthly macroeconomic tax analyses to enhance their foresight and responsiveness in assessing the broader economic environment. They also zero in on the impact of policy implementation, carrying out an evaluation of the outcomes of tax and fee reductions during the 13th Five-Year Plan period to provide a comprehensive and systematic assessment of policy effectiveness. Furthermore, aligned with the new development philosophy and attuned to evolving circumstances, they undertake analyses of technological innovation, the digital economy, clean energy, poverty alleviation, and other key areas, continuously updating and refining their analytical tools to keep pace with the times.
How to transform the data at their disposal into wealth and a driving force for development, while more precisely aligning with taxpayers’ needs and fostering high-quality economic growth—tax authorities across the country are actively exploring these questions.
Since the beginning of this year, the Guangxi Tax Service has developed a monitoring and analytical indicator system for tax‑related economic performance. At the start of each month, it presents, in a format combining text, an index list, and graphical visualizations, a multi‑dimensional, multi‑layered, and multi‑perspective overview of Guangxi’s economic development—covering macroeconomic trends, sectoral dynamics, investment, consumption, and other key areas. This approach highlights both the month’s salient achievements and identified shortcomings, and culminates in a monthly tax‑analysis report that is submitted to the Autonomous Region Party Committee, the government, and relevant departments, thereby effectively leveraging taxation as a tool for policy support.
“The practices of the Guangxi tax authorities are highly instructive and worthy of emulation. All economic departments of the autonomous region should further unlock the value of data and deepen its application, striving to adopt a higher strategic perspective, broader analytical dimensions, and greater depth in their work,” said Lan Tianli, Chairman of the Guangxi Zhuang Autonomous Region.
The Shanghai Municipal Tax Service, in response to developments in the growth of foreign-invested headquarters, has fostered horizontal collaboration among its internal business units, coordinated cross‑departmental data sharing with the Commerce Commission, maintained close communication with the relevant departments of the State Taxation Administration, and engaged in concerted efforts with tax authorities in key provinces and municipalities. It has also prepared the analytical report “Guiding the Broad Direction of Foreign Investment and Shaping a New Pattern of Domestic–International Dual Circulation,” while exploring the establishment of an analytical data template for foreign‑invested enterprises that can serve as a reference for local jurisdictions.
In July this year, Hubei Province released its Tax Index for High-Quality Economic Development. The index indicates that, in the first half of the year, the province’s economy broadly achieved a recovery-driven growth, with the recovery trend continuing to strengthen. According to reports, the Hubei Provincial Government Research Office and the Provincial Tax Service Bureau, in collaboration with Zhongnan University of Economics and Law, integrated tax-related data on economic and social development. Using 2019 as the base year and the two-year average growth rate as the benchmark, they constructed a tax‑based index system for high-quality economic development in Hubei, assigning specific weights to each component. The index measures economic scale through corporate sales and tax revenues, while assessing development quality across five dimensions: market dynamism, industrial efficiency and quality, tax contribution, growth drivers, and the circulation and integration of economic activities.
Today, tax data is increasingly serving as a reliable barometer for assessing economic performance. By further unlocking data resources, extracting greater value from data, and expanding its applications, tax authorities across the country are continuously exploring new approaches and channels for “governance through data.”
“The tax‑electricity prosperity index compiled by the Provincial Tax Service Bureau can effectively forecast economic trends, providing us with a new tool and solid support for monitoring the province’s economic performance and assessing its development trajectory,” said a relevant official from the Jiangxi Provincial Development and Reform Commission at the provincial economic‑operation coordination meeting.
Taxation big data not only serves as a vital tool for industries to address challenges and unlock their potential, but also provides an essential basis for assessing economic trends and supporting epidemic prevention and control efforts.
In March of this year, the Dalian Municipal Tax Service Bureau, in collaboration with the Market Supervision Administration and the Marine Fisheries Association, leveraged tax‑related big data—including VAT invoice records, tax revenue statistics, individual income tax return data, corporate income tax return data, and export data—to produce the “Citywide Analysis of Taxation in the Cold‑Chain Sector and Related Industries.” The report provides an in-depth analysis of the cold‑chain (storage and logistics) industry, as well as its closely linked sectors: the aquatic product processing industry and the aquatic product trade industry.
Following the “11·03” outbreak in Dalian, the Dalian Municipal Tax Service Bureau once again compiled and analyzed relevant data for the city’s cold-chain (storage and logistics), aquatic-product processing, and aquatic-product trading sectors covering the first ten months of the year. By integrating this information with historical data, the bureau produced a more comprehensive analytical report and put forward targeted recommendations—such as refining epidemic‑prevention and control measures, bolstering confidence in development, encouraging enterprises to pursue innovation, and restoring domestic consumer confidence—which have been widely praised.
