JC Master Legal News Issue 1005

Release Date:

2022-02-14 08:19

Key Takeaways for This Issue

The China Securities Regulatory Commission has issued the “Regulatory Provisions on the Interconnectivity of Depositary Receipt Business between Domestic and Foreign Stock Exchanges.”

Recently, the State Taxation Administration issued an announcement stating that from March 1 to June 30, it will conduct the annual individual income tax settlement for comprehensive income for the 2021 tax year.
Three departments have issued guidelines to strengthen administrative law enforcement in the regulation of off-campus training.
In order to thoroughly implement the spirit of the “Opinions of the CPC Central Committee and the State Council on Further Reducing the Homework Burden and Off‑Campus Training Burden of Students at the Compulsory Education Stage” and the “Implementation Outline for Building a Law-Based Government (2021–2025)” issued by the CPC Central Committee and the State Council, and to strengthen administrative law enforcement in the regulation of off‑campus training, the Ministry of Education, the Central Institution Organization Commission, and the Ministry of Justice recently jointly issued the “Opinions on Strengthening Educational Administrative Law Enforcement and Deepening Comprehensive Governance of Off‑Campus Training” (hereinafter referred to as the “Opinions”).

Finance & Capital Markets
The China Securities Regulatory Commission has issued the “Regulatory Provisions on the Interconnectivity of Depositary Receipt Business between Domestic and Foreign Stock Exchanges.”

To further facilitate cross-border investment and financing, promote the global allocation of production factors, and advance institutional opening-up of the capital market, the China Securities Regulatory Commission has revised the “Regulatory Provisions on the Interconnectivity of Depositary Receipt Business between the Shanghai Stock Exchange and the London Stock Exchange (Trial)” (CSRC Announcement [2018] No. 30). The revised document is now titled “Regulatory Provisions on the Interconnectivity of Depositary Receipt Business between Domestic and Foreign Stock Exchanges” and shall take effect from the date of its promulgation.
This revision primarily encompasses the following key elements: First, it broadens the scope of application—domestically, by including eligible listed companies on the Shenzhen Stock Exchange, and internationally, by extending coverage to Switzerland and Germany; second, it permits overseas issuers of underlying securities to raise capital and adopts a market‑based book‑building pricing mechanism; third, it refines ongoing regulatory arrangements, introducing more streamlined and flexible rules regarding annual report disclosure requirements and obligations to disclose changes in equity interests.
From December 17, 2021, to January 16, 2022, the China Securities Regulatory Commission publicly sought comments on the “Regulatory Provisions” and carefully reviewed, incorporated, and adopted the feedback received. Based on the consultation process, market participants generally responded positively to the proposed enhancements and refinements. Expanding and optimizing mechanisms for connectivity between domestic and international capital markets represents a pragmatic step toward institutional opening-up, helping to broaden two-way financing channels, enabling enterprises to leverage both domestic and international markets and resources in compliance with applicable laws and regulations, enhancing the ability of China’s capital markets to serve the real economy and strengthen their international competitiveness, and providing investors at home and abroad with a more diversified array of investment options.
Going forward, the China Securities Regulatory Commission and the Shanghai and Shenzhen Stock Exchanges will, in accordance with the Regulatory Provisions and other relevant frameworks, ensure robust service provision and regulatory oversight for the cross‑border depositary receipt business linking domestic and overseas exchanges, thereby leveraging high‑level opening-up to foster high‑quality development of the real economy.

