JC Master Legal News Issue 1002

Key Takeaways for This Issue

The China Securities Regulatory Commission has issued the “Guiding Opinions on the Transfer of Listed Companies from the Beijing Stock Exchange.”

The establishment of the Beijing Stock Exchange (hereinafter referred to as the BSE) is a key measure to deepen the reform of the New Third Board, helping to improve the multi-tiered capital market system and better serve the development of the real economy. To further clarify arrangements related to the transfer listing process, the China Securities Regulatory Commission has revised the “Guiding Opinions on the Transfer Listing of Companies Listed on the National Equities Exchange and Quotation System for Small and Medium-sized Enterprises” (hereinafter referred to as the original guiding opinions), thereby formulating the “Guiding Opinions on the Transfer Listing of Companies Listed on the Beijing Stock Exchange” (hereinafter referred to as the “Guiding Opinions”).
Several unlisted banks have launched private placements to bolster their capital, with real estate business emerging as a key focus of regulatory scrutiny.
　Industry analysts note that the regulatory focus on the real estate sector is primarily aimed at preventing illicit capital flows into the property market, curbing speculative activity, and averting localized, irrational booms. At the same time, it seeks to promote a sustained optimization of banks’ credit structures, stabilize employment, boost domestic demand, and drive economic transformation and upgrading.
Implementation of tax relief policies for the Winter Olympics is being carried out thoroughly, enabling market entities to reap tangible benefits.

According to a notice issued by the Ministry of Finance, the State Taxation Administration, and the General Administration of Customs, during the construction, trial operations, test events, and the periods of the Beijing 2022 Winter Olympics and Paralympics, water resources used for the construction and operation and maintenance of venues and facilities for the Beijing 2022 Winter Olympics shall be exempt from the water resources tax.

The Ministry of Veterans Affairs and the Ministry of Justice have jointly issued guidelines to strengthen legal aid services for veterans.
Recently, the Ministry of Veterans Affairs and the Ministry of Justice jointly issued the “Opinions on Strengthening Legal Aid for Veterans” (hereinafter referred to as the “Opinions”), which implement the Law on the Protection of Veterans and the Law on Legal Aid, and set forth arrangements and requirements for further improving legal aid services for veterans.

Finance & Capital Markets
The China Securities Regulatory Commission has issued the financial industry standard, “Security Testing Specifications for Mobile Internet Applications in the Securities and Futures Industry.”

Recently, the China Securities Regulatory Commission issued the “Security Testing Specifications for Mobile Internet Applications in the Securities and Futures Industry,” a financial industry standard, which takes effect from the date of its publication.
In recent years, the development of mobile application systems in the securities and futures industry has accelerated, with an increasingly mature ecosystem and ever-wider adoption of such tools. Mobile applications have delivered fast and convenient securities‑related services; however, they also pose certain security risks. The “Security Testing Specification for Mobile Internet Applications in the Securities and Futures Industry” sets out the general requirements and testing methodologies for assessing the security of mobile internet applications in this sector, and is applicable to information security testing services, the security testing and evaluation of mobile internet applications, as well as the design and development of automated security‑testing tools. The formulation and implementation of this standard will harmonize industry‑wide security requirements for mobile internet applications, enhance their overall security, strengthen the information‑security capabilities of industry participants in mobile‑based operations, and effectively mitigate associated security risks.
Going forward, the China Securities Regulatory Commission will continue to advance the informatization of the capital market, with a strong focus on strengthening foundational standards and improving the technical security regulatory framework, thereby ensuring that, alongside technological progress, the level of security governance is steadily enhanced.

The China Securities Regulatory Commission is soliciting public comments on the “Pilot Provisions for Securities Companies’ Market-Making Trading of STAR Market Stocks (Draft for Comments).”

 The “Implementation Opinions on Establishing the STAR Market at the Shanghai Stock Exchange and Piloting the Registration-Based System” (hereinafter referred to as the “Implementation Opinions”) stipulate that, building on the existing auction‑based trading system, a market‑making mechanism will be introduced on the STAR Market when conditions are ripe. Since its inception, the STAR Market has operated smoothly, with notable results from various reform measures. To implement the “Implementation Opinions” and further advance the reform of establishing the STAR Market and piloting the registration‑based system, the China Securities Regulatory Commission has drafted the “Pilot Provisions on Securities Offices’ Market-Making Trading of STAR Market Stocks (Draft for Public Comment)” (hereinafter referred to as the “Market-Making Provisions”), which proposes introducing a market‑making mechanism to the STAR Market. The draft is now being made public for public comment.
The “Market-Making Regulations” comprise seventeen articles and cover six key areas: market-maker eligibility criteria, admission procedures, arrangements for the sourcing of market-making securities, internal controls, risk monitoring and surveillance, and regulatory enforcement. For detailed information, please refer to the Explanatory Notes on the Drafting of the “Market-Making Regulations.”
We welcome valuable feedback from all sectors of society on the Market-Making Regulations. The China Securities Regulatory Commission will, based on the results of the public consultation, further refine the Regulations and, after completing the requisite procedures, promulgate and implement them.