In late July this year, a localized outbreak occurred in Jiangsu Province. The Jiangsu Provincial Tax Service promptly collaborated with the Provincial Epidemic Prevention and Control Office and other relevant departments to assess the impact of the epidemic on business operations, swiftly completing province-wide as well as city-specific (Nanjing and Yangzhou) analysis reports. Following the outbreak, the tax authorities once again produced a report titled “An Analysis of the Pandemic’s Impact and Recovery Since Last Year Based on Tax Data,” offering recommendations for accelerating economic recovery and development in the context of the new normal—such as targeting small, medium, and micro enterprises that continue to be affected by the pandemic and refining the supply of institutional policies, while also ensuring seamless coordination of macroeconomic policies across the next two years and strengthening cross‑cycle policy adjustments.
Big data holds vast opportunities and drives a promising future. According to reports, the tax authorities aim, through approximately five years of concerted effort, to essentially establish a smart tax system powered by tax‑related big data. This will enable a shift from experience‑based enforcement to science‑based, precision‑driven enforcement; from one‑size‑fits‑all services to refined, intelligent, and personalized service delivery; and from “tax administration based on invoices” to category‑specific, precision‑targeted regulation under “data‑driven tax governance.” In doing so, they seek to comprehensively enhance tax enforcement, service provision, and regulatory capabilities, thereby fostering a fairer and more competitive tax environment.

Ensure that all tax and fee policies designed to benefit businesses and the public are fully and faithfully implemented.

According to the website of the State Taxation Administration, on December 10, the Administration convened an expanded meeting of its Party Committee to convey and study the spirit of the Central Economic Work Conference. The meeting noted that, as China’s economic development faces triple pressures—shrinking demand, supply shocks, and weakening expectations—the tasks ahead in tax administration are more demanding, carry greater responsibility, and require higher standards. The tax authorities must earnestly strengthen their sense of responsibility, ensuring that macro policies remain prudent and effective while micro policies continue to invigorate market entities; they should facilitate the smooth circulation of the national economy through structural policies and ensure the solid implementation of science-and‑technology policies; support reform-and‑opening-up policies to unleash development momentum; bolster regional policies to enhance balance and coordination in development; and uphold social policies to safeguard the basic living standards of the people. In doing so, they will ensure that all tax and fee measures designed to benefit businesses and the public are fully and faithfully implemented, thereby better serving tens of millions of corporate taxpayers, hundreds of millions of individual taxpayers, and over one billion contributors.
The meeting emphasized that the Party Committee of the State Taxation Administration and the Party Committees of tax authorities at all levels must continue to exert sustained efforts to strengthen law-based revenue collection, implement tax and fee reduction policies, deepen tax administration reform, crack down on tax evasion and avoidance, and uphold strict Party self‑discipline, while enhancing quality and efficiency. They should also fully leverage the advantages of tax‑related big data, closely monitor evolving circumstances, conduct in-depth analysis and research on key and difficult issues, and proactively prevent and defuse risks across all fronts, ensuring that stability remains the top priority and that progress is made within a stable framework.
The meeting called for the State Taxation Administration and the tax system to earnestly carry out all tasks at year’s end and the beginning of the new year, to continue deepening Party history study and education, and to redouble efforts to further enhance effectiveness and efficiency. It also emphasized the need to sustain efforts to promote the “Six Stabilities” and “Six Guarantees,” to implement deferred tax and fee payments for small, medium, and micro manufacturing enterprises, and to provide robust support for the Beijing Winter Olympics and Paralympics, among other priorities. Furthermore, it urged meticulous preparations for the National Tax Work Conference, a thorough review of the year’s achievements, an objective identification of shortcomings, and the formulation of a well‑grounded, detailed plan for next year’s work. Finally, it stressed the importance of maintaining unwavering vigilance in routine epidemic prevention and control, coordinating visits, condolences, assistance, and outreach activities to ensure that this year’s work concludes successfully and that next year gets off to a strong start.

 
Litigation & Arbitration
Five departments have jointly issued the “Guiding Opinions on Several Legal Issues Concerning the Crackdown on Cross-Border Maritime Smuggling Crimes in the Guangdong-Hong Kong-Macao Greater Bay Area.”