Guide financial institutions to expand credit issuance and better meet legitimate housing demand.
On February 11, the People’s Bank of China released the “Report on the Implementation of China’s Monetary Policy in the Fourth Quarter of 2021” (hereinafter referred to as the “Report”).
The Report indicates that, in the next phase, a prudent monetary policy should be flexible and appropriately accommodative, with enhanced cross-cycle adjustments. It calls for fully leveraging both the aggregate and structural functions of monetary policy tools, emphasizing sufficient, targeted, and front-loaded policy efforts—while avoiding excessive liquidity injections and ensuring that the real economy’s reasonable and effective financing needs are met.
Guide financial institutions to effectively expand credit issuance.
In line with established practice, the Report analyzes the current domestic and international economic and financial conditions and outlines the policy framework for the next phase. With regard to monetary policy in the period ahead, the Report states that, on the one hand, it is necessary to ensure reasonable growth in money supply and credit. It calls for close monitoring of marginal changes in both domestic and global economic and financial conditions, strengthening surveillance and analysis of uncertainties such as fiscal revenues and expenditures, government bond issuance, cash injection and withdrawal, and monetary policy adjustments in major economies. Furthermore, it emphasizes the comprehensive use of a variety of monetary policy tools to maintain appropriately ample liquidity and guide market interest rates to fluctuate around policy rates. The Report also urges financial institutions to substantially expand credit extension, enhance the stability of overall credit growth, and ensure that the growth rates of the money supply and total social financing remain broadly aligned with nominal economic growth.
When analyzing credit allocation, the Report notes that in the second half of last year, downward pressure on the domestic economy led to a sharp slowdown in credit demand. In response, the central bank proactively guided financial institutions to enhance the stability of overall credit growth and carefully coordinated cross-year credit‑flow management. For the full year 2021, financial institutions extended RMB loans totaling 19.95 trillion yuan, an increase of 315 billion yuan year on year—building on the already high base of 2020—thereby maintaining stable overall credit growth. On a two-year average basis, M2 and aggregate social financing grew at rates of 9.5% and 11.8%, respectively, broadly matching—and slightly exceeding—the two-year average nominal economic growth rate.
On the other hand, we will continue to leverage the guiding and catalytic role of structural monetary policy tools. We will maintain the stability of relending and rediscount policies, and keep providing inclusive, sustained financial support to agriculture‑related entities, small and micro enterprises, and private enterprises, while encouraging financial institutions to increase credit allocation to regions where credit growth has been sluggish.
In the area of preventing and defusing financial risks, we will continue to adhere to the guiding principles of “safeguarding overall stability, ensuring coordinated planning, adopting tailored measures, and precisely defusing risks,” steadily and orderly managing risk resolution at key institutions, enhancing the effectiveness of regulatory coordination, and resolutely curbing any resurgence or recurrence of risks. We will ensure that all parties assume their respective responsibilities, establish and improve a fiscal‑financial risk‑resolution mechanism under the leadership of the principal officials of local Party and government bodies, and forge a concerted effort to address risks. Furthermore, we will refine the accountability framework for financial risks, rigorously hold those responsible for major financial risks accountable, and effectively guard against moral hazard.
Furthermore, with regard to future real estate financial policies, the Report states that it will officely uphold the principle that housing is for living in, not for speculation; refrain from using real estate as a short-term tool to stimulate the economy; maintain stable land prices, housing prices, and market expectations; effectively implement prudent management of real estate finance; strengthen financial support for the rental housing sector; safeguard the legitimate rights and interests of homebuyers; better meet reasonable housing needs; and promote the healthy development and virtuous cycle of the real estate market.
The maturity of monetary policy instruments should not be regarded as a factor affecting the liquidity of the banking system.
The Report analyzes banking system liquidity in the form of a special feature. At the end of 2021, the excess reserve ratio of financial institutions stood at 2.0%, reaching a year‑high, indicating that liquidity in the banking system remained reasonably ample. The Report notes that banking system liquidity primarily refers to the excess reserves held by financial institutions at the central bank. A range of factors influence China’s banking system liquidity, including cash in circulation, government deposits at the central bank, required reserve deposits, the central bank’s foreign‑asset holdings, and payment‑institution reserve deposits, among others.
The Report emphasizes that, when analyzing the liquidity situation of the banking system, it is advisable to focus on the central bank’s overall liquidity management framework rather than on isolated factors. It further cautions against simply summing up short-term and long-term influences to calculate liquidity surpluses or deficits, and warns against treating the maturity of monetary policy instruments as a determinant of banking‑system liquidity, thereby using such considerations to assess the degree of liquidity tightness or looseness.
“In fact, under the current liquidity‑management framework, the central bank conducts operations by closely monitoring market interest rates. Regardless of how various factors affecting banking‑system liquidity evolve, the central bank flexibly deploys a range of monetary policy tools to respond promptly, ensuring that liquidity remains reasonably ample. With respect to maturing monetary policy instruments, the central bank carefully calibrates the pace of maturities to implement cross‑cycle liquidity management, and, in light of prevailing conditions and policy needs, appropriately rolls over certain expiring tools to fully meet the market’s reasonable liquidity demands,” the Report states.
Accordingly, the Report underscores that, from a market perspective, the most direct, accurate, and timely indicator of liquidity conditions is market interest rates. Assessing the stance of monetary policy should therefore focus on policy rates such as the open-market operations rate and the Medium-term Lending Facility (MLF) rate, as well as the overall trend of market rates over a given period, rather than placing undue emphasis on quantitative metrics like the absolute level of liquidity or the scale of open-market operations.
The macro leverage ratio will continue to remain broadly stable.
Although the Report once again emphasizes the need to keep the macro leverage ratio stable in the next phase, it also notes in a special column that, since last year, China’s macro leverage ratio has remained broadly stable while trending downward, thereby creating room for the financial system to further bolster the real economy. It is expected that the macro leverage ratio will continue to remain broadly stable in 2022.
The macro leverage ratio is the ratio of a country’s total non-financial sector debt to its gross domestic product (GDP). Preliminary estimates indicate that at the end of 2021, China’s macro leverage ratio stood at 272.5%, down 7.7 percentage points from the end of the previous year. This marks the fifth consecutive quarter of decline, reflecting significant progress in stabilizing leverage.
By sector, at the end of 2021, the leverage ratio of China’s non-financial corporate sector stood at 153.7%, down 8.0 percentage points from the end of the previous year; the household sector’s leverage ratio was 72.2%, down 0.4 percentage points year-on-year; and the government sector’s leverage ratio was 46.6%, up 0.7 percentage points from the end of the previous year.
The Report emphasizes that, since the onset of the pandemic, China has supported a relatively rapid economic recovery and growth with comparatively modest increases in new debt, resulting in a relatively moderate rise in the macro leverage ratio. In 2021, the total debt stock grew by 9.7% year on year, a pace 2.7 percentage points lower than at the end of the previous year and at a historically low level—7.3 percentage points below the average annual growth rate of total debt observed from 2009 to 2019.
With regard to this year’s macro leverage ratio, the Report notes that, in recent years, the campaign to defuse financial risks has curbed the trend of shifting from the real economy to the virtual sector and of reckless expansion. Financial reforms have advanced steadily, and the efficiency and quality of financial services have improved. These measures have collectively enhanced the effectiveness of financial support for the real economy, helping China’s economy to recover and grow relatively quickly since the onset of the pandemic, even with a relatively modest increase in new debt. As a result, China’s macro leverage ratio has remained broadly stable while trending downward, creating room for the financial system to further bolster the real economy going forward. Meanwhile, with the epidemic under control and economic growth demonstrating growing resilience, conditions are also in place to maintain overall macro leverage stability in the period ahead.
“In the next phase, a prudent monetary policy should be flexible and appropriately accommodative, with stronger cross‑cycle adjustments to enhance the stability of aggregate credit growth. The growth rates of money supply and total social financing should remain broadly aligned with nominal economic growth; this ‘alignment’ mechanism itself inherently ensures that the macro leverage ratio remains broadly stable. As the economy continues to recover and endogenous growth drivers strengthen, China’s macro leverage ratio is expected to remain broadly stable in 2022,” the report stated.

The People’s Bank of China has issued the Administrative Measures for Bond Lending in the Interbank Bond Market.
　To standardize bond‑lending activities in the interbank bond market (hereinafter referred to as “bond lending”), protect the legitimate rights and interests of market participants, and enhance liquidity in the bond market, the People’s Bank of China has formulated the Measures for the Administration of Bond‑Lending Activities in the Interbank Bond Market (People’s Bank of China Announcement [2022] No. 1, hereinafter referred to as the “Measures”).
The Measures draw on the practical experience of mature international markets and are tailored to the needs of China’s financial market development. They refine the bond‑lending regime by addressing key areas such as market participants, collateral requirements, and master agreements, including provisions to support market participants in conducting centralized bond‑lending activities in a standardized manner, thereby enhancing the efficiency and flexibility of bond‑lending transactions. At the same time, to strengthen risk prevention, the Measures set forth specific requirements regarding reporting and disclosure of large‑value lending, risk monitoring, and self‑regulatory oversight.
The issuance of these Measures will help meet the diversified trading needs of market participants, enhance market makers’ position‑management capabilities, improve liquidity in the interbank bond market, and promote the deeper and healthier functioning of the financial market.

Shanghai Stock Exchange: This week, it imposed strict self-regulatory oversight, in accordance with regulations, on delisting-risk stocks *ST Xinyi and *ST Chengxing.
To promote the sound operation and high-quality development of the insurance industry, to better leverage the positive role of the Insurance Security Fund, and to safeguard the legitimate rights and interests of policyholders, the China Banking and Insurance Regulatory Commission, in consultation with the Ministry of Finance and the People’s Bank of China, has revised the “Administrative Measures on the Insurance Security Fund” promulgated and implemented in 2008, resulting in the “Administrative Measures on the Insurance Security Fund (Draft for Public Comment)” (hereinafter referred to as the “Measures”). Today, the draft is being made public for public comment.
The Measures have been revised in accordance with the following principles: First, adhering to the overarching principle of seeking progress while maintaining stability. Within the existing institutional framework, targeted amendments have been made to a small number of provisions that no longer align with risk prevention and high-quality development in the insurance sector. Second, adopting a problem‑oriented approach. In light of new circumstances and requirements, the measures aim to enhance the scientific soundness and reasonableness of fund‑premium rates, thereby strengthening the sustainability of the protection fund. Third, reinforcing management. The system for managing the insurance protection fund has been refined to further improve the efficiency of fund mobilization, utilization, and administration.
The Measures comprise seven chapters and 40 articles, covering general provisions, the Insurance Security Fund Company, the raising of the Insurance Security Fund, the use, administration, and supervision of the Insurance Security Fund, legal liabilities, and supplementary provisions. The principal amendments include: shifting from a fixed premium rate to a benchmark rate supplemented by risk‑based differential rates; establishing a mechanism for mutual support between the property insurance and life insurance security funds; and strengthening legal accountability for violations of the provisions of these Measures.
Going forward, the China Banking and Insurance Regulatory Commission, in coordination with the Ministry of Finance and the People’s Bank of China, will, based on the views and suggestions of all stakeholders, further revise and refine the Measures and promulgate them in accordance with established procedures.

