JC Master Legal News Issue 1003

Key Takeaways for This Issue

The China Securities Regulatory Commission rigorously investigates and prosecutes illegal activities by securities intermediaries in accordance with the law.
In recent years, guided by the overarching regulatory framework of serving the real economy and enhancing the quality of listed companies, our Commission has consistently implemented the “dual investigation” approach, rigorously, swiftly, and severely investigating, in accordance with the law, illegal acts such as the failure of intermediary institutions to exercise due diligence and fulfill their responsibilities in cases of securities fraud and financial statement manipulation.
National Bureau of Statistics: In December 2021, sales prices of commodity residential housing declined month-on-month, while the year-on-year growth rate eased.
　In December 2021, sales prices of commodity residential housing in 70 large and medium-sized cities continued the downward trend that began in the fourth quarter on a month-over-month basis, while year-on-year growth rates eased.
There are new changes to the annual corporate income tax final settlement and clearance.
Tax administration for corporate income tax continues to be streamlined: forms have been simplified, filing accuracy has improved, and preferential policies have been further refined. To ease the tax compliance burden on taxpayers and prevent the misappropriation of their funds, any overpayment or excess amount of prepaid corporate income tax will no longer be credited against the following year’s corporate income tax liability.
The Ministry of Justice and the Central Office for Spiritual Civilization have issued the Measures for the Administration of Legal Aid Volunteers.
Recently, the Ministry of Justice and the Central Office for Spiritual Civilization jointly issued the Measures for the Administration of Legal Aid Volunteers (hereinafter referred to as the “Measures”), which set forth provisions regarding the principles and scope of legal aid volunteer services, eligibility requirements, rights and obligations, service management, and incentive and保障 mechanisms.

Finance & Capital Markets
The China Securities Regulatory Commission rigorously investigates and prosecutes illegal activities by securities intermediaries in accordance with the law.
In recent years, guided by the overarching regulatory framework of serving the real economy and enhancing the quality of listed companies, the Commission has consistently implemented a “dual‑investigation” approach, rigorously, swiftly, and severely investigating, in accordance with the law, violations such as negligence and dereliction of duty by intermediary institutions underlying securities fraud and financial statement manipulation. Since 2019, the Commission has initiated investigations into 80 cases involving intermediary institutions, affecting 24 accounting offices, 8 securities companies, 7 asset appraisal agencies, 3 law offices, and 1 credit rating agency, covering key areas including equity issuance, annual report audits, asset acquisitions, and major asset restructurings. In 2021, the Commission filed 39 investigations into intermediary‑institution violations, more than doubling the number from the same period last year, and referred or notified public security authorities of leads in two cases.
Based on these cases, the relevant violations can be summarized as follows: First, there are serious deficiencies in risk identification and assessment procedures, with no further audit procedures designed or implemented to address material misstatement risks. For instance, some accounting offices failed to identify material misstatement risks related to cash balances when a company’s year-end cash balance was substantial, its deposit‑and‑loan levels were unusually high, and fraud risks were evident. Other offices did not maintain reasonable skepticism regarding abnormal circumstances—such as sharp fluctuations in production costs or frequent transfers of raw materials—and thus failed to conduct effective verification or to perform additional necessary audit procedures. Second, assurance and valuation procedures were inadequately or improperly performed; verification and validation amounted to mere formalities, and engagement reports were “tailor‑made.” Some accounting offices did not exercise effective control over the conofficeation process, and their physical inventory observation procedures were poorly executed. Meanwhile, certain asset‑valuation agencies issued appraisal reports based on values pre‑determined by the client, with the signing appraiser failing to carry out the appraisal procedures in practice. Third, professional judgments were unreasonable, resulting in expert opinions that deviated from fundamental professional standards. For example, some securities offices, acting as financial advisory service providers, disregarded the uncertainty surrounding project progress, leading to significant discrepancies between revenue forecasts and actual outcomes. Similarly, some law offices, when reviewing the validity of contracts, failed to fulfill their duty of heightened care and did not detect situations such as a company’s unauthorized disposal of assets. Fourth, there was a grave breach of professional ethics, with individuals colluding with or assisting companies in engaging in fraudulent practices. Certain practitioners cooperated with companies to intercept conofficeation requests and fabricate audit evidence. Meanwhile, some accounting offices, at the company’s request, pre‑agreed on the type of audit opinion and entered into “drawer agreements.” These violations highlight critical issues, including a lack of independence and professionalism among certain intermediary institutions and practitioners, inadequate quality‑control systems and management mechanisms, and a deficiency in professional skepticism coupled with a loss of ethical底线.
Ensuring that intermediary institutions fulfill their duties and responsibilities is a crucial step in enhancing the quality of information disclosure in the capital market. It serves as an essential foundation for preventing securities fraud and safeguarding investors’ legitimate rights and interests, and it is an indispensable requirement for deepening capital market reform and promoting high-quality development. Going forward, our Commission will resolutely implement the “Opinions on Strictly Cracking Down on Securities Law Violations in Accordance with the Law,” issued by the CPC Central Committee and the State Council, and, in line with a zero‑tolerance policy, strengthen the effective coordination among routine supervision, oversight inspections, and enforcement investigations. We will adhere to the principle of “dual investigation in each case,” fully leverage the powers conferred by the new Securities Law, and rigorously pursue the legal liabilities of intermediary institutions and their practitioners, thereby substantially raising the cost of violations. In this way, we will effectively urge these entities to perform their role as gatekeepers of the capital market and build a market operating framework centered on information disclosure.

The China Securities Regulatory Commission has publicly sought comments on the “Interim Provisions on the Supervision of Significant Money Market Funds (Draft for Comments).”
Recently, in order to enhance the regulation of significant money market funds and safeguard the legitimate rights and interests of fund unit holders, the China Securities Regulatory Commission has drafted the Interim Provisions on the Regulation of Significant Money Market Funds (Draft for Public Comment) (hereinafter referred to as the “Interim Provisions”), which is now being made public for public consultation.
The Provisional Regulations comprise five chapters and twenty articles, with the main provisions as follows: first, they define key money market funds and establish an assessment methodology to effectively identify such funds; second, they set forth additional regulatory requirements for key money market funds to enhance their risk resilience; and third, they delineate mechanisms for risk prevention and control, as well as supervisory oversight, applicable to key money market funds.
We welcome valuable feedback from all sectors of society on the Provisional Regulations. The China Securities Regulatory Commission will, based on the results of the public consultation, further refine the regulations and, after completing the relevant procedures, issue and implement them.

