JC Master Legal News Issue 1012

Key Takeaways for This Issue

The China Securities Regulatory Commission is soliciting public comments on the revision of the “Regulations on Strengthening Confidentiality and Archival Management for the Issuance of Securities and Listing Abroad.”

To support enterprises in listing overseas in compliance with applicable laws and regulations, to enhance the standardization of confidentiality and archival management in the process of issuing securities and listing abroad, and to further deepen cross-border regulatory cooperation, the China Securities Regulatory Commission, together with the Ministry of Finance, the State Secrecy Bureau, and the State Archives Administration, has revised the “Regulations on Strengthening Confidentiality and Archival Management Related to the Issuance of Securities and Listing Abroad” (CSRC Announcement [2009] No. 29), resulting in the “Regulations on Strengthening Confidentiality and Archival Management Related to the Issuance of Securities and Listing Abroad by Domestic Enterprises (Draft for Public Comment).” These regulations are now being made public for public comment.
The CPC Central Committee and the State Council: Building a Nationally Unified Energy Market
On the 10th, the CPC Central Committee and the State Council issued the “Opinions on Accelerating the Development of a Unified National Market.” The document proposes building a nationwide unified energy market. On the premise of effectively ensuring a secure energy supply, and in alignment with the goals of peaking carbon emissions and achieving carbon neutrality, it calls for the orderly advancement of national energy market development.

Tax incentives are being effectively implemented and refined to help nurture “specialized, refined, distinctive, and innovative” enterprises.

This year’s Government Work Report calls for vigorous efforts to cultivate “specialized, refined, distinctive, and innovative” enterprises, providing robust support in areas such as financing, talent development, and the establishment of incubation platforms.

Supreme People’s Procuratorate: Strengthen assistance and support for women and other groups who have been victimized by trafficking and other illegal and criminal acts.
The document, disclosed on the 6th by China’s Supreme People’s Procuratorate, states that among the five categories of women in need— including those who have suffered domestic violence, sexual assault, human trafficking, and other illegal or criminal acts—the procuratorial organs shall treat them as priority cases and, in coordination with the All-China Women’s Federation, intensify efforts to provide assistance and support.

Finance & Capital Markets
The China Securities Regulatory Commission is soliciting public comments on the revision of the “Regulations on Strengthening Confidentiality and Archival Management for the Issuance of Securities and Listing Abroad.”

To support enterprises in listing overseas in compliance with applicable laws and regulations, to enhance the standardization of confidentiality and archival management in the process of issuing securities and listing abroad, and to further deepen cross-border regulatory cooperation, the China Securities Regulatory Commission, together with the Ministry of Finance, the State Secrecy Bureau, and the State Archives Administration, has revised the “Regulations on Strengthening Confidentiality and Archival Management Related to the Issuance of Securities and Listing Abroad” (CSRC Announcement [2009] No. 29), resulting in the “Regulations on Strengthening Confidentiality and Archival Management Related to the Issuance of Securities and Listing Abroad by Domestic Enterprises (Draft for Public Comment).” These regulations are now being made public for public comment.
In response to recent developments and emerging issues related to overseas issuance and listing, this revision proposes the following key adjustments to the existing regulations: First, it strengthens the legal basis by adding relevant laws and regulations, such as the Accounting Law of the People’s Republic of China and the Certified Public Accountants Law of the People’s Republic of China, as higher‑level statutes. Second, it revises the scope of application to align with the “Regulations of the State Council on the Administration of Securities Issuance and Listing by Domestic Enterprises Overseas (Draft for Public Comment),” explicitly extending applicability to both direct and indirect overseas listings by enterprises. Third, it clarifies corporate responsibilities for information security, providing clearer and more precise guidance on confidentiality and records management for domestic enterprises, securities offices, and securities service institutions involved in overseas securities issuance and listing activities. Fourth, it refines arrangements for cross‑border regulatory cooperation, thereby establishing institutional safeguards to ensure the safe and efficient conduct of such cooperation.
The state continues to support eligible enterprises in listing overseas, and is steadily deepening cross-border regulatory cooperation. We are confident that the revised regulations will further enhance the compliance of overseas‑listed companies and promote the sound and orderly development of overseas listing activities. We welcome valuable input from all sectors of society. The China Securities Regulatory Commission and relevant authorities will, based on public feedback, further refine and improve the regulations and, after completing the required statutory procedures, issue and implement them as soon as possible.