The China Securities Regulatory Commission has issued the “Guiding Opinions on the Transfer of Listed Companies from the Beijing Stock Exchange.”
The establishment of the Beijing Stock Exchange (hereinafter referred to as the BSE) is a key measure to deepen the reform of the New Third Board, helping to improve the multi-tiered capital market system and better serve the development of the real economy. To further clarify arrangements related to the transfer listing process, the China Securities Regulatory Commission has revised the “Guiding Opinions on the Transfer Listing of Companies Listed on the National Equities Exchange and Quotation System for Small and Medium-sized Enterprises” (hereinafter referred to as the original guiding opinions), thereby formulating the “Guiding Opinions on the Transfer Listing of Companies Listed on the Beijing Stock Exchange” (hereinafter referred to as the “Guiding Opinions”).
This revision, while preserving the original guidance’s institutional framework, format, and core content, introduces changes in five key areas. First, the legal basis has been adjusted by removing the “Decision of the State Council on Certain Issues Concerning the National Equities Exchange and Quotations for Small and Medium‑sized Enterprises” (Guofa [2013] No. 49). Second, the terminology has been revised: “National Equities Exchange and Quotations Company” and “Select Tier Company” have been replaced with “Beijing Stock Exchange” and “Beijing Stock Exchange Listed Company,” respectively, and “transfer listing” has been changed to “transfer.” Third, the calculation of the listing period has been clarified: when a Beijing Stock Exchange listed company applies to transfer to another board, it must have been listed on the Beijing Stock Exchange for at least one year, and its time listed on the original Select Tier plus its time listed on the Beijing Stock Exchange may be combined for purposes of this requirement. Fourth, share lock‑up arrangements have been specified: the lock‑up period for shares of a Beijing Stock Exchange listed company following a transfer is, in principle, calculated by deducting any periods during which the shares were already subject to lock‑up on the original Select Tier or on the Beijing Stock Exchange. Fifth, certain other textual provisions have been adapted to ensure consistency and clarity.
From October 30 to November 14, 2021, the China Securities Regulatory Commission publicly solicited comments on the “Guiding Opinions.” During this period, it received feedback from securities offices, individual investors, and other stakeholders. Overall, stakeholders generally endorsed the revision approach and key provisions of the “Guiding Opinions.” Some of the submitted views pertained to business‑rule arrangements at the exchange level, while others were of an interpretive or advisory nature and did not warrant adjustments to the draft for public comment.
It should be noted that, for applications submitted to the Shanghai and Shenzhen Stock Exchanges prior to the Beijing Stock Exchange’s opening, the original Guiding Opinions and their accompanying rules shall apply. For applications submitted to the Shanghai and Shenzhen Stock Exchanges after the Beijing Stock Exchange’s opening but before the official entry into force of the Guiding Opinions and their accompanying rules, the Shanghai and Shenzhen Stock Exchanges shall process and review such applications in accordance with the existing rules.
Going forward, the CSRC will coordinate with the Shanghai Stock Exchange, the Shenzhen Stock Exchange, the Beijing Stock Exchange, China Securities Depository & Clearing Corporation, and other relevant entities to ensure that all preparatory work for the transfer of listings is in place, and, based on the pilot program’s outcomes, will assess and refine the pertinent institutional arrangements.

The China Banking and Insurance Regulatory Commission has issued the “Administrative Measures for Project Companies of Financial Leasing Companies.”
To strengthen and improve the regulatory framework for financial leasing companies, standardize their conduct of financial leasing business through project companies, enhance risk prevention, and promote the sustained and sound development of their operations, the China Banking and Insurance Regulatory Commission recently issued the Measures for the Administration of Project Companies of Financial Leasing Companies (hereinafter referred to as the “Measures”), which shall take effect from the date of issuance.
The Measures comprise five chapters and thirty-four articles, with the main provisions as follows: First, they clarify the legal basis of the Measures, define “project companies,” and specify the scope of leased assets that may be used in financing lease transactions conducted through such companies. Financial leasing companies and their specialized subsidiaries (hereinafter referred to as “specialized subsidiaries”) shall apply these Measures when establishing project companies in accordance with relevant laws and regulations to engage in financing lease business. Second, the Measures set forth the locations for establishing project companies, the eligibility criteria, the principles governing their establishment, and their business scope. Specifically, domestic project companies may be established in bonded zones, free trade pilot zones, free trade ports, and other designated domestic areas. Third, financial leasing companies and specialized subsidiaries are required to manage project companies in accordance with the principles of consolidated management and look-through supervision, to establish sound management systems and mechanisms, and to implement comprehensive risk management. Fourth, risk management is strengthened by specifying detailed requirements regarding the assignment of counterparties, equity transfers, liquidation and closure, the functions of overseas management‑type project companies, and their hierarchical structure. Fifth, the regulatory responsibilities of banking and insurance supervisory authorities are clearly defined, including reporting obligations, regulatory indicators, and the submission of statistical reports; moreover, in response to identified issues and risks, supervisory measures or penalties may be imposed in accordance with applicable laws and regulations.
Going forward, the China Banking and Insurance Regulatory Commission will continue to strengthen regulatory oversight, guide financial leasing companies and their specialized subsidiaries in effectively implementing the Measures, fully leverage their distinctive capabilities, refine their expertise, and enhance their services, thereby supporting the development of industries such as aviation and shipping, bolstering the construction of domestic bonded zones, free trade pilot zones, and free trade ports, and improving the efficiency and quality of services provided to the real economy.

Commercial & Corporate
The “stable growth” policy stance remains unchanged, and the rally in the financial and real estate sectors may continue.
During the past week, the new‑energy sector suffered a sharp decline, while the real‑estate sector maintained the upward momentum that began after the People’s Bank of China cut the reserve requirement ratio in December 2021. In the first trading week of 2022, A‑shares continued to exhibit a starkly contrasting “hot‑and‑cold” structural market, with mean reversion and valuation repair likely to remain the dominant forces shaping the year‑end rally.
According to seasoned industry insiders interviewed by reporters, the rebound in the real estate sector still has room to run, and the shift in market style from year-end rally is likely to persist. Going forward, financial stocks may also continue to catch up. Meanwhile, although a rotation between high- and low‑valued stocks has already begun, public mutual funds have yet to make any significant moves to reweight their portfolios toward undervalued sectors.
By the end of March 2021, following the completion of the index rebalancing, A‑shares exhibited distinct structural style characteristics each quarter: for instance, the new‑energy vehicle sector led in the second quarter, while cyclical stocks surged in the third. By December, the new‑energy value chain had reached a temporary peak, while the real‑estate sector reversed nearly a year of weakness and took over as the main driver of the rally.
“Short-term, we can still hold positions in the real estate sector,” a private-equity manager in Shenzhen—who shifted from new energy to the real estate value chain as early as November—told a reporter from Caixin. Starting in December, various “stabilizing‑growth” measures have provided support, but the improvement in orders for related companies around the Spring Festival has yet to materialize. The sector’s rally is expected to persist into March, at which point we may see positive fundamentals begin to unfold.
“The synchronized rally in finance and real estate can still persist,” Hu Yu, partner and head of research at Shenzhen Chengnuo Asset Management, told a reporter from Caixin. In the second half of 2021, following an over‑reaction in policy, there was an opportunity to buy on dips in the property sector. At the time, a prevailing market consensus emerged: the real estate industry was seen as past its prime, a fading sunset, and property stocks had become cheap bargains that no one wanted to touch. However, “the real estate industry” and “property stocks” are distinct concepts; the key difference is that property stocks remain very undervalued, while housing prices are far from cheap.
Lin Jiayi, CEO of Xuanjia Finance, believes that leading real estate companies with low leverage, along with relatively stable players in related industrial chains—such as undervalued home appliance and home‑improvement offices—stand to benefit. With the industry still sizable, short‑term downward revisions in scale are limited, making these stocks highly attractive on a valuation basis. As sector sales bottom out and post quarter‑over‑quarter gains, and as supply‑chain pressures return to normal, profitability is expected to continue improving, inevitably driving a correction in deeply undervalued price‑to‑earnings ratios.
Some market participants also believe that, with ongoing risk events among property developers and no significant portfolio reallocation by public mutual funds, value stocks may underperform expectations in the latter part of the first quarter.
Dai Kang, a strategy analyst at GF Securities, notes that since the beginning of this year, among the stock markets of major global economies, value‑style sectors such as energy, industrials, finance, and real estate have broadly led gains, largely driven by a synchronized recovery in both “win rate” and “odds.” From an “odds” perspective, A‑shares currently favor the value style: technology‑sector stocks, compared with “steady‑growth” value stocks, are trading at elevated valuations and enjoy relatively high fund allocations. Meanwhile, the “win rate” for A‑share value stocks—underpinned by a focus on steady growth—is still in the phase of “rising expectations.” However, this scenario is likely to fall short of expectations in the latter part of the first quarter. Although public mutual funds are actively rebalancing their portfolios, they have yet to make significant shifts into value‑oriented equities.
Golden Eagle Fund believes that with ongoing risk events among property developers, real estate investment is unlikely to turn around in the short term. Looking ahead to 2022, corporate earnings growth is expected to decelerate, while liquidity will remain moderately accommodative. Overall, the market is likely to continue featuring a structurally driven rally.