The China Securities Regulatory Commission has launched the delivery-versus-payment reform.
Today, the China Securities Regulatory Commission officially launched the Delivery versus Payment (DVP) reform and issued a public consultation on the proposed amendments to the Measures for the Administration of Securities Registration and Settlement. Concurrently, China Securities Depository & Clearing Corporation Limited is seeking public input on the Settlement Rules and the Measures for the Administration of Settlement Reserve Funds.
DVP is a fundamental settlement system widely adopted in international markets, ensuring the full and timely delivery of both securities and funds upon completion of a securities transaction. China’s Securities Law explicitly stipulates that when a securities registration and clearing institution provides net‑settlement services, it must require settlement participants to deliver securities and funds in full, in accordance with DVP principles, and to provide settlement guarantees. At present, China’s securities market has aligned its brokerage and margin‑financing/short‑selling activities involving individual investors with the DVP framework through mechanisms such as third‑party custody and pre‑trade verification of funds and securities. However, proprietary trading and custody activities involving institutional investors still lack a fully developed settlement regime. This reform, in line with the Securities Law and drawing on international best practices, establishes a linkage between securities settlement and cash settlement for proprietary and custody operations, and clarifies default‑handling procedures.
This reform largely preserves investors’ existing trading and settlement systems and practices, with no impact on the vast majority of individual investors. It strengthens the security of the settlement system at the institutional level and further attracts overseas capital into the Chinese market. At the same time, the reform lowers the minimum required ratio for settlement participants to deposit settlement reserve funds, helping to reduce overall market liquidity constraints and enhance capital efficiency.

Interpretation of the New Regulatory Requirements for “Giant” Money Market Funds: Public Consultation Draft
On January 14, in order to enhance the regulation of significant money market funds and safeguard the legitimate rights and interests of fund unit holders, the China Securities Regulatory Commission issued the “Interim Provisions on the Regulation of Significant Money Market Funds (Draft for Comments),” which clarifies the definition and assessment criteria for significant money market funds, as well as the additional regulatory requirements applicable to such funds and the mechanisms for risk prevention and oversight.
Industry insiders note that the forthcoming issuance of the Provisional Regulations does not imply that large-scale money market funds are inherently risky; rather, it reflects a proactive approach to risk prevention and underscores a forward-looking stance. The Regulations will help refine the regulatory framework and foster high-quality development in the critical money market fund sector as well as the broader public‑fund industry.
Clearly define and assess the scope.
Pursuant to Article 2 of the Provisional Regulations, a significant money market fund is defined as a money market fund whose asset size is substantial or which has a large number of investors and strong linkages with other financial institutions or financial products; should a material risk materialize, such a fund could have a significant adverse impact on the capital market and the financial system.
Article 4 of the Interim Provisions further clarifies the scope, criteria, and procedures for assessing significant money market funds: First, it stipulates that any individual fund that, over 20 consecutive trading days, meets either the criterion of having net asset size exceeding RMB 200 billion or the criterion of having more than 50 million investors shall be included in the assessment. Moreover, different money market funds managed by the same fund manager and sold through the same sales agency shall be combined for calculation purposes. Fund management companies are required to proactively report such cases to the China Securities Regulatory Commission within 10 working days.
Secondly, the China Securities Regulatory Commission will evaluate the nominated products, finalize the list, and make it publicly available. The evaluation criteria will primarily encompass four dimensions: size, degree of interconnectedness, substitutability, and complexity.
Third, for products that have failed to meet the aforementioned criteria in terms of scale and number of investors for three consecutive months, the CSRC may remove them from the list of significant money market funds.
Data show that, as of the end of the third quarter of 2021, a total of 18 fund management companies had aggregate AUM in money market funds exceeding RMB 200 billion. However, the Provisional Regulations stipulate that, for funds managed by the same fund manager, only those sold through the same sales institution will be eligible for consolidated aggregation.
Stricter and more prudent requirements are imposed on key money market funds.
The Provisional Regulations impose stricter and more prudent requirements—compared with those applicable to conventional funds—on the fund managers, custodians, and sales institutions of significant money market funds, covering aspects such as investment management philosophy, investment allocation, trading practices, scale control, subscription and redemption management, sales conduct, and the accrual of risk reserves.
With respect to investment management principles, the Provisional Regulations stipulate that, while adhering to a long-term, prudent operating and investment philosophy, fund management companies shall not engage in indiscriminate expansion of fund size. Furthermore, the performance evaluation, compensation, and incentive structures for senior management personnel and fund managers of fund management offices shall not be directly or indirectly linked to the size of the funds under their management.
With respect to internal management requirements, the Provisional Regulations stipulate that fund managers shall assign dedicated personnel to key positions in important money market funds, including investment research, trading, risk control, compliance, operations, and auditing. Such personnel must have at least three years of relevant professional experience, and there shall be no fewer than two fund managers for each such fund. Furthermore, both the fund manager and the fund custodian are required to establish disaster recovery systems at two or more application‑level sites.
With respect to investment metrics, the Provisional Regulations stipulate: the maximum holding ratio for any single investment asset is reduced from 10% to 5%; the cap on holdings of illiquid assets is lowered from 10% to 5%; the minimum allocation to cash‑like assets is raised from 5% to 20%, with a clear limit that time‑bound bank deposits may not exceed 50%; the leverage ratio ceiling is tightened from 120% to 10%, and the maximum remaining maturity is shortened from 120 days to 90 days. Furthermore, large money market funds with assets under management exceeding RMB 500 billion are prohibited from engaging in leveraged operations under normal market conditions, and their maximum remaining maturity is further capped at 60 days.
With respect to investor structure and scale management, the Provisional Regulations require prudent verification of large‑scale subscription applications to prevent a situation in which, following acceptance of a single investor’s subscription, that investor’s holdings exceed 5% of the fund’s total shares. If a single investor’s holdings exceed 5% of the fund’s total shares, the fund manager shall enter into binding arrangements with the relevant investor in advance regarding redemption activities, including, but not limited to, limiting daily net redemptions to no more than 5% of the fund’s total shares and deferring payment of a portion of redemption proceeds. Furthermore, large‑scale redemption requests must be reviewed and conofficeed prudently in accordance with applicable laws and regulations, and a report must be filed with the China Securities Regulatory Commission on the day such redemptions occur.
With respect to sales management, the Provisional Regulations stipulate that it is prohibited to unilaterally promote key money market funds by highlighting their size, market share, fund managers, historical performance, or ease of subscription and redemption, and it is also forbidden to implement discriminatory sales practices against other funds.
With respect to risk reserves, the fund manager and the custodian shall each set aside, on a monthly basis, risk reserves from the management fees and custody fees of significant money market funds at rates of no less than 40% and 20%, respectively. Fund sales institutions shall establish a risk reserve mechanism for significant money market funds, setting aside, on a monthly basis, risk reserves from all sales proceeds of such funds at a rate of no less than 20%.
Emphasize the balance between risk prevention and control and the supervision and management mechanism.
The Provisional Regulations clarify the risk prevention and control as well as the supervisory and administrative mechanisms for significant money market funds.
First, fund managers and other relevant market participants are required to jointly develop reasonable and effective risk‑response plans and make advance arrangements for risk‑management measures.
Second, it establishes a risk‑management task force mechanism for material risk scenarios and sets out the risk‑resolution responsibilities and requirements of market participants, including fund managers.
Third, it specifies the sources of funds available for disposal—such as the fund manager’s own capital, risk reserves, and major shareholders—in different circumstances.
When a major money market fund faces significant risks, the fund manager shall impose restrictions on the remuneration of directors, supervisors, and senior management, and shall refrain from granting bonuses or performance-based compensation to such individuals, distributing dividends to shareholders, extending new loans or guarantees to external parties, undertaking substantial investments, or permitting directors, supervisors, senior management, and other key responsible personnel to resign.
With respect to loss compensation and liquidity support, if the fund manager, fund custodian, or fund sales agency causes losses to the fund’s assets or to the legitimate rights and interests of fund unit holders due to violations of laws or regulations, breaches of the fund contract, operational errors, or technical malfunctions, and is legally liable for such losses, they may prioritize using risk reserves to provide compensation. With the approval of the China Securities Regulatory Commission, the risk reserves of fund managers, fund custodians, and fund sales agencies may also be utilized to support the liquidity of significant money market funds.
With respect to short-term financing arrangements, the fund manager shall enter into agreements with major shareholders, the fund custodian, and other relevant parties, stipulating that, in the event of large-scale redemptions or similar circumstances affecting a significant money market fund, short-term financing may be obtained within a specified limit through mechanisms such as repurchase agreements collateralized by securities.
Balancing and coordinating development with risk prevention.
According to data released by the Asset Management Association of China, as of November 2021, the total size of public mutual funds stood at RMB 25.32 trillion, with money market funds accounting for RMB 9.86 trillion—representing 38.94% of the overall public fund market. Money market funds are characterized by low investment thresholds, high safety, strong liquidity, and low transaction costs, and they serve over 500 million investors, making them a key public‑fund product that supports a broad investor base. Against this backdrop, the draft “Provisional Regulations” will help promote the high‑quality development of significant money market funds, further advance inclusive finance, and better support investors in managing their wealth.
According to a responsible official from the relevant department of the China Securities Regulatory Commission, the Provisional Regulations draw on international market experience and adopt an asset‑management‑product‑oriented approach, emphasizing the integration of macroprudential oversight with micro‑supervision. They help address regulatory gaps and further refine the regulatory framework.
Industry insiders note that the Provisional Regulations impose stricter and more prudent requirements on investment and operational metrics for significant money market funds, while emphasizing the reinforcement of institutional accountability and proactively implementing risk‑prevention measures. These provisions are conducive to enhancing the resilience of the industry, and the public fund sector will continue to prioritize stability while seeking progress, placing greater emphasis on striking a balanced approach between development and risk management.