SZSE: In 2021, both the number and assets under management of domestic ETF products reached new highs in the past decade.
On April 10, the Shenzhen Stock Exchange released its Annual Report on ETF Industry Development (2021). The report shows that in 2021, the total assets under management of domestic ETFs reached RMB 1.4 trillion, up 30.55% from the previous year, with both the number of products and their overall size hitting record highs over the past decade.
Specifically, the domestic ETF market exhibits the following characteristics: equity‑type ETFs account for the largest share of assets, at 67.44%, followed by money‑market ETFs, which make up 20.97%; cross‑border stock ETFs have posted the strongest growth, with a year‑on‑year increase of 212.33%, led by the E Fund CSI Overseas Internet ETF, whose assets under management surged by 485.15%; the bulk of ETF‑asset expansion stems from newly launched products, predominantly broad‑based and thematic ETFs, with the ChinaAMC MSCI China A50 Connect ETF—listed on the Shenzhen Stock Exchange—emerging as the largest new issuance in 2021; market efficiency continues to improve, as evidenced by higher turnover ratios among non‑money‑market ETFs and a modest rise in premium‑discount levels, both remaining within reasonable ranges; institutional investors still dominate ETF holdings, though the share held by individual investors has increased; the leading‑fund‑manager effect is pronounced, further concentrating non‑money‑market ETF assets, with the top ten fund managers accounting for 79.21% of total non‑money‑market ETF assets; fund advisory services and FOF products are expanding rapidly, creating new opportunities for ETFs as allocation tools; the proportion of Shenzhen‑listed ETFs in the overall domestic ETF market continues to grow, with both the number of products and their aggregate size reaching ten‑year highs; the share of Shenzhen‑listed stock ETFs relative to the free‑float market capitalization of Shenzhen A‑shares has risen, while the share of Shenzhen‑listed bond ETFs in the total Shenzhen bond market exceeds the 2021 national average.
Looking at the global ETF market, 2021 saw significant volatility in equity markets due to the COVID‑19 pandemic, yet this did not reverse the trend of sustained capital inflows into ETFs. The number of ETF products and their total assets under management continued to grow, with assets surpassing USD 10 trillion.
The global market exhibits the following characteristics: The U.S. and European markets remain dominant, with the U.S. ETF market accounting for 70.2% of the global ETF market and Europe contributing 15.6%. In both the U.S. and Europe, ETF market growth has been robust, expanding by 31.9% and 24.7%, respectively—outpacing the average annual compound growth rates of the past decade (21.1% and 18.2%). Meanwhile, Japan’s ETF market has slowed, with its size remaining flat compared to the previous year. Equity‑focused ETFs have seen markedly stronger appeal, with net inflows into equity ETFs in the U.S., Europe, and Asia (excluding Japan) rising by 211.5%, 232.4%, and 248.1%, respectively. Globally, ESG‑focused ETFs have grown rapidly, surpassing $300 billion in assets under management—a year-on-year increase of 84.3%—while net inflows surged 114.1% compared with the prior year. Among specialized product categories, Smart Beta ETFs, thematic ETFs, actively managed ETFs, FX‑hedged ETFs, and digital‑currency ETFs have all performed well, posting asset‑base growth rates of 31.7%, 20.7%, 53.6%, 15.7%, and 549%, respectively, in 2021.
The report points out that, in alignment with China’s strategic goals of high-quality economic development, common prosperity, and further opening-up, and in light of global ETF market trends, the domestic ETF market is likely to seize new opportunities for growth in the following areas: first, ETF products focused on key national sectors will gain momentum, supporting high-quality economic development; second, the ETF product lineup will continue to expand, attracting medium- and long-term capital into the market and contributing to the realization of common prosperity; third, innovative ETF offerings will become increasingly diverse, better addressing diversified investment needs; and fourth, the ETF mutual‑access mechanisms will be further broadened, bolstering the capital market’s high‑level opening-up.

CSRC: Orderly Entry and Exit, and a Sound Mechanism for Delisting Listed Companies
　At the Third Members’ Congress of the China Association of Public Companies, reporters learned that, to prevent the “bad money drives out good” phenomenon in the capital market, the China Securities Regulatory Commission has continued to deepen reforms of the delisting system. From 2019 to 2021, a total of 77 companies exited the market through various channels.
In 2018, the capital market established a mechanism for mandatory delisting of companies found to have committed serious violations. Since 2019, in tandem with the pilot registration-based system on the STAR Market and the ChiNext Board, reforms to the delisting regime have been implemented, refining delisting criteria and streamlining delisting procedures. From 2019 to 2021, a total of 77 companies exited the market through various channels—nearly 1.6 times the number recorded over the previous decade (49 companies). Among them, 42 companies were subject to mandatory delisting, more than 3.2 times the figure from the prior ten years (13 companies). High‑profile delistings, such as that of Kangde Xin, proceeded smoothly, and the principle of “delisting all eligible entities” has garnered broad recognition across the board.