Commercial & Corporate
Strengthen market regulation of the iron ore sector in accordance with the law and resolutely safeguard a fair market order.
In response to recent abnormal price fluctuations in the iron ore market, the National Development and Reform Commission and the State Administration for Market Regulation recently held joint talks with relevant iron ore information providers and will dispatch a joint research team to several commodity exchanges and key ports to conduct market‑regulation inspections of the iron ore sector. Furthermore, additional measures will be introduced to uphold normal market order. The implementation of these steps underscores the office stance and commitment of government market regulators to safeguard market order, curb speculative trading, and promote fairness, which will undoubtedly contribute positively to the stable operation and sound development of industrial and supply chains.
According to monitoring by the China Iron and Steel Association, recently some mining-related enterprises have violated business ethics by disseminating and hyping false information, thereby seriously disrupting market fairness and undermining the legitimate interests of market participants. The Association condemns such practices. Any behavior or actor that disregards market principles and unlawfully interferes with the normal functioning of the market must be rectified and held accountable.
A stable and orderly market serves the long-term interests of all stakeholders in the industrial chain and requires the concerted efforts of all parties to safeguard. Mining companies should conduct business with integrity and fulfill their contractual obligations on time; relevant trading offices must operate in compliance with the law, refraining from speculative price manipulation and hoarding; and steel producers should strengthen self-discipline, adhere to the principle of supply-demand balance, and carefully manage their procurement schedules. The China Iron and Steel Association will continue to work closely with the relevant government authorities to carry out market monitoring, further enhance analysis and research, and promote balanced development across the industrial chain and the stable functioning of the iron ore market.

Real estate lending got off to a strong start in January.
Today, reporters learned from financial regulators and several banks that real estate lending got off to a strong start in January, with new loan volumes rising further on the back of last quarter’s growth. It is estimated that new real estate loans totaled approximately RMB 600 billion in January, about RMB 300 billion more than the quarterly average in the fourth quarter. Of this, real estate development loans increased by roughly RMB 200 billion, while individual housing loans rose by around RMB 100 billion, reflecting continued improvement in financial institutions’ financing for real estate offices.
As February begins, banks in many regions continue to maintain the same “lenient” stance on individual mortgage loans as in January. According to reports from Caixin, banks in Beijing, Shanghai, Guangzhou, Shenzhen, and other cities indicate that mortgage disbursement is generally swift, with both approval and funding cycles averaging around one week. However, since it is still before the Lantern Festival, mortgage volume in the first week after the holiday remains modest, consistent with typical post‑holiday lending patterns.
Will the growth rate of mortgage lending continue to pick up in February? Some analysts believe that, influenced by the Lunar New Year holiday, the increase in mortgage loans may moderate somewhat. However, since the beginning of this year, 36 cities have introduced policies aimed at stabilizing the property market, and market expectations are likely to keep improving, suggesting that real‑estate‑related credit indicators could gradually rebound in the first half of the year.
In February, the overall “easing” trend in bank mortgage lending will persist.
Credit officers at numerous banks across multiple regions told Cailian Press reporters, “As long as all procedures are completed, the bank can disburse the loan.” From application through approval to disbursement, most of the banks surveyed said they can process the entire cycle within one to two months. On the interest-rate front, although mortgage rates have not been cut further since banks lowered them by 0.05 percentage points in late January—aligning with the reduction in the over‑5-year LPR—they remain at relatively low levels not seen in nearly a year.
However, due to the Lunar New Year holiday, the number of customers visiting branches to conduct business has been relatively low over the past week. “With the Lantern Festival still ahead, homebuyers aren’t rushing to apply for mortgages yet,” said the head of a personal‑loan department at a Shenzhen bank, adding that seasonal factors are one of the reasons for the subdued activity in the first week after the holiday. Another banking executive in Beijing’s credit division noted that real‑estate transaction volumes typically remain modest before the Spring Festival, so mortgage applications tend to be fewer in the post‑holiday period as well.
Wang Yifeng, chief analyst for the financial sector at Everbright Securities, stated that this year’s Lunar New Year falls at the end of January. Given weak sales earlier in the year and the repayment pressure on mortgage loans during the holiday period, mortgage loan growth in February may slow down.
Industry insiders note that, with 36 cities successively rolling out policies to stabilize the property market, market sentiment is likely to improve, and the real estate sector is expected to gradually stabilize in the first half of the year.
Mortgage rates in some regions may still have room to fall.
To better meet legitimate housing‑loan demand, will banks further ease both the volume and pricing of mortgage loans? Some argue that, amid supply‑demand imbalances, there is considerable room for mortgage rates to decline. However, others in the banking sector contend that additional rate cuts would have limited impact, as current rates are already quite low and banks have little leeway to lower them further.
Industry insiders note that, given the real estate sector’s sheer size and its extensive upstream and downstream supply chains, under a framework of differentiated regulation, most third- and fourth-tier cities—excluding the hotspots—can reap the benefits of subtle policy adjustments. As housing-market policies continue to be tailored to local conditions, bank loan rates in some smaller and medium-sized cities are expected to remain subject to further changes.
Wang Yifeng also believes that mortgage rates have considerable room to fall, and the extent of this decline may exceed the magnitude of the reduction in the over‑5-year LPR.
The Shenzhen Real Estate Agents Association recently released an analytical report noting that, despite declining interest rates and the relaxation of housing policies in many regions, the impact on Shenzhen may be limited. Based on the core principle of “housing is for living, not for speculation” articulated by central regulators, maintaining unwavering adherence to a steady and well‑calibrated regulatory framework—with Shenzhen serving as a pivotal point in the property market—can facilitate a gradual transition from “housing should not be used for speculation” to “housing should not dare to be speculated,” and ultimately to “housing should not want to be speculated.” Only then can a fundamental shift in market expectations be achieved.
A credit executive at a major state-owned bank in Shanghai also believes that, in hot-market regions, further interest-rate cuts are no longer sufficient to boost the growth rate of mortgage lending. In these cities, public perception of the real-estate market has largely converged: property is no longer seen as the optimal investment. Another banking industry insider added that current interest rates are already quite low, leaving little room for banks to lower them further.
However, the market believes that real estate credit policies are gradually stabilizing, and local governments, while adhering to the principle of “housing is for living, not for speculation,” are continuously fine-tuning their regulatory measures. This development should help anchor market expectations in the real estate sector.
Zhang Dawei, chief analyst at the Centaline Property Research Institute, believes that since January 2022, China has seen a flurry of real estate regulatory measures, with more than 70 policy announcements in total—30 of which were aimed at stabilizing the housing market. As these policies gradually take effect, particularly with the stabilization of credit conditions in the fourth quarter of 2021 and the consistent release of stability‑oriented signals by regulatory authorities, the real estate market is expected to stabilize and begin to recover.