　Notice on the “Guiding Opinions on Several Issues Concerning the Application of Law in Combating Maritime Cross-Border Smuggling Crimes in the Guangdong–Hong Kong–Macao Greater Bay Area”
To the Higher People’s Courts, People’s Procuratorates, and Public Security Departments (Bureaus) of all provinces, autonomous regions, and municipalities directly under the central government; to the Production and Construction Corps Branch of the Higher People’s Court of the Xinjiang Uygur Autonomous Region, the People’s Procuratorate of the Xinjiang Production and Construction Corps, and the Public Security Bureau of the Xinjiang Production and Construction Corps; to the Guangdong Sub‑Administration of the General Administration of Customs and all its directly affiliated customs offices; to the branch bureaus and directly affiliated bureaus of the China Coast Guard; and to the coast guard bureaus of coastal provinces, autonomous regions, and municipalities directly under the central government:
To ensure the accurate application of the law and to severely crack down on cross‑border maritime smuggling among Guangdong, Hong Kong, and Macao, the Supreme People’s Court, the Supreme People’s Procuratorate, the General Administration of Customs, the Ministry of Public Security, and the China Coast Guard have jointly formulated the “Guiding Opinions on Several Issues Concerning the Application of Law in Combating Cross‑Border Maritime Smuggling Crimes among Guangdong, Hong Kong, and Macao.” These opinions are hereby circulated; please implement them conscientiously. Should any significant issues arise during implementation, please promptly seek instructions and report to the Supreme People’s Court, the Supreme People’s Procuratorate, the General Administration of Customs, the Ministry of Public Security, and the China Coast Guard.
This is to notify you.
Supreme People’s Court, Supreme People’s Procuratorate
General Administration of Customs, Ministry of Public Security, China Coast Guard
December 14, 2021
On Combating Cross-Border Maritime Smuggling Crimes in the Guangdong–Hong Kong–Macao Region
Guiding Opinions on Several Issues Concerning the Application of Law
In recent times, cross‑border maritime smuggling of frozen goods and other illicit items among Guangdong, Hong Kong, and Macao has occurred with alarming frequency, severely undermining customs supervision and the normal order of trade. Such smuggling poses a significant risk of spreading infectious diseases, gravely jeopardizing public health and food safety. To carry out their criminal activities or evade law enforcement, smugglers have resorted to violent resistance, driving modified vessels at high speeds to ram and collide with law‑enforcement assets, thereby posing a serious threat to the safety of maritime navigation. In order to crack down rigorously on cross‑border maritime smuggling in the Guangdong–Hong Kong–Macao region, the following guiding opinions are hereby issued with respect to the most pressing legal issues currently encountered:
I. The smuggling of frozen goods into the country from non‑customs‑controlled areas without obtaining a national inspection and quarantine access certificate shall be deemed to involve goods prohibited from import by the state. Where such conduct constitutes a crime, it shall be prosecuted and punished as the crime of smuggling goods whose import or export is prohibited by the state. In particular, for the smuggling of frozen goods originating from overseas epidemic‑affected areas, conviction and punishment shall be imposed in accordance with Article 11, Paragraph 1, Item 4, and Paragraph 2 of the “Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues Concerning the Application of Law in Handling Criminal Cases of Smuggling” (Fa Shi [2014] No. 10, hereinafter referred to as the “Interpretation”). For the smuggling of frozen goods originating from overseas non‑epidemic areas, or for frozen goods whose origin—whether from an overseas epidemic area or not—cannot be determined, conviction and punishment shall be imposed in accordance with Article 11, Paragraph 1, Item 6, and Paragraph 2 of the Interpretation.
II. Where smugglers, in the course of committing smuggling offenses or evading apprehension, engage in dangerous acts such as colliding with others, forcing other vehicles off the road, scattering obstacles, driving at excessive speeds, or shining high-intensity lights into drivers’ eyes—thereby endangering public safety—they shall be punished for both smuggling and the crime of endangering public safety by dangerous methods, with concurrent sentencing. If they resist anti-smuggling law enforcement by means of violence or threats, they shall be punished for both smuggling and the crime of assaulting a police officer or the crime of obstructing official duties, with concurrent sentencing. Those who use armed force to shield smuggling activities shall be subject to enhanced punishment in accordance with Article 151, Paragraph 1 of the Criminal Law.
III. If the true name and address of a criminal suspect cannot be ascertained, they shall be identified by their alias or by the name and address they themselves provide, with such details duly noted in the legal documents.
The nationality and identity of a criminal suspect shall be determined based on the valid documents presented upon entry; if the suspect holds passports from two or more countries, their nationality shall be ascertained according to the passport held at the time of entry.
If the nationality of a criminal suspect is unknown, it may be ascertained with the assistance of the immigration administration authorities, or determined on the basis of a certificate issued by the relevant foreign embassy or consulate in China. If the suspect’s nationality cannot be ascertained despite all efforts, the suspect shall be treated as a stateless person.