Crude oil prices may rise on supply-side positives; experts expect the next round of domestic refined‑oil price adjustments to be an increase.
In the first week of 2022, crude oil prices continued the upward trend that began in late December last year. As of 18:00 Beijing time on January 7, the front-month Brent crude contract had risen by more than 6%, trading near $82.7 per barrel.
“Recently, crude oil prices have continued to rise, driven primarily by favorable supply-side factors,” said Sui Xiaoying, head of the Petrochemical Research Group and a senior researcher at Founder Zhongqi Futures, in an interview with the Securities Daily. On the one hand, ongoing unrest in Kazakhstan has spread to major oil-producing cities in the country’s west, raising the prospect of force‑majeure disruptions to production. On the other hand, recent extreme weather conditions in the United States have slowed oil flows. Moreover, OPEC’s compliance with its production cuts has remained consistently high over the past few months, indicating that output recovery among oil‑producing nations is proceeding more slowly than expected.
Huang Wanzhe, a researcher at Tianfeng Futures Research Institute, also told a Securities Daily reporter that three factors are supporting the rise in oil prices. As mounting data indicate that Omicron’s severity and fatality rates are relatively mild, market panic has eased significantly, and previous oversold positions are gradually being corrected. Meanwhile, on the fundamentals front, recent supply-side disruptions have been more pronounced: Libya has once again experienced force majeure, curtailing exports by roughly 550,000 barrels per day, with the duration still uncertain; Mexico has announced it will cease crude oil exports in 2023, reducing its 2022 export volume from 1.2 million b/d to about 400,000 b/d, primarily to boost domestic refining capacity. While this is unlikely to materially affect global liquids balances, it could impact the relative pricing of light and heavy crudes, thereby bolstering market sentiment. In addition, geopolitical risks remain elevated: on the one hand, Russia–Europe natural gas tensions are unlikely to resolve in the short term, keeping gas prices highly volatile and persistently high; on the other, ongoing unrest in Kazakhstan has further heightened concerns about supply stability.
Regarding the outlook for crude oil prices in the near term, Sui Xiaoying is not optimistic about the sustainability of any price increases. She stated: “At present, the market generally expects global economic growth to slow further and liquidity conditions to tighten. In particular, at its most recent policy meeting, the U.S. Federal Reserve signaled a notably hawkish stance. Meanwhile, the supply‑demand balance in the oil market is expected to gradually shift toward a more relaxed stance. As a result, medium‑ to long‑term oil prices will face downward pressure, suggesting that upside potential in the short term is limited and that a pullback later on is quite likely.”
“At present, the heating season in the Northern Hemisphere continues to underpin global energy demand, and crude oil consumption is unlikely to see a significant decline—this trend is reflected in crude oil inventories. According to the EIA, international crude oil stocks remain at low levels, making it difficult for global oil prices to fall sharply in the short term,” Feng Mohan of the Beijing Fushengde Consulting Macroeconomic Research Institute told a reporter from the Securities Daily. He added that any subsequent pullback in crude oil prices will depend on supply-and-demand dynamics after the Northern Hemisphere’s heating season concludes.
It is worth noting that, under China’s “ten-working-day” pricing mechanism for refined oil products, the next price adjustment window will open at 24:00 on January 17, 2022, and the trajectory of these adjustments has become a key focus of industry attention.
Sui Xiaoying expects that, with the current pricing cycle only halfway through, although international oil prices have risen overall in the first half, a pullback from elevated levels cannot be ruled out in the second half. However, if the overall adjustment in oil prices remains modest, the first round of refined‑product price hikes this year could still materialize.