Commercial & Corporate
National Bureau of Statistics: In December 2021, sales prices of commodity residential housing declined month-on-month, while the year-on-year growth rate eased.
In December 2021, sales prices of commodity residential properties in 70 large and medium-sized cities continued to decline on a month-over-month basis, following the downward trend that began in the fourth quarter, while year-on-year growth rates eased.
I. In first-tier cities, sales prices of new and existing residential properties recorded a month-on-month decline and increase, respectively, while in second- and third-tier cities, prices fell across the board.
According to calculations, in December, the sales prices of newly built commodity residential properties in first-tier cities turned from being flat month-on-month to a decline of 0.1%. Specifically, Beijing remained unchanged month-on-month, Shanghai rose by 0.4%, while Guangzhou and Shenzhen fell by 0.6% and 0.1%, respectively. Meanwhile, the sales prices of existing homes in first-tier cities reversed from a 0.2% month-on-month decline to a 0.1% increase. In particular, Beijing and Shanghai posted month-on-month gains of 0.8% and 0.4%, respectively, while Guangzhou and Shenzhen recorded declines of 0.3% and 0.4%, respectively. In second-tier cities, both new‑home and existing‑home sales prices declined by 0.3% month-on-month, with the rate of decline narrowing by 0.1 percentage point compared with the previous month. In third-tier cities, new‑home sales prices fell by 0.3% month-on-month, the same as the previous month, while existing‑home sales prices dropped by 0.5% month-on-month, a decline that widened by 0.1 percentage point from the prior month.
II. In first- and second-tier cities, the year-on-year growth rates of sales prices for both new and existing residential properties have declined; in third-tier cities, the year-on-year growth rate of new‑home sales prices has fallen, while that of existing‑home sales prices has remained unchanged.
According to calculations, in December, new‑home and existing‑home sales prices in first‑tier cities rose 4.4% and 5.3% year on year, respectively, with the growth rates declining by 0.4 and 0.5 percentage points from the previous month. In second‑tier cities, new‑home and existing‑home sales prices increased 2.8% and 1.5% year on year, respectively, both down 0.5 percentage points from the prior month. In third‑tier cities, new‑home prices rose 0.9% year on year, a deceleration of 0.5 percentage points from the previous month; meanwhile, existing‑home sales prices turned flat year on year, reversing last month’s 0.5% increase.

A Chinese R&D team has launched a “more sensitive” test kit that has been approved for market release, capable of accurately detecting the Delta and Omicron variants.
On the 15th, Tsinghua University announced that the novel coronavirus (2019-nCoV) nucleic acid detection kit (fluorescent PCR method), jointly developed by Professor Yong Guo’s team from the School of Medicine at Tsinghua University and Beijing Xinyi Biotechnology Co., Ltd. along with several other institutions, has officially received medical device approval from the National Medical Products Administration (NMPA).
According to reports, the new test kit significantly enhances detection sensitivity, thereby reducing the rate of false‑negative results. Moreover, this highly sensitive “COVID‑19 detector” reliably identifies all 15 of the most prevalent variants currently circulating worldwide, including the Delta and Omicron strains, with no instances of missed detections or off‑target binding.
Guo Yong explained that the new test kit employs digital PCR technology—the third generation of PCR—building on the earlier fluorescence quantitative PCR (the second generation) and incorporating microfluidic biochips to digitally quantify SARS‑CoV‑2 RNA. This approach significantly enhances the signal‑to‑noise ratio of nucleic acid testing, with a detection limit as low as 100 copies/mL.
He cited as an example that televisions in older households often suffered from “snow” on the screen, with blurry picture quality and poor stability. By contrast, modern LCD TVs no longer experience these issues, because they transmit digital rather than the earlier analog signals. Similarly, digital PCR can enhance the sensitivity and accuracy of nucleic acid testing—by the same principle.
According to reports, in response to the emergence of numerous SARS‑CoV‑2 variants, the research team has completed bioinformatic analyses of the corresponding variant sequences and conducted validation experiments on mutations that could potentially affect the performance of diagnostic assays.
In addition, the approved test kits are expected to play two important roles in clinical research: monitoring the clinical treatment of COVID‑19 patients and evaluating the efficacy of anti‑COVID‑19 drugs in clinical trials.
The newly approved test kit has received the first Class III medical device certificate from the National Medical Products Administration for COVID‑19 nucleic acid detection based on digital PCR technology, and it also represents the world’s first research achievement to be formally authorized—following review—for applying digital PCR to the COVID‑19 field. This milestone is seen as marking the localization and independent controllability of this technology. For the broader technological landscape, the official approval and market launch of a COVID‑19 nucleic acid test reagent leveraging digital PCR will help drive continuous innovation and rapid advancement in this field.