IV. Vessels and vehicles used to transport smuggled frozen goods and other contraband shall be disposed of in accordance with the following principles:
(1) Vessels and vehicles that are “three‑no” — i.e., lacking valid certificates — shall, in accordance with the law, be confiscated, seized, or handed over to the competent authority for lawful disposition.
(2) Vessels and vehicles owned by smugglers, or those that are nominally registered under a false name, have remained unregistered for an extended period, or are falsely registered—yet in fact belong to smugglers—shall be confiscated as instruments of crime in accordance with the law.
(3) Vessels and vehicles that are rented or lent to others who knowingly or ought to have known that such persons are engaged in crimes such as smuggling frozen goods shall be confiscated in accordance with the law.
Where any of the following circumstances exist, the ship or vehicle lessor or lender may be deemed to have known or ought to have known that another person was engaging in unlawful or criminal conduct, unless there is evidence proving that they were genuinely deceived or other contrary evidence is available:
(1) The lessor or lender, without approval from the relevant authorities, unilaterally converts a vessel into one capable of carrying frozen goods or other cargo, or otherwise disguises it;
(2) The lessor or lender tacitly permits the actual carrier to convert the vessel into one capable of transporting frozen goods or other cargo, or to engage in deceptive practices;
(3) Having previously been subject to administrative penalties for renting out or lending vessels or vehicles for smuggling, and then renting or lending them again to the same smuggler or the same smuggling syndicate;
(4) Where the lessor or lender refuses to provide the true identity of the actual carrier, or provides false information regarding the actual carrier;
(5) Other circumstances that may be deemed to constitute knowledge or constructive knowledge.
Whether a vessel qualifies as a “three‑no” vessel shall be determined in accordance with the provisions of the Joint Determination Measures for “Three‑No” Vessels (issued under Document No. 88 [2021] of the General Administration of Customs).
V. With respect to frozen products that have been seized or impounded and for which no national inspection and quarantine access certificate has been obtained, where the facts of the smuggling offense have been substantially ascertained, after completing evidence‑preservation measures such as photography, videography, weighing, site inspection, and examination, and retaining samples, such items shall, in accordance with the Measures for the Disposal of Confiscated and Seized Smuggled Frozen Products (Trial) (issued under Document No. 289 [2015] of the General Administration of Customs), and the Notice of the General Administration of Customs and the Ministry of Finance on the Local‑Level Management of Seized Smuggled Frozen Products (Document No. 300 [2019] of the General Administration of Customs), be promptly transferred to the relevant authorities for harmless treatment.
VI. With respect to criminal cases involving smuggling at non‑customs‑controlled locations in regions other than the Guangdong–Hong Kong–Macao maritime area, such cases may be handled in accordance with the law by reference to the spirit of these Opinions.

Ministry of Public Security: Solidly carry out public security inspection, auditing, and petition-handling work.
The meeting of the Ministry of Public Security’s Supervision Commission, the Leading Group for Audit Work, and the Leading Group for Letters and Visits was held in Beijing on the 16th. Wang Xiaohong, Secretary of the Party Committee of the Ministry of Public Security, Vice Minister in charge of daily operations, and Inspector General, presided over the meeting and delivered a speech. The meeting emphasized the need to thoroughly study and implement the important instructions of General Secretary Xi Jinping, strengthen the “Four Consciousnesses,” officely uphold the “Four Confidences,” and ensure “Two Upholds.” It called for steadfast adherence to serving the central tasks, supporting practical operations, and assisting the grassroots level; for maintaining zero tolerance for violations, ensuring full coverage in audits, providing timely responses to letters and visits, and adopting a zero‑tolerance approach to problems. The meeting also stressed the importance of elevating political awareness, focusing on key priorities, enhancing coordination and synergy, and earnestly carrying out supervisory, auditing, and petition‑handling work within the public security sector, thereby providing stronger oversight and guarantees for fulfilling the missions and tasks of the new era and for building a highly competent public security force that is “four times ironclad.”