Can global real estate still rise amid the 2022 interest-rate hike trend?
2021 marked another year of a real estate bull market. Driven by a combination of factors—including the global low-interest-rate environment, spillover effects from large-scale U.S. fiscal stimulus, and increased demand spurred by remote work—housing price growth accelerated sharply in many countries, validating the conclusions of our report “How Strong Is Global Housing Price Growth? When Will It Slow?” Meanwhile, surging inflation repeatedly hit new highs, prompting several economies, led by the United States, to announce at the end of 2021 that they would accelerate the unwinding of accommodative monetary policies. Looking ahead to 2022, against the backdrop of a global shift in monetary policy, we believe housing prices still have room to rise, though the pace of growth may moderate.
Let’s begin by reviewing the 2021 global surge in housing prices from three perspectives:
From a national perspective, by the end of the third quarter of 2021, year-on-year house price growth in many countries, including the United States, Japan, and South Korea, had surged into double digits, with Sweden posting an increase as high as 20%. From the standpoint of cross-border transactions, real estate in the EMEA region (Europe, the Middle East, and Africa) proved particularly attractive to investors. In terms of investment purposes, growth in residential and logistics sectors offset declines in office and retail investments amid the pandemic’s impact.
In terms of market capitalization, the gap between global real estate market value and the combined market value of equities and bonds has widened. In 2021, the combined market capitalization of global equity and bond markets was 1.4 times and 1.6 times, respectively, of global GDP in 2020, while global real estate market value stood at 3.9 times global GDP.
Taking the United States as an example, we analyze its robust real estate market from three perspectives:
On the macroeconomic front, since the onset of the pandemic, real estate has contributed more to U.S. GDP growth.
According to NAHB data, the share of real estate—comprising residential fixed‑asset investment and related services—in U.S. GDP averaged 17.0% in both 2020 and 2021, compared with just 15.8% in 2019. From the third quarter of 2020 to the third quarter of 2021, real estate contributed an average of 10.7% to the growth rate of U.S. real GDP, underscoring that the robust post‑pandemic economic recovery has been underpinned by the housing sector.
On the fundamentals front, the U.S. housing market enjoys strong support.
In a low-interest-rate environment, MBS application data for 2021 indicated robust demand, while new housing starts reached their highest level since the financial crisis. According to a report by the U.S. rental platform Apartment List, average rents in the United States rose by 18% in 2021, and in 99 out of 100 major cities, annual rent increases exceeded 10%, underscoring the surge in housing demand. From the perspective of manufacturing capacity utilization, by October 2021, capacity utilization along the U.S. real estate supply chain had approached its peak since 2012, with some demand gaps being met through imports.
In terms of U.S. equity sectors, in 2021 the S&P 500 real estate sector delivered excess returns second only to the energy sector, and its outperformance relative to the broader market reached a new high since the financial crisis.
Moreover, amid the robust recovery of the U.S. economy in 2021, growth stocks delivered strong performance; however, over the full year, the real estate sector outperformed the broader market’s growth equities.
Looking ahead to 2022, global house price growth may slow, but upward momentum will likely persist. Historically, only sustained interest-rate hikes by central banks—keeping rates at elevated levels—have brought an end to a country’s real estate boom, as seen in Japan in the 1990s and in the United States in the early 2000s. Although global monetary policy is expected to pivot in 2022, the normalization of interest rates will be gradual, and rates are unlikely to return to high levels until late 2023 or later.
Driven by surging global demand—led by the United States—the home appliance sector in China saw robust export growth in 2021; however, this did not translate into outsized returns for the industry. Our analysis indicates that overseas demand has primarily boosted Chinese exports in terms of volume, while most companies have yet to see corresponding improvements in gross margins. With the global real estate market expected to decelerate in 2022 and a high base effect from 2021, the A‑share home appliance sector may continue to underperform the broader market.
This week (January 3–7, 2021): Most Asia-Pacific stock markets declined, with the Shanghai Composite Index down 1.66% for the week, the Nikkei 225 falling 1.09%, and the Korea Composite Stock Price Index slipping 0.76%. Meanwhile, Australia’s S&P/ASX 200 rose 0.12%, while New Zealand’s NZX 50 fell 0.48%.

Several unlisted banks have launched private placements to bolster their capital, with real estate business emerging as a key focus of regulatory scrutiny.
At the turn of the year, several unlisted banks have had their applications to issue shares to specific investors—commonly referred to as “private placements”—accepted by the China Securities Regulatory Commission.
As capital consumption intensifies, internal capital‑raising methods such as retained earnings are no longer sufficient for some banks, making private placements an important avenue for external capital replenishment. The reporter noted that, in the feedback issued by the China Securities Regulatory Commission, both real‑estate‑related business activities and the top ten shareholders with ties to the real‑estate sector were subject to focused scrutiny.
Industry analysts note that the regulatory focus on the real estate sector is primarily aimed at preventing illicit capital flows into the property market, curbing speculative activity, and averting localized, irrational booms. At the same time, it seeks to promote a sustained optimization of banks’ credit structures, stabilize employment, boost domestic demand, and drive economic transformation and upgrading.
A surge in private placements is underway.
Recently, bank capital increases have surged. On the last day of December 2021 alone, the China Securities Regulatory Commission approved private placement plans for eight banks, including one joint-stock bank, two city commercial banks, and five rural commercial banks. Additionally, from December 2021 through January 6, 2022, the CSRC has issued feedback on the private placement applications of several other banks, though these institutions have yet to respond to the regulator’s inquiries.
Zhou Maohua, an analyst at the Financial Markets Department of China Everbright Bank, told reporters: “There are several reasons why many banks are actively applying for private placements. First, it helps broaden financing channels for unlisted banks. Small and medium-sized banks play a key role in serving small and micro enterprises, private offices, and agriculture, rural areas, and farmers. At the same time, unlisted banks generally have relatively limited access to funding sources. Regulatory authorities are encouraging eligible small and medium-sized banks to replenish capital through multiple channels, thereby optimizing their capital structures, strengthening their risk resilience, and enhancing their ability to support the real economy. Second, some unlisted banks face substantial capital‑raising needs. Affected by intensifying industry competition, the reclassification of assets back onto balance sheets, the disposal of risky assets, and rising credit demand from the expanding domestic real economy, certain banks are under considerable pressure to bolster their capital bases.”
Lou Feipeng, a researcher at the Postal Savings Bank of China, stated: “China’s economic development is facing triple pressures—shrinking demand, supply shocks, and weakening expectations. Economic policy prioritizes stability while seeking progress within that stability. The banking sector must step up its support for the real economy, particularly small and micro enterprises, green development, and technological innovation. To do so, it requires adequate capital; private placements are an important means of bolstering capital and enhancing capital adequacy ratios, thereby enabling banks to better serve the real economy.”
An executive at a city commercial bank that previously successfully completed a private placement stated that the successful issuance underscores shareholders’ support and long-term confidence in the bank. This will help the bank expand its capital base, enhance capital quality, and continuously strengthen its core competitiveness, which is of great significance for sustaining steady business growth, improving profitability and risk resilience, and better supporting the development of the real economy.
In 2021, commercial banks faced growing capital‑raising needs, prompting a variety of innovative strategies to bolster their capital bases. In the fourth quarter alone, the issuance of perpetual bonds and Tier 2 capital bonds increased compared with the same period of the previous year. Lou Feipeng stated: “In 2022, to better support the real economy, banks will need to make more effective use of capital‑supplementing instruments such as perpetual bonds and Tier 2 capital bonds, while unlisted banks can also fully leverage IPOs to replenish their capital.”
Looking ahead, Zhou Maohua believes that in 2022, the scale of capital replenishment among unlisted banks will increase, with a greater diversity of funding channels. “We can already see early signs of this trend: in 2021, banks tapped multiple avenues—including convertible bonds, perpetual bonds, rights issues, private placements, Tier 2 capital bonds, and special-purpose bonds—to bolster their capital base. Meanwhile, although the size of each individual capital‑raising effort by small and medium‑sized banks was relatively modest, the number of such banks participating has risen markedly.”
“In 2022, driven by economic recovery, expanding credit demand in the real economy, robust capital‑raising needs among certain unlisted banks, and regulatory support for eligible banks to tap multiple channels for capital replenishment, non‑listed banks are expected to exhibit broader coverage, higher volumes, and greater diversification in their capital‑raising efforts,” Zhou Maohua added.
The real estate sector has been subject to inquiries.
In recent feedback on the private placement filings of several banks, the CSRC’s inquiries have focused on issues such as banks’ real estate loan concentration, risks associated with their real estate business, and the operating conditions of shareholders of real estate enterprises.
The review opinion on the private placement of a certain city commercial bank indicates that the China Securities Regulatory Commission has requested the bank to provide supplementary disclosures regarding its real estate‑related loans for each reporting period, including borrower names, credit and loan amounts, borrowers’ creditworthiness, and whether any loans are past due. The bank is also required to clarify whether the relevant regulatory indicators for these loans meet the prescribed standards and to disclose any instances of administrative penalties or associated risks.
In its response to inquiries from the China Securities Regulatory Commission, the bank stated that the regulatory cap on real estate loan concentration—i.e., the maximum share of real estate loans in its total loan portfolio—is 22.5%. According to available data, at the end of 2019, this ratio stood at 22.05%, close to the regulatory “red line.” Since then, the ratio has declined, reaching 21.75% at the end of 2020 and 20.09% as of June 30, 2021.
Regulators have consistently maintained strict oversight over the share of real estate loans in banks’ portfolios. On December 31, 2020, the People’s Bank of China and the China Banking and Insurance Regulatory Commission issued the “Notice on Establishing a Concentration Management System for Real Estate Loans of Banking Financial Institutions,” which clearly defines the scope of institutions covered, the management requirements, and the adjustment mechanisms under this system.
Analysts believe that the regulatory framework for managing the concentration of real estate lending establishes a “safety threshold” for banks’ exposure to the sector, preventing credit resources from flowing into real estate and thereby reducing vulnerabilities in the financial system. It also encourages financial institutions to optimize their asset–liability structures and fosters the sound development of the real estate industry.
In addition to real estate‑related credit business, the China Securities Regulatory Commission, in its feedback on another city commercial bank’s private placement, noted that several of the bank’s top ten shareholders are real estate enterprises, and requested that the bank provide supplementary disclosures regarding its credit concentration, the basic details of its largest customer, as well as information on related‑party credit extensions and loan exposures, among other matters.
The reason for focusing particularly on curbing real estate lending, according to Zhou Maohua, is primarily to prevent a small number of banks from channeling funds into the property sector in violation of regulations. China has adopted a clear stance on real estate—“housing is for living, not for speculation”—and implements city‑specific policies to promote the sector’s sound development. In terms of the relationship between banks and real estate, the goal is to meet both first‑time homebuyer and upgrade‑type housing demand, as well as the reasonable financing needs of property developers; to guard against illicit capital flows into the housing market; to curb speculative activity; and to avoid localized, irrational booms. At the same time, this approach seeks to continuously optimize banks’ credit structures, strengthen support for small and micro enterprises, private offices, manufacturing, and other key emerging sectors, thereby stabilizing employment, boosting domestic demand, and advancing economic transformation and upgrading.
Lou Feipeng stated: “Regulators are focusing on the real estate sector both to contain risks in the banking sector and to ensure a healthy, self-sustaining cycle within the industry, thereby preventing risk spillovers between banks and real estate. In 2022, banks’ real estate business can prioritize better meeting homebuyers’ reasonable housing needs.”