How Should Real Estate Regulation Be “Eased”?
Real estate regulation has followed a clear, traceable trajectory. In the third quarter of 2021, regulatory measures reached their strictest phase in this cycle; since then, policies have gradually eased, though most adjustments have focused on the supply side. A comprehensive policy framework for supply‑side real estate regulation has been established, with policy intensity ranging from strongest to weakest across four key areas: down payment ratios, mortgage interest rates and loan limits, purchase‑restriction measures such as eligibility requirements, and transaction‑related taxes and fees. Real estate regulatory policies can be broadly categorized into demand‑side and supply‑side components. Demand‑side measures generally fall into four types—down payment ratios, mortgage rates and loan caps, purchase‑restriction policies like eligibility criteria, and transaction‑related taxes and fees—with policy stringency decreasing sequentially across these categories. Supply‑side policies primarily target land‑supply management, sources of real estate funding and financing channels, price controls and sales‑restriction mechanisms for newly listed properties, and the provision of affordable housing; however, their overall impact on the market remains limited. The third quarter of 2021 marked the peak of this round of tightening, and starting in the fourth quarter of 2021, regulatory measures began to ease slightly.
Outlook: The easing of regulatory measures is likely to continue until the end of this year at most, with policy initiatives primarily driven at the local level. These measures will mainly focus on modest reductions in mortgage rate add‑ons and slight relaxations of home‑purchase restrictions, while adjustments to down‑payment ratios remain to be seen. Real estate policies are expected to follow a “short‑term easing, long‑term tightening” pattern, with the current round of loosening probably lasting between six and twelve months. Given that this phase of economic stabilization still faces certain pressures—such as a slower-than-expected recovery in consumption and the continued need for investment to underpin growth—it is unlikely that the easing will last less than six months. At the same time, the likelihood of an easing period exceeding twelve months appears relatively low.
“One city, one policy” fine‑tuned regulation is likely to remain in place, with no major adjustments to home‑purchase restrictions—though some minor easing may occur. Given the divergence in housing prices between first‑tier and third‑ and fourth‑tier cities, the pressure on price controls varies significantly across the country; adopting a tailored, city‑specific approach helps maintain overall stability in the real estate market. At present, roughly 100 cities nationwide have implemented purchase‑restriction policies, which form the foundation for the current “one city, one policy” framework and are unlikely to undergo substantial changes. Among these, first‑tier cities and provincial capitals facing greater pricing pressures are expected to keep their measures in place, possibly introducing modest relaxations—such as easing talent‑recruitment policies or facilitating household registration for college graduates—to effectively loosen restrictions by other means. Meanwhile, second‑ and third‑tier cities may see slight loosening of these measures.
Mortgage lending limits and mortgage interest rates are likely to be the primary tools for easing policy, while the down-payment ratio remains uncertain. Adjusting the down-payment threshold would constitute a relatively bold policy move; a across-the-board reduction could trigger an overly rapid rise in housing prices. Likewise, policies governing the definition of second homes—closely tied to this issue—are not expected to be relaxed. Unless the property market fails to stabilize despite other supportive measures, the likelihood of adjusting the down-payment ratio appears low at this stage, and further developments will need to be monitored. We believe that demand-side mortgage support—such as local banks lowering the LPR add‑on spread and increasing public‑housing loan limits—will likely serve as the mainstay of this round of policy easing. With second-home eligibility rules remaining unchanged, measures to bolster home‑improvement demand may include tax and fee concessions.

Green Power, Renewables at Their Peak: Seize the Era’s Opportunities in the Pursuit of Carbon Neutrality
Against the backdrop of carbon neutrality, the power sector is poised for significant growth opportunities, with wind and solar energy serving as the clear overarching theme. According to the State Council’s guidelines, China’s share of non‑fossil fuel consumption is expected to reach approximately 20% by 2025, 25% by 2030, and over 80% by 2060. Photovoltaic and wind power will play pivotal roles in achieving the dual carbon goals. As the 14th Five-Year Plan period marks a critical phase in the transformation of the energy mix, investment in the power sector is likely to remain on an upward trajectory. Wind and solar are the definitive drivers under the carbon neutrality agenda; during this plan, China will prioritize the development of nine major clean energy bases and five offshore wind power hubs, with rural wind power capacity reaching 50 GW. Additionally, 676 counties have been designated as pilot areas for county‑wide rooftop distributed photovoltaic projects.
Under the dual constraints of primary energy consumption and carbon emissions, we project that cumulative wind power installed capacity will grow from 280 million kW in 2020 to 550 million kW by 2025, 840 million kW by 2030, and 2.01 billion kW by 2050, with a CAGR of 6.8% over the 2020–2050 period. Meanwhile, cumulative photovoltaic installed capacity is expected to increase from 250 million kW in 2020 to 710 million kW by 2025, 1.24 billion kW by 2030, and 3.06 billion kW by 2050, achieving a CAGR of 8.7% from 2020 to 2050.
The trend of cost reduction in the wind and solar sectors remains unchanged, with policy measures helping to lower financing costs. In wind power, driven by the ongoing trend toward larger turbine units, onshore wind has entered the grid‑parity era, with tender prices for turbines now as low as RMB 2,000 per kW (excluding towers). Meanwhile, offshore wind is gradually reaching parity; for a 680 MW offshore project in Zhejiang, the winning bid price was approximately 40%–50% lower than the average procurement price in 2020. The combined effects of turbine scaling, technological advances, and supply‑chain consolidation leave further room for cost reductions in wind energy going forward. In photovoltaics, recent upgrades in module technology and improvements in cell conversion efficiency have spurred rapid cost declines. By the end of 2021, domestic silicon‑material capacity had expanded by more than 100,000 tonnes, and the gradual commissioning of new capacity in the near term has helped ease elevated silicon prices. Looking ahead, the phased release of over 2 million tonnes of polysilicon capacity will further alleviate cost pressures, driving the levelized cost of electricity (LCOE) for solar PV down to between RMB 0.22 and RMB 0.46 per kWh by 2025. On the financing front, with the gradual implementation of carbon‑neutral bonds and carbon‑reduction support tools, financing costs for renewable‑energy operators continue to decline.
Demand for accommodating new energy is well‑secured, and green‑power trading premiums continue to rise. Non‑hydropower minimum consumption obligations are increasing annually across regions; in 2021, the national average was 13.38%, with the target for 2022 raised to 14.63%. The dual‑control energy policy grants exemptions for excess renewable‑energy consumption, further boosting demand for green power. The green‑power trading mechanism monetizes the environmental attributes of renewable electricity, with premiums having climbed from 0.03–0.05 yuan/kWh in the first batch of pilot transactions in September 2020, to 0.061 yuan/kWh in Zhejiang’s green‑power trades, and further to 0.072 yuan/kWh in Jiangsu’s annual auctions in 2022. In January 2022, the National Development and Reform Commission and other agencies issued the “Implementation Plan for Promoting Green Consumption,” emphasizing closer coordination between green‑power trading and carbon‑emissions‑rights trading, thereby clarifying and strengthening demand for green electricity. Based on a carbon‑trading price of 50–60 yuan per ton, the current green‑power premium stands at approximately 0.05 yuan/kWh. According to IMF projections, carbon prices could reach US$75 per ton or higher by 2030; accordingly, China’s green‑power premium could expand to as much as 0.36 yuan/kWh by that year.
Electricity price reforms are accelerating, and thermal power generation profits are expected to revert to their public‑utility nature. The market‑based reform of electricity pricing is gaining momentum, with the allowable upward adjustment range expanded to 20% and the pricing mechanism becoming more flexible.
In the 2022 annual long-term contract transactions, the transaction price for Jiangsu thermal power rose by 19.4% compared with the benchmark, while Shaanxi’s bilateral negotiated prices were increased to the maximum allowable level of 20%. In addition, electricity pricing reforms call for abolishing the catalog‑based tariff system for industrial and commercial users, with “promoting the full participation of industrial and commercial consumers in the market” as a key reform measure. As industrial and commercial users enter the downstream market, power companies’ bargaining power has further strengthened.
In December 2021, a policy was introduced to price 100% of coal under long-term contracts, signaling a continued strengthening of measures to ensure coal supply. This effectively resolved the tug-of-war between coal and power producers, restoring stability to the electricity‑coal price spread. As the linkage between coal prices and electricity tariffs grows ever tighter, thermal power generation is poised to revert to its public‑utility character, heralding an imminent reshaping of the valuation framework.
Industry Rating and Investment Strategy: We are optimistic about investment opportunities in the power sector. Thermal power is expected to benefit from valuation reversion and the growth prospects driven by the transition to new energy, while new‑energy operators are poised for both volume and price increases. We assign an “Outperform” rating to the sector.
　