The meeting pointed out that public security oversight, auditing, and handling of public complaints are of great responsibility and daunting in scope; therefore, it is imperative to keep the central tasks at the forefront, focus on key priorities, and better leverage these efforts to ensure effective implementation, promote standardization, and enhance quality and efficiency. We must rigorously, meticulously, and practically carry out oversight work, centering on the overarching theme of safeguarding security and stability in the lead‑up to the 20th National Congress of the Communist Party of China, with particular attention to major security and stability operations such as the Beijing Winter Olympics. Upholding the principle that “the absence of detected problems is itself the greatest problem, and the failure to identify potential risks is the greatest risk,” and adhering to the standard of “zero tolerance for any lapse—any lapse means total failure,” we will strengthen oversight of major policy decisions and deployments to ensure their thorough implementation and tangible results. We will closely monitor key areas and weak links in law enforcement, intensify verification and follow‑up on high‑profile cases, reinforce law‑enforcement oversight, and advance the effective implementation of systems such as the “Three Provisions” on preventing interference in judicial affairs, inter‑regional case‑handling cooperation, and the prohibition of profit‑driven law enforcement, thereby powerfully boosting the overall level of law enforcement and its public credibility. We will prioritize rectifying problems among leaders by strengthening supervision and checks on leading cadres, intensifying inspections to uphold proper conduct and discipline, and consistently ensuring the thorough implementation of the spirit of the CPC Central Committee’s Eight‑Point Decision on Improving Party and Government Conduct and its detailed rules, while persistently addressing the “Four Undesirable Trends” to maintain strict discipline and a clean, upright atmosphere within the force. We will also bolster efforts to protect police officers’ rights and alleviate their burdens, promoting the full implementation of relevant regulations and measures—such as those safeguarding the authority of police officers in law enforcement, granting immunity for lawful performance of duties, and establishing mechanisms for tolerating mistakes and correcting errors—as well as initiatives to show care and support for police personnel, thereby encouraging officers to assume responsibility and act boldly. Furthermore, we must diligently, meticulously, and effectively conduct auditing work, upholding the principles of auditing all matters that should be audited, ensuring rigorous scrutiny of every case, and holding those responsible strictly accountable. We will give priority to the “key few” and critical areas, carrying out comprehensive audits of all departments and units within the public security organs that manage, allocate, or utilize public funds, state‑owned assets, and state‑owned resources; conduct special audits on pressing and difficult issues; and ensure thorough follow‑up on corrective actions. Finally, we must promptly, meticulously, and effectively handle public complaints, insisting on leadership taking the lead in personally overseeing and receiving petitioners, vigorously implementing targeted remediation measures, and rigorously pursuing accountability. We will focus on resolving the most salient issues raised in public complaints, doing a good job of engaging with the people who come directly to us, legally safeguarding their legitimate rights and interests, and truly maintaining social harmony and stability.
The meeting emphasized the need to strengthen organizational leadership to provide robust support and safeguards for public security oversight, auditing, and petition-handling work. Party committees at all levels of public security organs must prioritize this work, refine operational mechanisms, and address key issues. Relevant units should enhance their support and coordination, improve management systems, rigorously guard against integrity risks, and proactively accept oversight. Vertically managed departments must effectively oversee and manage oversight, auditing, and petition‑handling activities within their own units and systems, and fulfill their supervisory and administrative responsibilities. It is essential to reinforce Party building as a guiding force, elevate professional capabilities, promote the deep integration of oversight, auditing, and petition‑handling functions, strengthen the development of specialized expertise in these areas, and build a team that is absolutely loyal, impartial, and highly competent.
Sun Xinyang, a member of the CPC Committee of the Ministry of Public Security and head of the Discipline Inspection and Supervision Group of the Central Commission for Discipline Inspection and the National Supervisory Commission stationed at the Ministry of Public Security, attended the meeting and addressed the attendees. The Department of Inspectorate and Audit reported on the status of public security inspection, audit, and petition work in recent years, while relevant units within the ministry presented updates on their respective areas of responsibility.

The 100-day intensive campaign to investigate official misconduct by judicial personnel has concluded.
Across the country, procuratorial organs have initiated investigations into 999 cases involving official crimes committed by judicial personnel, with 1,285 individuals implicated.
On December 19, reporters learned from the Supreme People’s Procuratorate that the “100-Day Campaign to Investigate Official Crimes Committed by Judicial Personnel” (hereinafter referred to as the “100-Day Campaign”) has recently concluded. During the campaign, procuratorial organs nationwide filed and investigated a total of 999 cases involving 1,285 judicial personnel, representing year-on-year increases of 28.6% and 24.5%, respectively. Among these, 119 high-ranking judicial officials at or above the county and department levels were implicated in major official‑crime cases, up 72.5% from the previous year; additionally, 138 cases involving 166 individuals suspected of engaging in favoritism, fraud, and abuse of power to reduce sentences, grant parole, or allow temporary release outside prison were prosecuted, with the number of persons involved 4.26 times that of the same period last year.
The head of the Fifth Procuratorial Office of the Supreme People’s Procuratorate stated that launching the “100-Day Assault Campaign” is an important work initiative undertaken by the procuratorial organs, guided by Xi Jinping’s Thought on the Rule of Law, to comprehensively implement the CPC Central Committee’s Opinions on Strengthening Legal Supervision by the Procuratorial Organs in the New Era, and to further advance the nationwide education and rectification campaign within the political and legal workforce. The campaign focuses on addressing persistent problems and deep-rooted malpractices, eliminating corrupt elements, and severely punishing official crimes committed by judicial personnel.