For the first time, exceeding 500 billion yuan, State Grid’s grid investment this year is set to reach a new record.
State Grid Corporation of China (hereinafter referred to as State Grid) has increased its grid investment for this year.
According to a source close to State Grid, the company held its annual work conference on January 13 and plans to invest 501.2 billion yuan in its power grid in 2022.
This marks the first time the company’s annual grid‑investment plan has exceeded RMB 500 billion, reaching a record high and representing an 8.84% year‑on‑year increase.
In 2020, State Grid Corporation of China invested RMB 460.5 billion in its power grid and pledged to allocate RMB 473 billion for grid investment in 2021.
According to information obtained by Interface News, State Grid Corporation of China’s grid infrastructure investment totaled RMB 402.48 billion in 2021.
Grid investment has long been a key driver of stable economic growth, and amid the vigorous development of new energy, the ultra-high-voltage grid continues to see growing demand.
According to a research report by Guorong Securities, the power grid is a critical component of counter-cyclical regulation. Coupled with challenges such as large-scale integration of new energy sources and shifts in the load structure, investment in the power‑grid sector is expected to accelerate.
Recently, citing sources familiar with the matter, it was reported that the state will launch a large-scale new round of ultra-high-voltage (UHV) grid construction this year, with all planned projects expected to receive approval. During the 14th Five-Year Plan period, State Grid Corporation plans to build UHV transmission lines—24 AC and 14 DC—with a total length exceeding 30,000 kilometers and a total investment of 380 billion yuan.
Among them, in 2022, State Grid plans to commence construction on a total of 13 UHV transmission lines—10 AC and 3 DC. This signifies that the UHV grid is set to enter a new phase of intensive development. Buoyed by this positive news, UHV‑related stocks experienced a sharp rally at one point.
During the 14th Five-Year Plan period, both State Grid Corporation of China and China Southern Power Grid Co., Ltd. (hereinafter referred to as China Southern Power Grid) plan to increase investment in the power grid.
Xin Bao’an, Chairman of the State Grid Corporation of China, stated that during the 14th Five-Year Plan period, the company plans to invest US$350 billion (approximately RMB 2.23 trillion).
China Southern Power Grid has announced that its “14th Five-Year Plan” for grid development will involve approximately RMB 670 billion in investment, a 36% increase compared with the “13th Five-Year Plan.”
Based on this calculation, the two major power grid companies’ grid investment during the 14th Five-Year Plan period will exceed RMB 2.9 trillion. This represents a 13% increase over the total national grid investment during the 13th Five-Year Plan and a 45% increase compared with the 12th Five-Year Plan period.
According to data from the National Energy Administration, from January to November 2021, nationwide grid‑related investment totaled RMB 410.2 billion, up 4.1% year on year.
As of now, China Southern Power Grid has not yet disclosed its grid investment plan for this year.
In 2014, State Grid Corporation of China entered a phase of large-scale grid investment. That year, construction officially commenced on the “Two AC and One DC” ultra-high-voltage projects, marking the beginning of a new stage characterized by comprehensive, large-scale UHV grid development and accelerated expansion. State Grid completed grid investments totaling RMB 338.5 billion, representing a 14.1% increase.
In 2015, to address the issues of wind, hydro, and solar energy curtailment, building power transmission channels became a top priority in grid development. That year, State Grid Corporation’s investment in its power grid reached RMB 420.2 billion, a year-on-year increase of 24%.
In 2016, State Grid Corporation of China’s grid investment reached a peak of RMB 497.7 billion, up 18.44% year on year, as it built a robust and smart power grid with ultra-high-voltage transmission as its backbone and coordinated development across all voltage levels, thereby enhancing its capacity to accommodate clean energy.
In 2017, the pace of China’s UHV infrastructure development slowed, with only two projects receiving approval that year, and State Grid Corporation’s grid investment also declined.
From 2017 to 2019, the State Grid Corporation of China’s actual grid investment totaled RMB 485.4 billion, RMB 488.9 billion, and RMB 447.4 billion, respectively.
In 2020, ultra-high-voltage (UHV) transmission emerged as one of the key investment priorities under the New Infrastructure strategy, prompting State Grid to increase its UHV investment and resulting in a corresponding rise in overall grid‑related capital expenditure that year.
State Grid Corporation of China was established in December 2002. With investment, construction, and operation of the power grid as its core business, it operates across 26 provinces, autonomous regions, and municipalities directly under the central government, serving 88% of China’s land area and more than 1.1 billion people.