Taxation TAXATATION
Providing policy support tailored to the needs of market entities.
General Secretary Xi Jinping emphasized: “Market entities are the carriers of economic strength; safeguarding market entities means safeguarding social productivity.” By doing everything possible to protect market entities, we can build a solid foundation for economic development. Continuing to implement the “Six Stabilities” and “Six Guarantees” initiatives and keeping the economy operating within an appropriate range both hinge on effectively protecting market entities.
The Central Economic Work Conference held at the end of last year stated: “We will continue to implement new tax and fee reductions targeted at market entities, helping them—especially small, medium, and micro enterprises and individual business households—to ease their burdens, overcome difficulties, and resume growth.” In January this year, a symposium on tax and fee reductions was convened to solicit opinions and suggestions on further measures to lower taxes and fees for market players. From refining the policy of additional deductions for R&D expenses, to expanding the scope and scale of VAT credit refunds, to introducing new support for a group of nationally recognized “Little Giant” enterprises specializing in niche markets, a series of policies aimed at relieving burdens and bolstering market entities have been steadily advanced, with greater efforts to lighten the load on businesses and invigorate their vitality.
The green mountains remain, and vitality abounds. In 2021 alone, new tax and fee reductions totaled approximately RMB 1.1 trillion, while cumulative cuts since the start of the 13th Five-Year Plan have exceeded RMB 8.6 trillion. The overall tax burden is projected to decline from 18.7% in 2012 to around 15.2% in 2021. While curbing government spending, these measures have provided relief to market entities and, in tandem with reforms such as “delegation, regulation, and service,” have further energized the business sector, boosted consumption and effective investment, and helped achieve stable growth, job creation, and inflation control. Tax and fee reductions have spurred the emergence of a large number of market players; today, China’s total number of market entities has surpassed 150 million, and tax payments by newly established businesses have risen year after year, fostering a virtuous cycle of “providing water to nurture fish” and “more water, more fish.” Experience has shown that tax and fee reductions are the most broadly beneficial policy for enterprises, playing a pivotal role in addressing difficulties and challenges and keeping economic activity within an appropriate range.
Faced with the triple pressures of shrinking demand, supply shocks, and weakening expectations, achieving stable economic development while making progress requires prioritizing stability. The key lies in bolstering market entities by introducing a new, more robust package of tax and fee reductions tailored to their needs, thereby providing policy support to help them navigate these challenges. This includes extending the tax and fee relief measures that expired at the end of 2021 for small and micro enterprises and individual business households; refining the policy of additional R&D expense deductions; and stepping up the refund of outstanding VAT credits to spur technological innovation and modernization among manufacturing offices. For particularly hard-hit sectors—such as services, which are both heavily affected by the pandemic and have substantial employment capacity—targeted tax and fee relief measures are being studied. These policies strike a balance between precision and coordination, pooling resources to deliver targeted assistance and playing a crucial role in ensuring a steady start to the first quarter and maintaining macroeconomic stability.
Clear and robust policy measures have provided much‑needed reassurance to hundreds of millions of market entities. At the same time, it is important to recognize that, beyond tax and fee reductions, we must deepen the “delegation, regulation, and service” reform with even greater vigor, fostering a business environment that is more market‑oriented, rule‑of‑law based, and internationally competitive. By further establishing an institutional framework that is fair, transparent, and characterized by stable expectations, and by removing various hidden costs and regulatory barriers, we can create a level playing field for all types of market entities, thereby cultivating fertile ground and generating endogenous momentum for their growth and expansion. In turn, this will continuously enhance the attractiveness, creativity, and competitiveness of China’s economy.
When market entities are vibrant, the market economy gains momentum. As the “cells” of China’s economic system, the hundreds of millions of market players are the primary participants in economic activity, the main providers of employment, and the key drivers of technological progress—making them a crucial force for maintaining macroeconomic stability. By heeding the voices of market entities and addressing their needs, by ensuring close coordination between macro policies and micro‑level actors, and by enabling businesses to operate with greater agility and dynamism, we can further unleash market vitality and creativity, thereby supporting China’s economy in achieving steady and sustainable growth.