“The original ‘100-Day Intensive Campaign’ was scheduled to run from early June to late September. However, in light of the rapid increase in the number of leads received by procuratorial organs across the country and the steadily mounting caseload, and in order to better support the ongoing education and rectification efforts, the campaign has been extended—following the overall arrangements of the Central Political and Legal Commission and with the approval of the leadership of the Supreme People’s Procuratorate—until the conclusion of the second phase of the education and rectification campaign for political and legal personnel,” said an official from the Fifth Procuratorial Department of the Supreme People’s Procuratorate.
The reporter learned that, at the outset of the “100-Day Assault Campaign,” the Supreme People’s Procuratorate promptly issued an implementation plan, clearly outlining its guiding principles, objectives, and specific measures, and convened a special national-level conference—attended by procuratorial organs at all four levels—to make arrangements and deployments. During the campaign, the Supreme People’s Procuratorate not only conducted weekly analyses to monitor case-handling trends across regions, promptly identifying and addressing emerging issues while strengthening both comprehensive and targeted guidance, but also deepened its examination of problems in the investigation phase through regular quarterly video conferences, the publication of typical cases, and on-site inspections and supervisory visits, thereby providing more focused guidance to ensure the quality and effectiveness of case handling.
“The Supreme People’s Procuratorate has selected nine key cases handled by procuratorial organs in Liaoning, Hebei, and other regions, placing them under supervised management under the name of the National Leading Group for the Education and Rectification of the Procuratorial Corps. Among these, three have been placed under supervised management by the Office of the National Leading Group for the Education and Rectification of the Political and Legal Forces,” the official stated.
The reporter learned that the Fifth Procuratorial Office of the Supreme People’s Procuratorate has directly conducted on-site supervision of the “May 13” series of cases in Tibet and the “April 6” special case in Liaoning. The Supreme People’s Procuratorate specially dispatched a supervisory team—comprising seasoned investigators from Beijing, Yunnan, and other regions—to Tibet to oversee these cases on the ground. To date, the procuratorial organs of the Tibet Autonomous Region have initiated investigations into 28 individuals on suspicion of crimes such as granting sentence reductions through favoritism and abuse of power, and illegally approving temporary release from prison for personal gain. Meanwhile, the procuratorial organs of Liaoning, taking dereliction of duty involving “protective umbrellas” for criminal gangs as their entry point, have launched investigations into 12 cases involving 12 judicial personnel in the Fuxin area, all suspected of abusing their official authority.
Prosecutorial organs across the country, in accordance with the Supreme People’s Procuratorate’s deployment and implementation plan, have promptly established special task forces for the “100-Day Assault Campaign,” chaired by senior procuratorial leaders and staffed with key personnel from relevant departments. Among these, 17 provincial-level procurators general serve as team leaders, focusing on centralized analysis of leads, coordinated investigations and verification, and decisive breakthroughs in cases, striving to achieve an organic integration of political, legal, and social outcomes. Local authorities are prioritizing the handling of high‑profile cases that have drawn strong public concern and widespread attention, as well as major, difficult, and complex cross‑regional cases involving official misconduct among judicial personnel that have caused significant repercussions and impact within a given jurisdiction. Where conditions for initiating investigation are met, such cases are promptly filed and investigated, fully demonstrating the determination and courage of political and legal organs to conduct self‑rectification and root out judicial corruption.
The “100-Day Intensive Campaign” has concluded, but investigations into official misconduct by judicial personnel remain ongoing. “Going forward, the procuratorial organs will accurately assess the new circumstances and tasks confronting investigations into such offenses, strengthen their sense of responsibility and commitment, enhance the quality and efficiency of case handling, and elevate prosecutorial investigative work to a new level,” said the official.

Medical insurance fund oversight is advancing in depth, and the rampant occurrence of fraudulent claims has been preliminarily brought under control.
Supervision of the medical insurance fund is advancing in depth.
The National Healthcare Security Administration and the Ministry of Public Security recently jointly issued the “Notice on Strengthening the Coordination Between Administrative and Criminal Enforcement in Cases Involving Fraudulent Acquisition of Medical Insurance Funds” (hereinafter referred to as the “Notice”), requiring medical security administrative departments and public security organs at all levels to attach great importance to the coordination between administrative and criminal enforcement in such cases, pool their efforts, and, in accordance with the law, crack down on illegal and criminal acts of fraudulently obtaining medical insurance funds, thereby effectively safeguarding the people’s “money for treatment and life-saving funds.”