Taxation TAXATATION
Tax incentives are boosting the quality and efficiency of integrated development in the Yangtze River Delta.
The Yangtze River Delta is China’s most economically dynamic, most open, and most innovation‑driven region, entrusted with a vital historical mission in advancing the new stage of development, implementing the new development philosophy, and forging a new development paradigm.
In recent years, the State Taxation Administration has coordinated and aligned the tax authorities across the Yangtze River Delta region, ensuring concerted efforts and synchronized progress. By continuously advancing integrated tax administration and streamlined tax‑filing procedures in the area, it has provided higher‑quality support for the region’s integrated development, helping to sustain steady economic growth while enhancing its quality.
Tax incentives empower market entities to innovate and develop.
In September 2021, the opening ceremony of the China–Israel CEO Cooperation Forum was held at the China–Israel (Shanghai) Innovation Park in Shanghai’s Putuo District, establishing a platform for senior executives from both countries to exchange ideas on technological innovation and further advancing China–Israel cooperation.
Mantis Vision Technology Co., Ltd. (hereinafter referred to as Mantis Vision) was among the first batch of companies to establish a presence in the China‑Israel (Shanghai) Innovation Park. “The early-stage development of an enterprise is inseparable from the support of regional policies and tax‑and‑fee incentives,” said Zhang Xiaofeng candidly. He added that concrete tax‑reduction measures have enabled the company to fully benefit from the dividends of the tax‑cut and fee‑reduction policies. In 2020, Mantis Vision took advantage of the policy on additional deduction for R&D expenses, securing an additional pre‑tax deduction of RMB 4.3 million. In 2021, with the policy further enhanced, the company received an advance deduction of over RMB 6.6 million in the third quarter. In addition, by benefiting from the VAT carryforward credit refund policy, it has already received more than RMB 1.4 million in refunds.
Mantis Vision is a microcosm of the tax authorities’ steadfast support for “innovation-driven growth.” In recent years, the policy of allowing an additional deduction for R&D expenses has become an effective tool for the state to bolster scientific and technological innovation. As tax incentives have grown increasingly robust, companies have gained greater confidence in pursuing R&D and driving innovation. “The funds we’ve received from these tax benefits will continue to be invested in core‑technology R&D—covering optics, hardware, software, and artificial‑intelligence algorithms,” said Zhang Xiaofeng.
Technological innovation not only injects momentum into the real economy but also effectively drives high-quality economic growth nationwide. Data show that over the past three years, enterprises in the Yangtze River Delta have steadily increased their investment in high‑tech services, with the share of such spending in total corporate expenditure rising from 3.8% in 2018 to 4.4% in 2021. Meanwhile, the region’s R&D and technology services trade accounted for 32.5% of the national total in 2021, up from 27.5% in 2018.
Taxation support measures bolster the integrated and coordinated development of the Yangtze River Delta.
A review by reporters reveals that, following the implementation of the Yangtze River Delta Integrated Development Strategy, the State Taxation Administration introduced 16 tax‑related support measures in November 2019 and, in 2020, rolled out an additional 10 measures to further support and serve the region’s integrated development, thereby establishing a “16+10” tax‑support framework. Benefiting from the establishment of a unified, open market with orderly competition in the Yangtze River Delta, the relevant localities swiftly reached consensus on cooperation, starting with vertical industrial integration and then expanding outward to horizontal regional integration.
From the perspective of vertical industrial integration between urban and rural areas, VAT invoice data show that county-level economies in the Yangtze River Delta have leveraged their locational advantages to actively participate in the region’s integrated development, with the share of sales revenue rising from 21.1% in 2018 to 23.6% in 2021. In this process, tax authorities have capitalized on their strengths to support the development of advanced manufacturing clusters—such as artificial intelligence, biopharmaceuticals, and integrated circuits—thereby fostering coordinated regional development under the banner of integration.
The Yangtze River Delta has achieved integrated vertical and horizontal connectivity, fostering a new landscape of comprehensive coordination. This has bolstered the development of the Hangzhou–Hefei Innovation Belt, facilitated interaction between the two national independent innovation demonstration zones in Hangzhou and Hefei–Wuhu–Bengbu, and jointly advanced the construction of the Nanjing–Hangzhou Ecological Economic Belt, thereby establishing an entrepreneurial ecosystem that is both rationally laid out and closely collaborative. Data show that the share of sales revenue from Zhejiang and Anhui in the Yangtze River Delta rose from 25.8% and 7.8%, respectively, in 2018 to 29.6% and 8.5% in 2021, with the gap between these two provinces and Shanghai and Jiangsu gradually narrowing.
Taxation Powers Bolster Higher‑Level Opening-Up in the Yangtze River Delta Region
The Yangtze River Delta has long been a vanguard of China’s opening-up, and it is one of the most open regions in the country.
On September 29, 2013, China’s first free trade zone—the Shanghai Pilot Free Trade Zone—was officially established, marking the beginning of a nationwide reform and experimentation initiative in the free trade zone framework. With the launch of construction of the Anhui Pilot Free Trade Zone in September 2020, the national strategic layout of free trade zones achieved full coverage of the Yangtze River Delta, giving rise to a new pattern of opening-up characterized by diversified development and vibrant innovation.
In the course of establishing pilot free trade zones, localities have taken the lead in conducting trials and experiments, giving rise to more than 200 innovative initiatives, many of which have since been rolled out nationwide. Among these efforts, the tax system—often a key focus of the experimental framework—has repeatedly introduced groundbreaking reforms, yielding a wealth of tangible results. At the same time, tax authorities across the Yangtze River Delta have proactively stepped up their efforts and provided front‑line support, helping to bolster the free trade zones and contributing to the realization of a higher‑level opening-up.
As a pioneer, the Shanghai Pilot Free Trade Zone has continuously refined its “single-window” system for business registration, introduced innovative tax policies such as installment payment of income tax on transfers of non-monetary assets and export‑port tax rebates, thereby laying a solid tax‑policy foundation for other free trade zones. In 2019, the Lingang New Area was established and committed to developing and implementing a tax regime and set of policies that are internationally competitive; the provision allowing certain enterprises to benefit from a preferential corporate income tax rate of 15% underscores its policy orientation toward fostering technological innovation and further opening up.
Against the backdrop of “accelerating the establishment of a new development pattern featuring domestic circulation as the mainstay and domestic and international circulations reinforcing each other,” the pilot free trade zones have become experimental platforms for China to explore and shape this new development paradigm. Meanwhile, taxation, as a key instrument on this high ground of reform and opening-up, is leveraging its strengths to help open the door to greater international engagement. Over the past three years, foreign-invested enterprises have shown an increasingly strong willingness to establish operations in the Yangtze River Delta, with the share of newly established foreign‑invested tax‑related market entities in the region rising from 22.1% of the national total in 2018 to 30.1% in 2021.
A relevant official from the State Taxation Administration stated that, driven by both tax and fee policies and high-quality services, the tax authorities will further integrate into the broader framework of integrated development, deliver integrated services, and advance integrated reforms, thereby unlocking the benefits of reform and amplifying policy advantages. In this way, they aim to leverage tax modernization in the new stage of development to support higher‑quality growth in the Yangtze River Delta region.
 
There are new changes to the annual corporate income tax final settlement and clearance.
Tax services for corporate income tax continue to be optimized: forms have been streamlined, filing accuracy has improved, and preferential policies have been further refined. To ease the tax compliance burden on taxpayers and prevent the tying up of their funds, any overpayment or excess amount of prepaid corporate income tax will no longer be credited against the following year’s corporate income tax liability. Starting with the 2021 annual corporate income tax final return and settlement, tax administration will become more convenient, and various tax‑benefit measures will reach market entities more precisely.
Recently, in order to further streamline corporate income tax administration and reduce the tax compliance burden on enterprises, the State Taxation Administration issued the “Announcement of the State Taxation Administration on Matters Relating to the Annual Corporate Income Tax Settlement and Finalization.” The Announcement applies to the annual corporate income tax settlement and finalization for 2021 and subsequent years, revising certain forms and their accompanying instructions, and optimizing the procedures for handling overpaid corporate income taxes.
What corporate income tax preferential policies are affected by this revision of the annual corporate income tax return?
According to reports, in support of the development of small and low-profit enterprises, the Ministry of Finance and the State Taxation Administration have clarified that, for the portion of a small and low-profit enterprise’s annual taxable income not exceeding RMB 1 million, corporate income tax will be levied at half the rate, in addition to the preferential policies stipulated in Article 2 of the “Notice of the Ministry of Finance and the State Taxation Administration on Implementing Universal Tax Relief Measures for Small and Micro Enterprises” (Cai Shui [2019] No. 13).
To encourage enterprises to increase R&D investment, the Ministry of Finance and the State Taxation Administration have clarified that, for manufacturing enterprises, R&D expenses actually incurred in R&D activities that are not capitalized as intangible assets and are instead expensed in the current period may, in addition to the standard actual‑expense deduction, be further subject to an additional pre‑tax deduction equal to 100% of the actual amount incurred, effective January 1, 2021. For expenses that result in the formation of intangible assets, a pre‑tax amortization allowance of 200% of the cost of such intangible assets will apply, also effective January 1, 2021.
With regard to supporting the high-quality development of integrated circuit and software enterprises, multiple departments have clarified the procedures for compiling lists of integrated circuit enterprises or projects and software enterprises eligible for tax preferential policies, as well as the eligibility criteria for enterprises and the project standards for such benefits.
With regard to promoting the development of venture capital, multiple departments have clarified that, for corporate‑type venture capital enterprises located within designated areas of Pudong New Area in Shanghai, if the portion of annual gains from equity transfers attributable to shares held for more than three years exceeds 50% of the total annual gains from such transfers, the enterprise income tax for the year shall be levied at half the rate, based on the individual shareholders’ shareholding ratios at year‑end. Similarly, if the portion of annual gains from equity transfers attributable to shares held for more than five years exceeds 50% of the total annual gains from such transfers, the enterprise income tax for the year shall be exempted, again calculated according to the individual shareholders’ shareholding ratios at year‑end.
In refining the catalog of corporate income tax incentives, multiple departments have previously updated the list of environmental protection, energy‑saving, and water‑conserving projects eligible for preferential corporate income tax treatment, as well as the standards for comprehensively utilized resources, products, and technologies.
To fully implement the aforementioned preferential policies and streamline reporting procedures, this Announcement revises certain forms and accompanying instructions in the “People’s Republic of China Corporate Income Tax Annual Return (Type A, 2017 Edition),” including the “Corporate Income Tax Annual Return Basic Information Form,” the “Details of Asset Depreciation, Amortization, and Tax Adjustments,” and the “Details of Exemptions, Reduced‑Inclusion Income, and Additional Deductions.” In addition, to further reduce the tax compliance burden on enterprises, the procedures for handling overpaid corporate income tax during annual final settlement have been optimized. Effective from the 2021 corporate income tax annual final settlement, if a taxpayer’s prepaid corporate income tax for the tax year exceeds the amount payable upon final settlement, such excess will no longer be credited against the taxpayer’s corporate income tax liability for the following year. Taxpayers are required to promptly file for a tax refund, and the competent tax authorities shall process such refunds in accordance with applicable regulations without delay.