Taxation TAXATATION
Implementation of tax relief policies for the Winter Olympics is being carried out thoroughly, enabling market entities to reap tangible benefits.
Effectively implementing the tax relief policies for the Winter Olympics is of great significance for successfully hosting the Winter Olympics and Paralympics and fulfilling China’s solemn commitments to the international community.
According to a notice issued by the Ministry of Finance, the State Taxation Administration, and the General Administration of Customs, during the construction, trial operations, test events, and the periods of the Beijing 2022 Winter Olympics and Paralympics, water resources used for the construction and operation and maintenance of venues and facilities for the Beijing 2022 Winter Olympics shall be exempt from the water resources tax.
According to reports, the Beijing 2022 Winter Olympics has built upon certain preferential policies introduced for the 2008 Summer Olympics, while also introducing a new package of tax incentives. Currently, the tax measures applicable to the Beijing Winter Olympics cover ten tax categories, including corporate income tax, value-added tax, stamp duty, and water resources tax. To better support the preparation for both the Winter Olympics and the Winter Paralympics and ensure the effective implementation of these tax policies, the tax authorities of Beijing and Hebei have signed a “Tax Coordination and Joint Development Agreement,” establishing an inter-provincial tax‑coordination mechanism. They have also jointly compiled the “Tax Guide for the Beijing 2022 Winter Olympics and Paralympics” to ensure that taxpayers involved in the Games can promptly benefit from all relevant tax incentives.
“During the project’s construction, there were always some ambiguities in tax policies. Tax officials stepped in to help us analyze and provide guidance, effectively easing our financial pressures,” said Zheng Xin, the finance director of Beijing North Control Jing’ao Construction Co., Ltd. and Beijing National Alpine Skiing Co., Ltd.
The reporter learned that the two companies where Zheng Xin works are responsible for the development and construction of the Yanqing Competition Zone’s Alpine Skiing Center, Bobsleigh and Skeleton Center, Olympic Village, and Mountain Media Center for the Beijing Winter Olympics. With high project costs and complex tax-related issues, the two offices at one point faced severe cash-flow difficulties. During proactive on-site visits, the Yanqing District Tax Service Bureau of the State Taxation Administration in Beijing promptly corrected deviations in the companies’ application of tax preferential policies and swiftly resolved related tax matters. To date, it has processed tax refunds totaling over RMB 100 million for the two enterprises in connection with the Winter Olympics.
Anmeidi (Zhangjiakou) Mountain Development Co., Ltd., established in Zhangjiakou by France’s MND Group, is a specialized manufacturer of ski equipment. Since last year, the local tax authorities have processed over RMB 3.8 million in outstanding input VAT refunds for the company. According to Mei Xiaochao, the company’s finance director, “The timely processing of these refunds has ensured we have sufficient working capital to sustain production.”
According to reports, the tax authorities in Zhangjiakou City have implemented dynamic management for 32 projects that have been introduced to and put into operation within the city’s ice-and-snow sports equipment industrial parks. They have processed tax reductions and refunds totaling nearly RMB 50 million for enterprises in the two industrial parks, with cumulative tax relief and refunds amounting to RMB 390 million for companies involved in the Winter Olympics. With the support of favorable tax policies, the number of snow‑industry enterprises in the city has grown steadily year after year, increasing from 35 at the beginning of 2015 to 310—nearly a tenfold rise. During the 2020–2021 period, the sector welcomed a total of 2.462 million visitors, helping to engage 5 million people in ice-and-snow sports activities.
Cheng Junfeng, Party Secretary and Director of the Hebei Provincial Tax Service Bureau, stated that ensuring high-quality support for all preparatory work related to the Winter Olympics and Paralympics is both a crucial political task at present and one of the three major priorities that Hebei Province must officely prioritize. The Hebei tax authorities will further implement and refine tax preferential policies for the Games, optimize service measures, strengthen publicity and guidance, and vigorously promote “non-contact” tax filing and payment. Working hand in hand with relevant departments, they will pool their efforts to contribute to the successful hosting of this grand sporting event.