The 2021 annual individual income tax settlement for comprehensive income will begin next month.
Available 24/7, all year round, within 4 months.
Recently, the State Taxation Administration issued an announcement stating that from March 1 to June 30, it will conduct the annual individual income tax settlement for comprehensive income for the 2021 tax year.
It is reported that the 2021 annual tax settlement period spans four months and is available around the clock, allowing taxpayers ample time to file. There is no need to rush and crowd into the final few days. If taxpayers wish to complete their annual tax settlement between March 1 and March 15, they can make an appointment by logging into the Individual Income Tax mobile app between 6:00 a.m. and 10:00 p.m. each day from February 16 to March 15. The appointment process is very straightforward, and the relevant feature will go live on February 16, with an accompanying user guide released at the same time.
“Taxpayers who were unable to secure an appointment need not worry; they may proceed without one and, after March 16, simply log in to the Individual Income Tax mobile app or the web portal to file their annual tax settlement. Should taxpayers face an urgent situation and still be unable to book a suitable appointment, they may also visit the tax service hall of their competent tax authority to complete the procedure directly,” said a spokesperson from the State Taxation Administration.
It is understood that, to guide taxpayers through the annual tax reconciliation in a reasonable and orderly manner and enhance their experience, the tax authorities will notify taxpayers in batches and phases, specifying particular time windows for processing. If your employer has already communicated a specific deadline, we recommend completing the procedure within that timeframe to ensure access to high-quality taxpayer services. Should you need to file during the early phase of the reconciliation period (March 1–15), you may also use the Individual Income Tax App on your mobile device to book an appointment.

Further Efforts to Cut Taxes and Fees
According to a report by China National Radio’s “News Across the Country,” taxes and fees constitute one of the major costs of business operations, and tax and fee reductions are crucial policy tools for fostering enterprise development and boosting the vitality of market entities. In 2021, China introduced approximately RMB 1.1 trillion in new tax and fee cuts, with the benefits of these policies continuing to unfold and providing strong support for the sustained and steady recovery of the national economy. As 2022 approaches, how will tax and fee reduction measures be further advanced, and can they inject additional momentum into market players? In its special series “Bringing Forth New Momentum with Vigor,” China National Radio presents this installment: “Reinforcing Tax and Fee Reductions.”
Last September, the State Taxation Administration issued an announcement allowing enterprises to voluntarily opt to claim the preferential policy of additional tax deductions for R&D expenses incurred in the first three quarters ahead of schedule. Immediately following the policy’s introduction, the Nantong tax authorities in Jiangsu Province proactively engaged with local “specialized, refined, distinctive, and innovative” enterprises, helping them benefit from the R&D expense additional deduction.
One of the beneficiary companies is a certain energy office in Nantong, Jiangsu. According to Wang Shaoqi, the company’s chief financial officer, “The new policy on the additional deduction for R&D expenses has saved us RMB 15 million in taxes and fees, accounting for roughly 20% of our total annual R&D investment.”
Like this company, many enterprises benefited last year from favorable tax and fee reduction policies. According to statistical data, in 2021 China’s cumulative new tax and fee reductions totaled approximately RMB 1.1 trillion. Nationwide, 320,000 enterprises took early advantage of the policy on additional deductions for R&D expenses, receiving tax relief amounting to RMB 333.3 billion. Among them, 186,000 manufacturing offices enjoyed tax reductions and exemptions totaling RMB 225.9 billion.
At present, China’s economic development is under triple pressure—shrinking demand, supply shocks, and weakening expectations. Businesses are placing greater hopes on tax and fee reduction policies. So how will these measures be further advanced this year?
The Central Economic Work Conference made it clear that new tax and fee reduction policies will be implemented in 2022. This important decision underscores the central government’s strong commitment to safeguarding market entities. Vice Minister of Finance Xu Hongcai previously stated that the more than 100 million market entities are the source of China’s economic resilience and serve as a crucial foundation for stabilizing the economy. In 2022, China will roll out a new, more robust package of tax and fee cuts. “We will focus on high-quality development in the manufacturing sector, fostering technological innovation and upgrading among enterprises. We will increase the scale of VAT credit refunds, refine the policy of additional deductions for R&D expenses, encourage investment in equipment renewal and technological transformation by manufacturing offices, and drive industrial restructuring and upgrading. We will also prioritize small and micro businesses and individual business households, helping market entities accelerate growth and boost vitality. We will extend the tax and fee relief measures that expired at the end of 2021, further easing the operational pressures faced by small and micro enterprises,” said Xu Hongcai.
Regarding this year’s package‑style, large‑scale tax and fee reduction policies, Cai Zili, Director-General of the Revenue Planning and Accounting Department of the State Taxation Administration, stated that the tax authorities will also implement a series of effective measures to ensure thorough and meticulous policy implementation. Cai Zili explained: “We will further refine the policy‑tagging system, precisely identify taxpayers and payers who meet the eligibility criteria for preferential policies, and deliver timely, targeted information on a ‘point‑to‑point’ and ‘one‑on‑one’ basis, ensuring that all tax and fee relief measures are fully and effectively put into practice. We will continue to expand the pilot program for issuing ‘dividend statements’ on tax and fee reductions, thereby further enhancing taxpayers’ and payers’ sense of gain from these measures.”
Tax and fee reductions ease the burden on market entities, but they also put greater pressure on government revenues. How can these policies be delivered directly to the grassroots level to prevent arbitrary levies? Xu Hongcai stated that the focus will be on bolstering local fiscal capacity to ensure the effective implementation of tax and fee cuts. “The central government will continue to increase transfer payments to local governments, channeling financial resources down to the city and county levels to prevent local authorities from compromising on tax and fee reductions due to insufficient funds,” Xu Hongcai said.
The tax authorities will also strengthen oversight and inspection of the implementation of tax and fee reductions. Wang Daoshu, Deputy Director of the State Taxation Administration, made it clear that tax and fee revenues must be collected in strict accordance with laws and regulations, and that “excessive” taxes and fees will not be imposed under any circumstances. Wang Daoshu stated: “All tax authorities at every level are required to adhere to lawful and regulatory collection of taxes and fees; they must not impose taxes or fees in violation of rules or ahead of schedule, nor delay or dilute the implementation of tax and fee reduction measures, and they must not infringe upon the legitimate rights and interests of taxpayers and payers. Any cases of levying ‘excessive’ taxes and fees or failing to adequately implement tax and fee reduction policies will be promptly rectified and investigated as soon as they are discovered—there will be zero tolerance in this regard.”
Meanwhile, the tax authorities will also make full use of tax‑related big data to rigorously track and analyze the implementation of policies and their impact on economic development, ensuring that the full potential of these measures is realized.
In addition, in the face of an unstable and uncertain global trade environment, tax and fee reductions remain a key lever for stabilizing foreign trade. The tangible fiscal benefits of these measures in 2022 will also enhance the ability of foreign‑trade enterprises to withstand international trade risks. Huang Yun, Director of the General Office and Spokesperson of the State Taxation Administration, stated: “In 2022, the tax authorities will earnestly implement all policies and measures—particularly those aimed at reducing taxes and fees—to support stable foreign trade. At the same time, we will work with relevant departments to study and introduce additional measures to further streamline export‑tax rebate procedures, continue to accelerate the processing of export tax refunds, and keep supporting the development of new forms and models of foreign trade, such as cross‑border e‑commerce, thereby contributing the tax sector’s strength to advancing higher‑level opening-up.”
Zhang Lianqi, vice president of the China Tax Institute, stated that, building on the sustained, high‑intensity tax and fee reductions of recent years, this year’s “even more robust” measures will undoubtedly provide stronger support to market entities and the real economy, helping to stabilize market expectations and boost confidence. These enhanced measures will also deliver tangible, concrete benefits. “Small, medium, and micro enterprises—and the manufacturing sector—are the lifeblood of China’s economy,” Zhang said. “Only when these businesses are stable can the Chinese economy remain stable. That is why tax and fee cuts are essential, and they must be implemented with real substance and practical impact. Overall, in 2022 we will continue to roll out large‑scale, comprehensive tax and fee reduction policies, ensuring that China’s economy progresses steadily and sustainably.”