Last year, the total amount of tax and fee reductions is expected to exceed one trillion yuan.
At the Chongli Ski Resort in Zhangjiakou, Hebei Province, one “heavyweight” machine stands out: a snow groomer developed by HBIS Group that climbs slopes and negotiates obstacles with ease. “It’s a suite of tax‑cut and fee‑reduction policies that has given us the confidence to move forward unburdened, supporting the construction of key Winter Olympics projects,” said Hu Zhigang, chief accountant of HBIS Group. Thanks to measures such as the additional deduction for R&D expenses and preferential tax rates for high‑tech enterprises, HBIS Group benefited from tax incentives totaling 392 million yuan in 2021.
“In 2021, the tax authorities coordinated efforts to implement tax and fee reductions while ensuring robust revenue collection, successfully fulfilling the revenue targets set in the budget. This helped further invigorate market entities and safeguard national fiscal capacity, with total new tax and fee cuts expected to exceed one trillion yuan for the year,” stated a leading official from the State Taxation Administration at the recently held National Tax Work Conference. From 2016 to 2021, cumulative new tax and fee reductions surpassed 8.6 trillion yuan, and the overall tax burden is projected to decline from 18.7% in 2012 to around 15.2% in 2021. Since 2021, tax and fee reduction policies have continued to deliver strong results, effectively easing the burden on businesses and providing relief to struggling enterprises.
— Tax and fee reductions have placed greater emphasis on stimulating the innovative vitality of market entities, with the policy on additional deductions for R&D expenses being “upgraded” twice, enabling enterprises to benefit from tax relief totaling 333.3 billion yuan in advance.
In 2021, manufacturing offices received a series of favorable policy measures: they were not only able to claim the enhanced R&D expense tax deduction for the first three quarters ahead of schedule, but the additional deduction rate was also raised to 100%. “In the fourth quarter of 2021, we were able to benefit from an advance R&D expense tax deduction totaling RMB 1.09 million, which has bolstered our confidence to ramp up R&D and production,” said Xie Jing, the finance director of Shenzhen Huisong Technology Development Co., Ltd.
— A “combined punch” of tax and fee reductions, along with tax and fee payment deferrals, is being deployed to ease the year-end liquidity pressures faced by market entities, with an estimated RMB 200 billion in deferred taxes and fees for small and medium-sized manufacturing enterprises.
Shijiazhuang Huajie Wood Industry Co., Ltd. is a “specialized, refined, distinctive, and innovative” enterprise that has long been dedicated to the R&D of wood-based panels. Recently, amid rising raw-material prices and other factors, the company faced temporary liquidity challenges. “The tax deferral policy has come as a great relief,” said Yang Yu, the company’s finance manager. “The approximately RMB 250,000 in taxes deferred will help us navigate this period of financial strain and achieve new growth in the new year.”
— A favorable tax‑related business environment has provided new enterprises with a strong sense of support; in 2021, the number of newly established market entities engaged in tax‑related activities is expected to reach approximately 13 million, up 13.6% year on year and 2.4 times the level recorded in 2012.
“New businesses need only log in to the Jianghan District Government Service Website of Wuhan, select the business registration application, and fill in the required information. They can receive an ‘opening‑up gift package’—including a business license and company seals—without leaving home, making the business‑registration process extremely convenient,” said Wen Yuanzhi, head of Wuhan Chunshi Yunjian Cultural Communication Co., Ltd.
A leading official from the State Taxation Administration stated that this year, it is essential to earnestly implement large-scale, phased, and package‑style tax and fee reduction policies, with particular emphasis on bolstering support for small and micro enterprises, individual business households, and the manufacturing sector. At the same time, close monitoring and analysis of policy implementation will be ensured—both by accurately calculating the benefits accruing to taxpayers and payers, continuing to expand the pilot program for delivering personalized tax‑and‑fee‑reduction benefit statements and gradually rolling it out nationwide, and by assessing the broader impact of these measures—so as to further enhance taxpayers’ and payers’ sense of gain and strengthen the overall effectiveness of the tax and fee reduction initiatives.