 
Tax services continue to gain momentum, with a multi-pronged approach to support the Winter Olympics.
On October 27, 2021, on the occasion of the 100-day countdown to the Beijing 2022 Winter Olympics, the State Taxation Administration, in collaboration with the Beijing Organizing Committee for the Olympic and Paralympic Winter Games, presented plaques to five designated tax service halls— including the First Tax Service Office of the Chaoyang District Tax Bureau in Beijing—located in Beijing and Hebei, which are authorized to process VAT refunds for the Beijing 2022 Winter Olympics, Paralympics, and their test events.
It is reported that, to support the successful hosting of the Beijing 2022 Winter Olympics, the state has introduced a series of tax‑related policies, notably a value‑added tax (VAT) refund scheme for the Games. Under these provisions, VAT incurred by designated entities on procurement expenditures related to the Winter Olympics within China is eligible for a refund. Refund applications may be filed online through the Beijing Municipal Electronic Tax Bureau or, offline, at five designated tax service halls located in Beijing and Hebei.
The reporter learned that, unlike other tax‑refund policies, the successful implementation of the VAT refund policy for the Winter Olympics involves multiple departments—including taxation, finance, the state treasury, and foreign exchange—and faces numerous challenges, such as aligning related policies and adjusting tax administration systems. Under the coordinated leadership of the State Taxation Administration, the Beijing tax authorities have placed Party building at the forefront, establishing the “Beijing 2022 Winter Olympics Tax Service Leading Group,” chaired by Zhang Youqian, Secretary of the Party Committee and Director of the Bureau. They have also put in place a communication and coordination mechanism with the Olympic Organizing Committee, the Hebei Provincial Tax Service, and various municipal commissions and bureaus, characterized by joint case handling, collaborative deliberation, and performance‑based follow‑up. To date, they have processed tax‑exemption and reduction procedures for Olympic venues such as the National Gymnasium and the Shougang Big Air Snowboarding Venue; streamlined the procedures for exempting foreign technical officials—such as consultants and judges—from personal income tax; simplified post‑payment review processes for overseas remittances; and enhanced the efficiency of filing and reviewing cross‑border payments.
On January 4, 2022, under the coordinated guidance of the State Taxation Administration and the Beijing Organizing Committee for the Winter Olympic Games, the Beijing Winter Olympics Tax Service Hotline (010-64212022) was officially launched, providing convenient services to enterprises involved in the Games.
Zhang Ruiju, Director of the 12366 Beijing Taxpayer Service Center of the State Taxation Administration, stated that following the launch of the tax service hotline for the Beijing Winter Olympics, the center will precisely tailor its approach to the specific needs of taxpayers seeking guidance on Olympic‑related tax policies, thereby making the hotline more efficient, convenient, and professional. At the same time, leveraging the e‑tax bureau’s targeted push‑notification feature and employing policy‑specific tags for Olympic‑related tax matters, the center will deliver preferential policies and pre‑submission reminders on a one‑to‑one basis, ensuring that the tax incentives for the Beijing Winter Olympics are promptly and easily accessible, thus providing robust support for both the Beijing Winter Olympics and the Winter Paralympics.

Chongqing: Officially launches online issuance of electronic tax payment certificates.
Effective January 1, 2022, the Chongqing Municipal Tax Service Bureau has officially launched an online service for issuing electronic tax payment certificates. Both corporate and individual taxpayers can independently download, print, and use these certificates through the Chongqing Electronic Tax Bureau, achieving a fully paperless process that covers issuance, receipt, storage, and accounting—eliminating the need to visit a tax service hall.
According to the introduction, a tax clearance certificate is a tax document issued by the tax authorities that certifies a taxpayer’s payment of taxes and fees. It covers not only the payment status of various types of taxes but also the payment of social insurance premiums and other fund‑related levies, and it serves a wide range of purposes.
Prior to the launch of this feature, tax clearance certificates had to be obtained in person at a tax service hall. To provide businesses and citizens with a more efficient and convenient tax‑filing experience, the Chongqing Municipal Tax Service Bureau has further advanced its “delegation, regulation, and service” reform, digitizing tax clearance certificates and enabling end-to‑end online processing.
According to the head of the Revenue Planning and Accounting Division of the Chongqing Municipal Tax Service Bureau, leveraging the e‑tax bureau’s 24/7 online services, taxpayers can simply access the Chongqing e‑tax portal, click on the “Tax Services” module, select “Enterprise Services” for businesses or “Individual Services” for individuals, log in, and then sequentially navigate to “Certificate Issuance—Issue Tax Payment Certificate (Form‑Based)—Tax Information Inquiry—Preview” to download and print the document. This service is available around the clock and accessible anytime with an internet connection, free from constraints of time and location, thereby effectively reducing costs in terms of time and effort.
“In the past two years, the number of our company’s projects has grown exponentially. At every tender, the client requires us to provide a corresponding tax clearance certificate, and different projects may necessitate certificates covering distinct time periods and specific tax types,” said the CFO of China Railway No. 11 Bureau Fifth Engineering Co., Ltd. “Now that tax clearance certificates have been digitized, finance staff can simply download them directly from their company computers, which is extremely convenient.”
It is reported that the electronic tax payment certificate downloaded online bears the electronic seal of the tax authority and carries the same legal validity as the paper tax payment certificate issued at the tax service hall. In addition, the electronic certificate features a system-generated QR code that can be scanned to verify its authenticity.
“Now it’s much easier: we can download our own tax clearance certificates anytime, and we can also verify the authenticity of those provided by our partners,” said the finance director of Chongqing Huizhikang Machinery Equipment Leasing Co., Ltd., who is participating in the pilot program. By scanning the QR code on the tax clearance certificate, they can instantly conoffice its validity, thereby significantly reducing operational risks for the company.
“The launch of this feature has also standardized the format of various tax‑payment certificates, enabling end-to-end digitalization of processes and standardization of business procedures,” said a responsible official from the Chongqing Municipal Tax Service. As one of six pilot cities for business environment innovation, Chongqing’s tax authorities will continue to prioritize innovative service delivery, advance key initiatives, and further optimize the tax‑related business environment.