An official from the National Healthcare Security Administration stated that the Notice represents a concrete measure by the Administration and the Ministry of Public Security to adapt to the evolving landscape of healthcare‑insurance fund oversight, further strengthening collaboration between the two agencies in areas such as joint consultation mechanisms, tip‑off reporting, information sharing, public awareness campaigns, and reward‑and‑penalty systems. The aim is to accelerate the establishment of an operational framework that seamlessly links administrative penalties for violations of healthcare‑insurance funds with criminal justice procedures, ensuring complementary strengths and maintaining sustained high‑intensity efforts to combat illegal and criminal activities involving fraud against these funds.
Professor Zhang Qing of China University of Political Science and Law argues that, in the fight against illegal and criminal activities involving the fraudulent misappropriation of medical insurance funds, administrative enforcement and criminal justice represent two distinct law‑enforcement approaches. By refining the mechanisms for coordinating and seamlessly integrating these two approaches, it is possible to strengthen deterrence against both potential and actual offenders, thereby better safeguarding the integrity of medical insurance funds and the legitimate rights and interests of insured individuals.
Initial efforts have begun to curb the frequent occurrence of insurance fraud.
In recent years, the National Healthcare Security Administration and the Ministry of Public Security have continuously strengthened their collaboration to jointly combat illegal and criminal activities involving fraudulently obtaining medical insurance funds. This has helped establish a robust enforcement framework, effectively curbing the widespread and frequent occurrence of such fraudulent schemes, and yielding tangible results in the oversight and management of medical insurance funds.
“However, the situation regarding oversight of the medical insurance fund remains grave, and illegal cases involving fraud against the fund continue to occur from time to time,” acknowledged an official from the National Healthcare Security Administration. Cases such as the medical insurance fraud incidents in Cheng’an County, Hebei Province, and Shan County, Shandong Province, serve as a stark reminder that the task of cracking down on criminal activities involving fraud against the medical insurance fund remains extremely challenging and requires sustained, unwavering efforts.
The Notice was issued against this backdrop. Lou Yu, a professor at the School of Civil, Commercial and Economic Law of China University of Political Science and Law and director of the Institute of Social Law, stated that the administrative authorities responsible for medical insurance must coordinate and collaborate with other departments in overseeing and managing the medical security fund, particularly by establishing mechanisms for communication and coordination with public security organs, as well as procedures for transferring cases, to ensure effective linkage between administrative and criminal enforcement.
Lou Yu further pointed out that, for a long time, due to the lack of legal safeguards, this mechanism has yielded unsatisfactory results in China, primarily manifesting in two ways: on the one hand, administrative agencies and public security organs have inconsistent standards for identifying unlawful conduct, and, owing to the latter’s lack of specialized expertise, they often struggle to determine the nature of cases referred by the former, leaving many matters unresolved; on the other hand, with limited police resources, and unable to ascertain the legal classification of a case, public security organs are even less motivated to initiate investigations, conduct inquiries, or impose sanctions.
To this end, the Notice calls for deepening collaboration and coordination between the medical insurance authorities and the public security organs in areas such as consultation mechanisms, tip‑off reporting, information sharing, public awareness campaigns, and reward‑and‑penalty systems, with a view to expediting the establishment of an operational framework that seamlessly links administrative penalties for violations of medical insurance funds with criminal justice procedures, thereby leveraging their respective strengths.
The time limit for case filing review is divided into three tiers.
For a long time, when investigating cases of fraudulently obtaining medical insurance funds, administrative authorities have held differing views and adopted varying practices regarding whether to refer such cases to the criminal justice system—either after imposing administrative penalties or prior to their completion.
Some argue that the administrative authority responsible for medical insurance should refer cases to the criminal justice system only after imposing administrative penalties, thereby ensuring that the administrative body has fully discharged its duties and that dual administrative and criminal sanctions would enhance deterrence against fraudulent claims. However, others contend that imposing both administrative and criminal penalties would unduly broaden the scope of enforcement, contravening the principle of proportionality between offense and punishment. Moreover, China’s relevant laws and regulations generally prohibit dual penalties, with criminal sentencing taking into account and incorporating any prior administrative sanctions.
Zhang Qing stated that, to resolve the disputes arising in the referral of the aforementioned cases, the Notice explicitly stipulates: during the course of regulatory enforcement over medical insurance funds, administrative departments for medical security at all levels must, upon discovering that citizens, legal persons, or other organizations have engaged in acts involving the use of medical insurance funds that are suspected of constituting a crime, promptly refer such cases to the public security organs at the same level in accordance with the law. Zhang Qing explained that this requirement mandates that, once an administrative agency responsible for medical insurance identifies conduct that may constitute a crime during its enforcement activities, it must immediately initiate referral, rather than waiting until the administrative penalty has been imposed before doing so.