 
Litigation & Arbitration
The Ministry of Justice and the Central Office for Spiritual Civilization have issued the Measures for the Administration of Legal Aid Volunteers.
Recently, the Ministry of Justice and the Central Office for Spiritual Civilization jointly issued the Measures for the Administration of Legal Aid Volunteers (hereinafter referred to as the “Measures”), which set forth provisions regarding the principles and scope of legal aid volunteer services, eligibility requirements, rights and obligations, service management, and incentive and保障 mechanisms.
The Measures stipulate that legal aid volunteers are citizens who, upon arrangement by legal aid agencies and other relevant entities, provide legal aid and related services free of charge, drawing on their professional knowledge and skills. The scope of services provided by legal aid volunteers includes: offering legal advice; drafting legal documents on behalf of clients; conducting criminal defense and representation; representing clients in civil, administrative, and state compensation cases, both in litigation and through non-litigation channels; providing on‑call legal assistance as duty lawyers; and offering mediation and arbitration representation in labor dispute matters, among other legal aid services. They also render ancillary services such as translation into foreign languages or ethnic minority languages, and psychological counseling, to those receiving aid; provide barrier‑free services—including Braille and sign language interpretation—for eligible disabled beneficiaries; and support the fundraising for legal aid programs, while participating in publicity, training, theoretical research, and case‑quality assessment activities.
The Measures stipulate the entities providing legal aid volunteer services and their principal responsibilities, clarifying that legal aid institutions are responsible for organizing and implementing such volunteer activities. They may entrust public institutions and social organizations to recruit legal aid volunteers and carry out related volunteer work. Higher education institutions and research institutes may organize faculty members engaged in legal education and research, as well as law students, to serve as legal aid volunteers, providing, in accordance with the law, legal advice, drafting of legal documents, case representation, and mediation and arbitration representation in labor disputes to citizens experiencing financial hardship and other parties meeting statutory requirements. Trade unions, the Communist Youth League, the All-China Women’s Federation, the China Disabled Persons’ Federation, and other mass organizations that independently organize recruitment shall accept professional guidance from legal aid institutions, ensure that volunteers adhere to legal aid service standards, and maintain records of their activities.
The Measures strengthen safeguards for legal aid volunteers by stipulating that, when organizing special legal aid volunteer activities that may pose personal risks or last for one year or longer, the legal aid agencies and other recruiting entities shall enter into service agreements with the volunteers and arrange appropriate personal accident insurance. If, in the course of providing volunteer services, a legal aid volunteer suffers infringement of personal or property rights, the legal aid agencies and other recruiting entities shall provide necessary assistance and, in accordance with the law, safeguard the lawful rights and interests of the volunteer.
The Measures require judicial administrative organs to coordinate with relevant departments involved in legal aid volunteer services, establish and improve an incentive mechanism for such volunteer work, carry out publicity campaigns to promote legal aid volunteering, provide necessary funding, training, and facilities, and ensure that legal aid volunteers benefit from preferential policies and rewards in areas such as education and public services.
The issuance of these Measures represents a concrete step taken to implement the provisions of the Legal Aid Law that encourage and regulate the participation of social organizations in legal aid volunteer services. It is of great significance for expanding the supply of legal aid, promoting equal access to legal aid services, better meeting the growing demand for legal assistance in the new era, and safeguarding the legitimate rights and interests of vulnerable groups.

Notice of the Ministry of Justice on Issuing the Provisional Measures for the Withdrawal Management of Forensic Science Institutions and Forensic Experts
Ministry of Justice on the Issuance of
Notice on the Measures for the Withdrawal of Forensic Institutions and Forensic Experts (Trial)
(December 28, 2021, Judicial Regulation No. 5 of 2021)
To the Justice Departments (Bureaus) of all provinces, autonomous regions, and municipalities directly under the central government, and to the Justice Bureau of the Xinjiang Production and Construction Corps:
The “Administrative Measures for the Withdrawal of Forensic Institutions and Forensic Experts (Trial)” were reviewed and approved at the 17th Ministerial Office Meeting on December 22, 2021. They are hereby promulgated; please ensure their thorough implementation.
Administrative Measures for the Withdrawal of Forensic Science Institutions and Forensic Experts (Trial)
Chapter I General Provisions
Article 1: In order to strengthen oversight of forensic appraisal practice and to standardize the management of the withdrawal of forensic appraisal institutions and forensic appraisers, these Measures are formulated in accordance with the Administrative Licensing Law, the Administrative Penalty Law, the Decision of the Standing Committee of the National People’s Congress on Issues Concerning the Administration of Forensic Appraisals, the Measures for the Registration and Administration of Forensic Appraisal Institutions, the Measures for the Registration and Administration of Forensic Appraisers, and other relevant provisions.
Article 2: For the purposes of these Measures, the withdrawal of forensic appraisal institutions and forensic appraisers refers to the cancellation of their registration by the original judicial administrative authority that originally handled their registration, in accordance with the law, when such institutions or appraisers fall under any of the withdrawal circumstances stipulated herein.
Article 3: The withdrawal of forensic institutions and forensic experts shall be carried out in accordance with the statutory powers, scope, conditions, and procedures, and shall adhere to the principles of openness, fairness, and impartiality.
Article 4: Provincial judicial administrative organs shall establish and improve working mechanisms, and, in accordance with the law, promote the standardized and institutionalized withdrawal of forensic institutions and forensic experts, thereby fostering orderly competition and a survival-of-the-fittest dynamic within the forensic science sector.
Chapter 2: Circumstances and Procedures for Withdrawal
Article 5: If a forensic appraisal institution or a forensic appraiser falls under any of the following circumstances and the circumstances are serious, the original judicial administrative authority responsible for registration shall, in accordance with law, revoke its registration:
(1) Where serious negligence has caused substantial damage to the lawful rights and interests of the parties concerned;
(2) Providing false certification documents or employing other fraudulent means to obtain registration;
(3) A forensic appraisal institution falls under one of the circumstances specified in Article 39 of the Measures for the Registration and Administration of Forensic Appraisal Institutions, and such circumstances have resulted in serious consequences;
(4) Where a forensic expert falls under one of the circumstances specified in Article 29 of the Measures for the Administration of Registration of Forensic Experts and such circumstances have resulted in serious consequences;
(5) Where a forensic expert, having been duly notified by the people’s court in accordance with the law, refuses to appear in court to give testimony without any legally prescribed justification;
(6) Where a forensic expert intentionally issues a false opinion;
(7) Other circumstances prescribed by laws and administrative regulations.
Article 6: If a forensic appraisal institution or a forensic appraiser falls under any of the following circumstances, the original judicial administrative authority responsible for registration shall, in accordance with law, carry out the procedures for canceling the registration:
(1) Where a request is made in accordance with the law to terminate forensic appraisal activities;
(2) Where the validity period of the “Judicial Appraisal License” or the “Practicing Certificate for Judicial Appraisers” has expired and no application for renewal has been filed, or where such renewal has not been granted;
(3) Where a forensic appraisal institution voluntarily dissolves or ceases operations, or where changes in its registration particulars render it no longer compliant with the conditions for establishment;
(4) Where a forensic expert is unable to continue engaging in forensic expertise due to health-related reasons, such as loss of capacity or death;
(5) Where the forensic institution to which the forensic expert belongs has been deregistered or its registration has been revoked;
(6) Other circumstances prescribed by laws and regulations.
Article 7: If a forensic appraisal institution or a forensic appraiser falls under any of the following circumstances, the judicial administrative authority shall order it to make rectifications within a specified time limit and strengthen supervision:
(1) Having unilaterally suspended practice for more than one year without the consent of the judicial administrative authority;
(2) Those who, following a third-party competency assessment, are found to lack the requisite professional competence;
(3) Those whose judicial appraisal integrity rating is assessed as Grade D;
(4) Those who have been included on the list of seriously untrustworthy entities;
(5) Where a forensic appraisal institution, without justifiable reason, fails to arrange for its forensic appraisers to participate in continuing education and training; or where a forensic appraiser refuses to attend continuing education and training; or where the required number of training hours for the position has not been met;
(6) Failure to verify or calibrate measuring instruments and equipment in accordance with the prescribed requirements;
(7) Other circumstances exist that warrant enhanced regulatory oversight.
If, upon completion of rectification, a forensic appraisal institution is found through review to no longer meet the conditions for establishment, the original judicial administrative authority responsible for its registration shall, in accordance with the law, carry out the procedures for deregistration.
Article 8: When a judicial administrative organ revokes or cancels a registration, it shall issue a written decision stating the legal basis and the reasons therefor.
If a forensic appraisal institution or a forensic appraiser disagrees with the revocation or cancellation of its registration by the provincial judicial administrative authority, it may, in accordance with the law, apply for administrative reconsideration or file an administrative lawsuit.
Chapter 3: Supervision and Management
Article 9: When provincial-level judicial administrative organs lawfully process the cancellation registration procedures for forensic institutions and forensic experts, they shall promptly make relevant information public through their official websites and other appropriate channels, and notify the supervisory, investigative, procuratorial, and judicial authorities, as well as other relevant entities.
Article 10: Municipal-level judicial administrative organs shall fulfill their responsibilities for local supervision, strengthen routine oversight and management, conduct regular enforcement inspections, and obtain a comprehensive understanding of the personnel, premises, instruments, equipment, internal management, and practice of forensic science institutions.
Chapter IV Supplementary Provisions
Article 11: With respect to administrative actions such as revocation or cancellation covered by these Measures, implementation shall be in accordance with the Decision of the Standing Committee of the National People’s Congress on Issues Concerning the Administration of Forensic Expertise and other relevant provisions.
Article 12: Each provincial-level judicial administrative organ may, in light of local conditions, formulate implementing rules in accordance with these Measures.
Article 13: These Measures shall enter into force as of the date of their promulgation.