Litigation & Arbitration
The Supreme People’s Procuratorate has issued a notice to strengthen public interest litigation in the areas of state property and land resources, aiming to achieve full coverage of case handling at the municipal-level procuratorates.
The Supreme People’s Procuratorate has issued a notice requiring the strengthening of public interest litigation work in the areas of state‑owned property protection and the transfer of state‑owned land use rights.
Achieving the “National Finance and Territorial Integrity” domain
Full coverage of case handling at the municipal level.
Recently, the Eighth Procuratorial Office of the Supreme People’s Procuratorate issued the “Notice on Strengthening Public Interest Litigation Work in the Areas of State Property Protection and the Transfer of State Land Use Rights” (hereinafter referred to as the “Notice”), mandating full coverage of case handling at the municipal-level procuratorates in the “state property and state land” domain. This measure aims to better leverage the functions of public interest litigation, safeguard state property, and support and ensure the overall economic and social development agenda.
The Notice emphasizes the need to bear in mind the overarching interests of the nation and to strengthen a sense of responsibility and mission in carrying out public interest litigation work in the areas of state property and national territory. At present, illegal activities in certain sectors and industries continue to result in significant losses of state-owned assets, highlighting gaps in the administrative oversight systems and mechanisms in these fields. It is essential to recognize the importance of this work from the perspective of reinforcing legal supervision, upholding fairness and justice, improving national governance, and promoting common prosperity for all the people.
The Notice emphasizes the need to focus on the overarching priorities of the Party and the state, as well as pressing issues of public concern, by intensifying case handling and achieving full coverage at the municipal-level procuratorates. In the area of state‑owned property protection, this includes cases involving the fraudulent misappropriation or unauthorized receipt of funds earmarked for major project construction, fiscal subsidies benefiting the people and agriculture, pension funds, medical insurance funds, and research grants, as well as instances—widely reported by the public—of enterprises and individuals evading taxes and encroaching upon state‑owned assets. In the field of state‑land‑use‑right transfers, priority should be given to strengthening oversight of failures to adequately regulate such unlawful practices as malicious arrears in land‑transfer payments, prolonged underutilization of land, and construction carried out without prior approval. Local authorities are urged to take proactive measures, conduct thorough investigations, respond vigorously, and strive for breakthroughs, ensuring steady growth in the scale of case handling. Drawing on local conditions, they may launch targeted supervisory campaigns addressing particularly salient sectors and matters, thereby advancing systemic and root‑cause‑based governance. This year, every municipal‑level procuratorate nationwide is required to directly initiate and handle at least one case in each of these two areas, while also taking the lead in, or providing oversight for, several landmark public interest litigation cases related to “state property and land.” Provincial‑level procuratorates are expected to step up their guidance and coordinate overall organization and command.
The Notice requires the adoption of effective measures to strive for improved quality and efficiency in public interest litigation. It emphasizes adherence to the principle of being both proactive and prudent, prioritizing the enhancement of case-handling quality and effectiveness. Through the adjudication of individual cases, attention should be paid to identifying systemic issues, thereby advancing governance in specific categories of matters, particular industries, or defined sectors. Furthermore, the integrated case-handling mechanism must be refined, with strict implementation of the reporting and consultation system, and active efforts made to secure leadership and support from Party committees and people’s congresses. Upholding the philosophy of win‑win and multi‑win outcomes, coordination with relevant administrative agencies should be strengthened, and collaborative mechanisms established with auditing authorities, disciplinary inspection and supervision bodies, and other related institutions. Finally, the strategy of leveraging big data to empower legal oversight should be vigorously implemented, elevating the level of informationization in case handling, intensifying learning and research, and enhancing the capacity and competence of public interest litigation in the areas of state property and land resources.

Three departments have issued guidelines to strengthen administrative law enforcement in the regulation of off-campus training.
In order to thoroughly implement the spirit of the “Opinions of the CPC Central Committee and the State Council on Further Reducing the Homework Burden and Off‑Campus Training Burden of Students at the Compulsory Education Stage” and the “Implementation Outline for Building a Law-Based Government (2021–2025)” issued by the CPC Central Committee and the State Council, and to strengthen administrative law enforcement in the regulation of off‑campus training, the Ministry of Education, the Central Institution Organization Commission, and the Ministry of Justice recently jointly issued the “Opinions on Strengthening Educational Administrative Law Enforcement and Deepening Comprehensive Governance of Off‑Campus Training” (hereinafter referred to as the “Opinions”).
The Opinions state that administrative law enforcement for the regulation of off-campus training is a statutory duty of education administrative departments at all levels in performing their governmental functions related to off-campus training. It calls for accelerating the establishment of an enforcement system characterized by clear powers and responsibilities, standardized management, smooth operations, robust safeguards, and effective oversight, so as to comprehensively enhance the quality and effectiveness of administrative law enforcement in this area, rigorously investigate and prosecute illegal and non-compliant activities in off-campus training in accordance with the law, ensure the solid and effective implementation of the “double reduction” policy, and strive to deliver education that meets the expectations of the people.
The Opinions emphasize the need to improve the existing mechanism of joint law enforcement among various departments under the leadership of Party committees and governments, clearly defining responsibilities, ensuring each department performs its own duties, fostering division of labor and cooperation, and promoting coordinated and concerted efforts across different levels, among peers, and between geographically distant jurisdictions. Market regulation, cyberspace administration, public security, sports, culture and tourism, as well as other relevant departments, shall, within their respective areas of responsibility, conduct either individual or joint oversight of issues related to off-campus training.
The Opinions clearly stipulate that the education administrative departments must strengthen their administrative law enforcement responsibilities for overseeing off-campus training, and effectively enhance their awareness and capacity to conduct administrative inspections, impose administrative penalties, and enforce administrative measures in accordance with the law. It is necessary to bolster the administrative law enforcement capabilities of education authorities in this area by expediting institutional establishment, reinforcing staffing, and improving the professional competence of personnel. Furthermore, a checklist of enforcement actions should be developed, enforcement procedures standardized, and innovative enforcement methods adopted to elevate the effectiveness of administrative law enforcement in regulating off-campus training.
The Opinions require that education, staffing, and judicial authorities at all levels incorporate funding for administrative law enforcement in the oversight of off-campus training into their fiscal budgets, strengthen support measures, and appropriately allocate the necessary equipment and resources—such as transportation, communications tools, and body-worn cameras. Furthermore, administrative law enforcement related to the regulation of off-campus training shall be brought within the scope of educational supervision, with local governments encouraged to reinforce such enforcement efforts. Any failure to effectively implement central policies or inadequate governance of off-campus training will be subject to strict accountability.