In addition, the Notice further specifies the time limits for public security organs to review and decide whether to file a case upon receiving referrals from administrative agencies, dividing these into three tiers: for ordinary cases, the review period remains three days; for cases in the second tier that involve suspected criminal leads requiring verification, the review period shall not exceed seven days; and for cases in the third tier—classified as “major, difficult, or complex matters”—the review period may, with approval from the head of a public security organ at or above the county level, be extended to 30 days.
In Zhang Qing’s view, the Notice sets forth varying time limits for initiating case‑filing reviews based on the nature of the leads and the complexity of each case. This differentiation takes into account the differing evidentiary standards applicable to administrative and criminal cases, as well as the varying degrees of difficulty in gathering evidence across diverse and distinct types of cases. Consequently, it helps public security organs make more informed decisions within the prescribed timeframes as to whether to initiate a case, thereby enhancing the accuracy of such decisions.
Establish a liaison mechanism for coordination between administrative and criminal enforcement.
The Notice clarifies that the collaborative mechanism for investigating and handling cases of fraudulently obtaining medical insurance funds shall be improved. Cooperation in the referral and investigation of such cases shall be deepened. Medical security administrative departments and public security organs at all levels are required to establish a liaison system for coordinating criminal–administrative referrals, working together to ensure the effective investigation and prosecution of referred cases.
Zhang Qing stated that the mechanism for liaison officers in criminal‑administrative enforcement serves, on the one hand, as a bridge between the medical insurance administrative authorities and the public security organs, and, on the other hand, helps oversee the medical insurance administrative agencies, thereby preventing situations such as “failure to transfer cases when they should be” or “substituting fines for criminal penalties.”
In addition, joint meetings and a system of situation briefings are also crucial mechanisms for facilitating inter‑departmental communication. The Notice stipulates that such joint meetings must be held on a regular schedule and, in terms of content, should involve the exchange of information on the progress of medical insurance cases to achieve information sharing, thereby further addressing the challenges in ensuring seamless coordination between administrative and criminal enforcement.
Zhang Qing pointed out that the joint‑meeting system helps administrative law enforcement officers and criminal justice personnel reach consensus on lingering disagreements in medical insurance fraud cases, jointly address differences regarding the criteria for referring such cases to the criminal justice system, and prevent discrepancies in understanding between medical insurance supervisory authorities and criminal justice organs from impeding case referrals and allowing perpetrators of medical insurance fraud to evade legal accountability.
The Notice sets forth the key responsibilities of the National Healthcare Security Administration and the Ministry of Public Security in strengthening social oversight. Specifically, the two agencies are to intensify efforts to publicize policies on investigating and prosecuting fraud involving medical insurance funds, encourage and mobilize public participation in oversight, and actively solicit reports of illegal and criminal activities related to such fraud. They will also refine procedures for handling tip-offs, implement reward measures for whistleblowers, and ensure prompt and substantial rewards in accordance with laws and regulations; furthermore, they will strictly enforce confidentiality protocols for whistleblower information, safeguard the legitimate rights and interests of informants, and foster a favorable environment in which society pays attention to, participates in, and supports fund‑supervision efforts.
Zhang Qing stated that if combating fraud and abuse of medical insurance relies solely on the enforcement powers of administrative and judicial authorities, it will be difficult to address all such misconduct and effectively prevent its recurrence. Therefore, it is essential to strengthen social oversight. Efforts should be intensified to publicize cases of illegal and criminal activities involving the misappropriation of medical insurance funds, while also conducting robust public‑opinion campaigns and guidance to maximize the educational and deterrent effects, thereby more effectively punishing unlawful conduct and deterring offenders.
The Notice marks the first step in China’s efforts to establish collaborative mechanisms between administrative and criminal enforcement in the oversight of medical insurance funds. Lou Yu suggests that, going forward, a joint conference system and a regular information‑reporting mechanism could be leveraged to bring together experts from diverse fields—including medical technology, hospital management, law, and finance—to jointly examine and define the constituent elements of illegal and criminal acts involving the fraudulent misappropriation of medical insurance funds, thereby establishing uniform criteria for determination. The National Healthcare Security Administration and the Ministry of Public Security could then periodically publish typical cases and guidance on case‑by‑case determinations, gradually ensuring consistent sentencing for similar offenses and ultimately achieving seamless coordination and alignment between administrative and criminal proceedings.

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