Supreme People’s Court: Strictly punish, in accordance with the law, unfair competition practices such as forced “choose one of two” and compulsory bundling.
Today, the Supreme People’s Court held a press conference to release the “Guiding Opinions on Fully Leveraging the Role of Judicial Functions to Support the Development of Small and Micro Enterprises.” The document outlines 20 specific measures aimed at fostering a market environment characterized by fair competition and honest business practices, thereby providing robust support for the growth of small and micro enterprises.
The Opinions propose strengthening the adjudication of antitrust and anti-unfair competition cases, and imposing strict legal penalties on monopolistic and unfair competitive practices such as forced “choose one of two,” predatory pricing, mandatory bundling, blocking and censorship, and fabricated orders and falsified reviews. They also call for legally recognizing and addressing operators’ abuse of data, algorithms, technology, capital advantages, and platform rules to exclude or restrict competition, thereby preventing disorderly capital expansion and safeguarding the space for the survival and development of small, medium, and micro enterprises.
It supports the protection of market entities’ autonomy in transactions and earnestly upholds the spirit of contract. Where a market entity in a dominant position enters into a manifestly unfair contract by taking advantage of the precarious situation or lack of judgment of small, medium, and micro enterprises, the courts shall, in accordance with the law, uphold the latter’s claim to rescind such contracts. In cases where the performance of a contract is rendered impossible for small, medium, and micro enterprises due to the pandemic or other factors, or where continued performance would be manifestly unfair to them, the courts shall, applying the doctrines of force majeure and change of circumstances and considering the specific facts of the case, fairly and lawfully order the exemption from or partial exemption of liability, or the modification or termination of the contract.
In the adjudication of cases, it is imperative to strictly distinguish between economic disputes and criminal offenses, and to prevent the mischaracterization of civil liability as criminal liability. In response to the practical issue whereby civil disputes arising between market entities—such as small, medium, and micro enterprises—and suspects or defendants in criminal cases cannot be resolved because the criminal proceedings impede the progress of the civil litigation and thereby hinder the protection of their civil rights, the Opinions stipulate that, unless otherwise provided by law or judicial interpretations, if a civil case does not necessarily depend on the outcome of the related criminal proceedings, it may not be refused acceptance or its proceedings suspended on the ground that the criminal case is still under investigation or has not yet been concluded.
The Opinions also propose establishing a “green channel” for handling cases involving the arrears of payments owed to small, medium, and micro enterprises. In accordance with the law, they seek to protect SMEs that have potential for rehabilitation; where such enterprises are unable to repay their debts due to liquidity constraints, all parties should be actively encouraged to reach enforcement settlement agreements providing for debt reduction or waiver and deferred payment, thereby creating the conditions necessary to alleviate their debt burdens and restore their production and operations.

The Supreme People’s Procuratorate and the Ministry of Justice have issued the Measures for the Selection and Appointment of People’s Supervisors.
　To further deepen the reform of the people’s supervisor system and standardize the selection and management of people’s supervisors, the Supreme People’s Procuratorate and the Ministry of Justice have revised the “Measures for the Selection and Management of People’s Supervisors,” which was promulgated in 2016, and recently issued the new “Measures for the Selection and Management of People’s Supervisors” (hereinafter referred to as the “New Measures”).
The new Measures, grounded in the institutional positioning of the people’s supervisors system, aim to build a corps of supervisors characterized by high political integrity, broad representativeness, and a solid grassroots foundation. Drawing on the experiences and practices of various localities, the Measures adopt a problem‑oriented approach, focusing on the key issues arising from adjustments to the people’s supervisors system and making corresponding revisions and improvements to ensure seamless coordination among the selection, management, and deployment of people’s supervisors.
A key change in the new Measures is that the scope of oversight by people’s supervisors has been expanded from the original focus on “cases” involving official‑duty crimes investigated by the procuratorial organs to encompass the procuratorial organs’ “case-handling activities” across the “four major types of prosecution” and the “ten major areas of work,” while also refining the hierarchical structure of supervision. Under the new Measures, people’s supervisors are categorized into two levels: those appointed by provincial-level procuratorates and those appointed by prefectural‑level procuratorates. Provincial‑level people’s supervisors oversee the case‑handling activities of their peer procuratorates, as well as those of their branch and dispatched procuratorates; prefectural‑level people’s supervisors oversee the case‑handling activities of their peer procuratorates and subordinate procuratorates. When provincial‑level procuratorates, their branches, or dispatched procuratorates organize supervisory activities, the provincial judicial administrative authorities select the relevant people’s supervisors. Similarly, when prefectural‑level and primary‑level procuratorates organize such activities, the corresponding prefectural‑level judicial administrative authorities carry out the selection. As for the Supreme People’s Procuratorate, it organizes supervisory activities and, in consultation with the Ministry of Justice, selects people’s supervisors from among those appointed by provincial‑level procuratorates.
The new Measures also align with the evolving trends of the people’s supervisors system and, based on practical considerations, have refined the specific provisions governing the selection and management of people’s supervisors, including requirements for appointment, methods of selection, and the issuance of public notices.

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