The Supreme People’s Court has issued an interpretation on judicial compensation in enforcement proceedings, fully safeguarding legitimate rights and interests while regulating the exercise of enforcement powers.
Fully safeguard legitimate rights and interests and standardize the exercise of enforcement powers.
The Supreme People’s Court has issued an interpretation on judicial compensation in enforcement proceedings.
On February 8, the Supreme People’s Court issued the “Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Judicial Compensation Cases Involving Enforcement” (Fa Shi [2022] No. 3, hereinafter referred to as the “Interpretation”), which took effect on March 1, 2022. Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era and thoroughly implementing Xi Jinping’s Thought on the Rule of Law, the Interpretation adheres to the working principle of “compensating where compensation is due and ensuring that good work is done well.” Based on the provisions of the State Compensation Law of the People’s Republic of China and other relevant laws, and in light of the actual practices of judicial compensation adjudication and enforcement within the people’s courts, it establishes unified norms addressing several issues of legal application in the trial of judicial compensation cases involving enforcement.
Since the 18th National Congress of the Communist Party of China, under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core, the people’s courts have tackled tough challenges and pressed ahead with determination, achieving on schedule the phased goal of “basically resolving difficulties in enforcement.” By vigorously strengthening the system of enforcement norms, they have effectively constrained and standardized the exercise of enforcement powers, yielding significant results in enforcement work. At the same time, as practice in state compensation adjudication and enforcement has evolved, new circumstances and issues have continuously emerged in the field of judicial compensation related to enforcement, while the public’s demands and expectations for the protection of rights have steadily risen. To promptly address public concerns, uphold social fairness and justice, and enhance judicial safeguards for human rights, the Supreme People’s Court has formulated this Interpretation. The Interpretation comprises twenty articles, covering key areas such as the conditions for filing and reviewing cases involving judicial compensation in enforcement matters, the coordination between compensation procedures and enforcement relief and oversight mechanisms, the determination of liability for compensation, and the scope and standards for damage awards. Grounded in the realities of judicial compensation in enforcement, the Interpretation seeks to resolve longstanding difficulties, pain points, and bottlenecks that have long hindered state compensation adjudication, and actively responds to the public’s evolving demands and expectations. Its promulgation will play a crucial role in ensuring fair and timely adjudication of cases involving judicial compensation in enforcement, fully safeguarding the lawful rights and interests of claimants, and promoting the standardized and orderly conduct of enforcement work by the people’s courts.
According to reports, this Interpretation was jointly drafted and formulated by the Office of the Compensation Committee and the Enforcement Bureau of the Supreme People’s Court, building on the 2016 “Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in Adjudicating Judicial Compensation Cases in Civil and Administrative Litigation,” and drawing on experience gained from judicial compensation cases involving enforcement as well as from practical work in enforcement proceedings. Moving forward, the Supreme People’s Court will earnestly study and implement Xi Jinping’s Thought on the Rule of Law, ensure the effective implementation of this Interpretation, and, taking it as an opportunity, further promote the high-quality development of state compensation adjudication and enforcement work, fully safeguard the legitimate rights and interests of citizens, legal persons, and other organizations, and strive to ensure that the people feel fairness and justice in every judicial case.
The “Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Judicial Compensation Cases Involving Enforcement” was adopted at the 1857th meeting of the Adjudication Committee of the Supreme People’s Court on December 20, 2021. It is hereby promulgated and shall enter into force as of March 1, 2022.

53,000 persistent and deeply entrenched problems have been identified and rectified! Prosecutorial organs across the country are advancing a “self-revolution.”
On the 9th, a responsible official from the relevant department of the Supreme People’s Procuratorate, while outlining the achievements of the procuratorial organs in carrying out the education and rectification campaign for political and legal personnel, stated that nationwide procuratorial organs have identified and addressed 53,000 persistent problems and deep-rooted malpractices during the campaign, and have introduced more than a thousand institutional mechanisms, effectively resolving a number of issues including political disloyalty, unfair case handling, judicial corruption, failure to assume responsibility when faced with challenges, and lax work styles.
Teng Jiguo, Deputy Director of the Political Department of the Supreme People’s Procuratorate, stated that during the education and rectification campaign targeting political and legal personnel, the procuratorial organs adhered to addressing root causes and tackling both symptoms and underlying issues, thereby resolving a large number of prominent problems that undermined the image of the procuratorial workforce and eroded public trust in law enforcement and judicial impartiality. According to the briefing, in response to concerns strongly voiced by the public, the procuratorial organs formulated and implemented 1,070 institutional mechanisms, including the “Regulations on Circuit Prosecutorial Work of the People’s Procuratorates.” During the campaign, procuratorial organs nationwide identified and rectified a total of 53,000 persistent and deep-seated problems, effectively addressing longstanding systemic malpractices within the procuratorial system.
Teng Jiguo stated that, nationwide, procuratorial organs have kept officely focused on implementing the CPC Central Committee’s Opinions on Strengthening Legal Supervision by Procuratorial Organs in the New Era. By conducting targeted inspections of legal supervision and deepening institutional reforms, they have effectively addressed pressing issues such as difficulties in filing‑case supervision, accessing case files, and overseeing parole, sentence reduction, and temporary release. As a result, the capacity and confidence of procuratorial organs to exercise oversight—both in terms of courage and competence—have continued to grow, leading to an overall improvement in the quality and effectiveness of legal supervision.
Meanwhile, in conjunction with Party history study and education, the procuratorial organs, grounded in their role as legal supervisory bodies, have focused on addressing the pressing concerns, difficulties, and expectations of the public, as well as “minor cases” that directly affect people’s daily lives. Nationwide, procuratorial organs have issued a total of 922 lists of measures, vigorously carrying out practical initiatives such as ensuring a response to every petition, substantively resolving administrative disputes, advancing public interest litigation, and providing civil support for lawsuits, thereby effectively addressing a large number of issues that trouble, worry, and deeply concern the people.
Teng Jiguo stated that, going forward, the procuratorial organs will establish and improve a regularized working mechanism for education and rectification, maintaining unwavering resolve to consistently strengthen political, professional, and disciplinary conduct.

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