Ningxia: Implementing Tax Incentive Policies to Boost Enterprises’ Innovation and Technological Capabilities
Technological innovation is the core driving force behind China’s economic development, and the implementation of the policy on additional tax deductions for R&D expenses is a key measure by the state to encourage enterprises to increase their R&D investment and support scientific and technological innovation. In 2018, the additional deduction rate for R&D expenses was raised from the previous 50% to 75%; this year, the rate for manufacturing has been further increased to 100%. At the same time, the method of claiming the benefit has been changed: whereas previously it could only be claimed during the annual final tax settlement by May 31 of the following year, it can now be self‑declared when making provisional payments in the third quarter or in September, thereby further alleviating the financial pressures faced by enterprises engaged in R&D.
To effectively implement the policy of additional tax deductions for R&D expenses, the Ningxia tax authorities have leveraged the tax‑big data platform to precisely identify high‑tech enterprises, technology‑based SMEs, and companies that have incurred R&D expenditures in previous years. They have established a dedicated ledger for tracking policy implementation and provided “one‑on‑one” guidance and outreach, ensuring that enterprises fully understand the policy, clearly grasp the application procedures, and can benefit from it accurately and promptly. At the same time, they have strengthened coordination with departments such as science and technology and finance, enhanced information sharing and inter‑agency collaboration, and jointly addressed challenges encountered during policy implementation, helping enterprises to fully, promptly, and effectively access the benefits they are entitled to.
The Pengyang County Tax Service Bureau has established a green channel for taxpayers who have missed out on benefits due to failure to file, rigorously implementing the “one-time notification” and “first-contact responsibility” systems and conducting joint office operations to help taxpayers complete corrected filings on the same day. For taxpayers whose R&D projects have been approved but not yet implemented, the bureau provides thorough explanations of the policy on additional deductions for R&D expenses, thereby boosting enterprises’ enthusiasm for investing in R&D.
The Pingluo County Tax Bureau proactively reached out to the County Science and Technology Bureau to gain an in-depth understanding of the county’s enterprises’ R&D expenditure over recent years, the development trends of high-tech offices, and the challenges they face. It has established an information-sharing mechanism between the tax and science-and‑technology authorities, accurately ascertained the total number of high-tech enterprises, and maintained a taxpayer service ledger to ensure that no enterprise is left unaccounted for in the tax base or among its service recipients.

 
Litigation & Arbitration
Supreme People’s Procuratorate: In the first 11 months of 2021, procuratorial organs recovered approximately RMB 168 million in unpaid wages through case handling.
On the 6th, reporters learned from the Supreme People’s Procuratorate that from January to November 2021, procuratorial organs nationwide accepted and reviewed for prosecution a total of 2,813 cases involving the crime of refusing to pay labor remuneration, involving 3,243 individuals—up 12.3% and 12%, respectively, year on year—and recovered approximately RMB 168 million in unpaid wages through these cases.
Remuneration for labor is fundamental to people’s livelihoods. Procuratorial organs at all levels have fully exercised their legal supervisory functions, prosecuted, in accordance with the law, crimes of refusing to pay wages, safeguarded the legitimate rights and interests of workers, and fostered a sound rule-of-law business environment conducive to the healthy development of the private sector.
According to reports, procuratorial organs, grounded in judicial case handling, have taken lawful enforcement measures and imposed strict penalties on criminal suspects who, despite being subject to criminal investigation and prosecution, continue to fail to fulfill their obligation to pay. From January to November 2021, procuratorial organs nationwide approved the arrest of 732 individuals in 716 cases involving the crime of refusing to pay wages, and instituted public prosecution against 1,382 individuals in 1,256 cases.
On the other hand, the procuratorial organs have actively implemented the criminal justice policy of “fewer arrests, cautious prosecution, and prudent detention.” For criminal suspects who demonstrate genuine remorse and make every effort to remedy the situation by paying owed wages, they have lawfully decided not to arrest or prosecute; and for cases that are brought to public prosecution, they have proposed lenient sentencing recommendations. These measures seek to minimize the impact of case handling on enterprises’ normal production and operations, thereby better safeguarding workers’ wage rights. From January to November 2021, procuratorial organs nationwide declined to approve the arrest of 893 individuals in 953 cases involving the crime of refusing to pay labor remuneration, representing year-on-year increases of 55.3% and 50.8%, respectively. They also decided not to prosecute 1,031 individuals in 1,244 cases, up 4.1% and 5.3% year over year.

The Ministry of Veterans Affairs and the Ministry of Justice have jointly issued guidelines to strengthen legal aid services for veterans.
Recently, the Ministry of Veterans Affairs and the Ministry of Justice jointly issued the “Opinions on Strengthening Legal Aid for Veterans” (hereinafter referred to as the “Opinions”), which implement the Law on the Protection of Veterans and the Law on Legal Aid, and set forth arrangements and requirements for further improving legal aid services for veterans.
The Opinions clearly state that, guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, and adhering to the principles of upholding Party leadership, putting people first, government guidance, and reform and innovation, they set forth five key tasks: strengthening institutional safeguards, expanding coverage, improving working mechanisms, diversifying service delivery, and reinforcing organizational leadership. These measures will play a positive role in establishing and perfecting mechanisms for safeguarding the rights and interests of veterans, enhancing the public legal services system, elevating the quality of legal aid, and better protecting the legitimate rights and interests of veterans.
The “Opinions” stipulate that the departments responsible for veterans’ affairs may, based on actual working conditions, establish legal consultation windows at veterans’ service centers (stations). Legal aid agencies may, as needed, set up legal aid workstations or liaison points at these centers to accept legal aid applications locally. Veterans are encouraged to actively participate in volunteer legal aid services. Matters directly affecting the legitimate rights and interests of veterans shall be brought within the scope of legal aid in accordance with the law, and the eligibility criteria for legal aid shall be relaxed.
The Opinions stipulate that legal aid agencies shall diligently handle legal aid cases involving veterans concerning the conofficeation of employment relationships, payment of wages, work-related injuries, traffic accidents, food and drug safety incidents, medical malpractice, and personal injury compensation. Applications for legal aid from veterans shall be given priority in acceptance, review, and assignment. For elderly or disabled veterans with mobility challenges, telephone applications and door-to-door services shall be provided as appropriate.
The “Opinions” stipulate that veteran affairs and judicial administration departments at all levels shall conscientiously fulfill their responsibilities for organizing, coordinating, and guiding legal aid work for veterans, fully leveraging their respective functions. They are to establish and improve mechanisms for communication, coordination, and close collaboration. Furthermore, they should strengthen professional training to enhance the expertise and service capabilities of legal aid personnel, enrich service offerings, innovate delivery methods, and continuously raise the capacity and quality of legal aid services provided to veterans. In addition, they are to intensify oversight and guidance, carry out effective publicity and outreach, and actively foster a favorable environment that encourages innovation, thereby promoting the healthy, sustained, and innovative development of legal aid for veterans.

Ministry of Public Security: In the fight against economic crimes, direct economic losses totaling 25.5 billion yuan were recovered last year.
In 2021, public security organs across the country waged a vigorous campaign to prevent and defuse major risks, rigorously cracked down on economic and financial crimes in accordance with the law, worked to curb prominent economic criminal activities, and significantly enhanced their capacity to support economic and social development, thereby effectively safeguarding national economic security and social stability.
— As of November, a total of 66,000 economic crime cases had been solved, with direct economic losses recovered amounting to RMB 25.5 billion.
— Continuously advancing the “Operation Fox Hunt” to apprehend economic crime suspects who have fled abroad, and, through international police cooperation, bringing a number of such fugitives to justice.
— Actively participated in advancing efforts to prevent and resolve risks associated with private equity investments and in the cleanup and rectification of various trading venues, investigating and prosecuting over 1,200 cases in accordance with the law, involving nearly RMB 500 billion.
— Actively cooperated with the special campaign to address risks in internet finance, and, in accordance with the law, investigated and prosecuted 15 P2P platforms.
Over the past year, public security organs nationwide have focused on preventing and defusing major financial risks, maintaining a stringent crackdown on all forms of economic crime. For three consecutive years, they have launched special operations to combat illegal fundraising offenses, uncovering a large number of high‑profile cases. They have also continuously conducted targeted campaigns to dismantle criminal networks that use offshore companies and underground money‑laundering operations to transfer illicit funds, dismantling several major cross‑regional criminal rings and shutting down numerous criminal dens and illegal payment platforms. In coordination with relevant departments, they have carried out a two‑year special campaign to combat the fraudulent issuance of invoices and tax‑evasion crimes, while simultaneously launching the “Hundred‑City Joint Campaign” against tax‑related offenses and other specialized anti‑tax‑crime initiatives. Furthermore, they have repeatedly initiated large‑scale, coordinated operations targeting key sectors such as precious metals and petrochemicals. Efforts to combat capital‑market crimes have been vigorously advanced, resulting in the resolution of numerous cases involving listed companies’ violations of information disclosure requirements, manipulation of the securities market, and unauthorized trading in securities and futures. In response to prominent economic crimes in areas such as counterfeit currency, insurance, bank cards, and pyramid schemes, authorities have sustained intensive, concentrated enforcement actions, achieving significant results.
Closely aligned with the “Doing Practical Things for the People” campaign, we are focusing on the urgent needs and expectations of private enterprises and rigorously cracking down, in accordance with the law, on economic crimes that infringe upon their legitimate rights and interests, such as contract fraud, embezzlement, and misappropriation of funds. We will further strengthen oversight of law enforcement, launch targeted campaigns to address illegal asset freezes, promptly identify and rectify irregularities in enforcement, effectively safeguard the lawful rights and interests of private enterprises, and wholeheartedly support the high-quality development of the private sector.

The Supreme People’s Procuratorate has released five typical cases of criminal offenses involving the refusal to pay wages, prosecuted in accordance with the law.

　Recently, the Supreme People’s Procuratorate released five typical cases of criminal offenses involving refusal to pay wages, prosecuted in accordance with the law. Among these cases, some integrate the functions of criminal and civil prosecution, simultaneously pursuing criminal accountability and recovering unpaid wages; others strike a balance between safeguarding workers’ rights and protecting businesses, implementing the criminal justice policy of “fewer arrests, cautious prosecution, and prudent detention” to support the development of private enterprises; some reflect the procuratorial organs’ proactive efforts to strengthen equal protection for specially vulnerable, overage workers, thereby upholding their lawful labor rights; and still others demonstrate the procuratorial organs’ use of the “linkage mechanism between the Criminal Law and the Administrative Law” to enhance the identification and referral of criminal leads, ensure that no criminal facts are overlooked, and reinforce precise prosecution of malicious wage arrears.
An official from the First Procuratorial Office of the Supreme People’s Procuratorate stated that ensuring workers receive their full wages on time is a matter of fundamental importance to people’s livelihoods. Since 2021, wage arrears have continued to occur from time to time, particularly at year-end and the beginning of the new year, when funding for various projects and construction works enters the settlement phase. Coupled with the impact of the COVID‑19 pandemic, wage defaults involving rural migrant workers have become especially prevalent. Moreover, such arrears are often concealed, and some workers lack sufficient legal awareness, making it difficult for them to protect their rights. If these issues are not promptly monitored and properly addressed, they will undermine the public’s sense of gain, happiness, and security.
According to the official, procuratorial organs nationwide have remained committed to a people-centered approach. On the one hand, they focus on judicial case handling: for criminal suspects whose offenses are particularly egregious, whose consequences are severe, and who continue to refuse to fulfill their payment obligations even after criminal proceedings have been initiated and assets have been seized, they impose strict legal sanctions to effectively deter such behavior. On the other hand, procuratorial organs actively implement the criminal justice policy of “fewer arrests, cautious prosecution, and prudent detention,” giving equal weight to protecting the rights of workers and safeguarding businesses. In handling cases, they comprehensively assess the overall circumstances, conducting reviews of the necessity of detention and making full use of the lenient treatment system for those who admit guilt and accept punishment. As a result, they lawfully decide not to arrest or prosecute suspects who demonstrate genuine remorse and make every effort to remedy unpaid wages. For cases that do proceed to public prosecution, they submit sentencing recommendations calling for lighter or more lenient penalties, thereby minimizing the impact of case handling on enterprises’ normal production and operations and better protecting workers’ wage rights. In addition, procuratorial organs actively engage in social governance, emphasizing the use of prosecutorial recommendations to help enterprises establish long-term mechanisms, and leveraging specific cases to clarify the law and conduct legal publicity, thus achieving more effective protection of workers’ legitimate rights and interests.
From January to November 2021, procuratorial organs nationwide received and reviewed for prosecution a total of 2,813 cases involving the crime of refusing to pay labor remuneration, involving 3,243 individuals—up 12.3% and 12%, respectively, year on year—and recovered approximately RMB 168 million in unpaid wages through case handling. Among these, 716 cases involving 732 individuals were approved for arrest in accordance with the law, and public prosecution was instituted in 1,256 cases involving 1,382 individuals; 893 cases involving 953 individuals were not approved for arrest, up 55.3% and 50.8%, respectively, year on year; and 1,031 cases involving 1,244 individuals were decided not to be prosecuted, up 4.1% and 5.3%, respectively, year on year.

 
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