The China Securities Regulatory Commission convened the 2022 Work Conference on the Regulation of Private Equity Funds and Regional Equity Markets, as well as on combating illegal activities and conducting rectification efforts.
On March 25, the China Securities Regulatory Commission (CSRC) convened the 2022 Work Conference on the Regulation of Private Equity Funds and Regional Equity Markets, as well as on combating illegal activities and carrying out rectification efforts. The meeting thoroughly studied and implemented the spirit of the Central Economic Work Conference and the National Two Sessions, earnestly carried out all requirements for rectifying issues identified during the central inspection, and followed the arrangements set forth at the 2022 CSRC System Work Conference. It reviewed the work of 2021, analyzed and assessed the current situation, and outlined key priorities for 2022. Fang Xinghai, a member of the CSRC Party Committee and Vice Chairman, attended the meeting and delivered a speech, while five organizations presented exchange remarks. Officials from the CSRC’s Discipline Inspection and Supervision Group, the Third Bureau of Financial Audit of the National Audit Office, relevant departments within the CSRC headquarters, all local securities regulatory bureaus, and other units across the system participated in the meeting either in person or via video link.
The meeting noted that, since 2021, the private equity fund and regional equity market regulators, in carrying out anti‑illegal‑activities and rectification efforts, have resolutely implemented the decisions and arrangements of the CPC Central Committee and the State Council, as well as the work plans of the Commission’s Party Committee. Adhering to the principles of “establishing sound systems, non‑interference, and zero tolerance,” they have continuously refined the regulatory framework for private equity funds, optimized policies on fund registration and filing, deepened pilot programs for innovation in regional equity markets, prudently addressed risks associated with private equity funds and various local trading venues, and rigorously cracked down on illegal securities and futures activities, resulting in an overall reduction in systemic risks.
The meeting concluded that, while the international landscape is becoming increasingly complex, China’s economy remains resilient, and its fundamental strengths—underpinned by long-term growth prospects—will not change. Private equity funds and regional equity markets are playing an increasingly prominent role in supporting the real economy, facilitating financing for small, medium, and micro enterprises, and fostering independent innovation. Meanwhile, the industry and market ecosystem continue to improve, laying a solid foundation for high-quality development. It is essential to uphold a bottom-line mindset, strengthen analysis and assessment, and prudently and systematically carry out risk prevention, mitigation, and resolution efforts related to private equity funds and various local trading venues.
The meeting emphasized the need to earnestly implement the requirements for rectifying issues identified during the central inspection, raise political awareness, continuously strengthen conduct and work style, and proactively assume responsibility and take action. It called for solid progress in key areas of 2022, including the regulation of private equity funds and regional equity markets, as well as efforts to combat illegal activities and carry out orderly clean-up and rectification, so as to greet the successful convening of the 20th National Congress of the Communist Party of China with outstanding achievements. First, refine the regulatory framework for private equity funds, optimize oversight and services, prudently defuse industry risks, and promote the sector’s sound development. Second, fully leverage the coordinating role of the inter‑ministerial joint mechanism for cleaning up and regulating various trading venues, further reduce the number of gold exchanges, and steadily address existing risks; at the same time, launch a special campaign to address “pseudo‑gold exchanges” (i.e., “registration‑and‑filing institutions”). Third, crack down rigorously on illegal securities and futures activities, closely monitor emerging trends and developments, intensify investigations and prosecutions of cases involving illegal operations, and effectively safeguard investors’ legitimate rights and interests. Fourth, strengthen guidance, coordination, and oversight of regional equity market work, and deepen pilot programs for various forms of innovation.

Commercial & Corporate
The CPC Central Committee and the State Council: Building a Nationally Unified Energy Market
On the 10th, the CPC Central Committee and the State Council issued the “Opinions on Accelerating the Development of a Unified National Market.” The document calls for building a nationwide unified energy market. On the premise of effectively ensuring a secure energy supply, and in alignment with the goals of peaking carbon emissions and achieving carbon neutrality, it proposes advancing the development of a national energy market in an orderly manner. Based on comprehensive planning and optimized spatial layout, the plan seeks to improve the oil and gas futures product system, standardize the establishment of oil and gas trading centers, and refine the placement of key infrastructure such as trading venues and delivery warehouses. It also aims to promote interconnectivity among oil and gas pipeline networks and ensure their fair access to all market participants. Furthermore, it advocates steadily advancing natural gas market‑based reforms and accelerating the establishment of a unified energy‑measurement and pricing system for natural gas. In addition, the document calls for improving a multi‑tiered, unified electricity market system and exploring the timely establishment of a national electricity trading center. Finally, it emphasizes further leveraging the role of the national coal trading center and promoting the refinement of a nationwide unified coal trading market.

Steel industry profitability improved month-on-month, and with stable growth, the supply-and-demand outlook is expected to remain favorable.
　On the supply side, production restrictions in North China led to a sharp year-on-year decline in steel output in the first quarter, though month‑on‑month output saw a modest rebound. In Q1 2022, steel production was significantly disrupted by heating-season output curtailments in North China, while electric‑arc furnace mills in South China also cut output proactively due to depressed margins stemming from elevated scrap‑steel prices. As a result, national weekly steel output fell 10.52% year over year, though it rose 2.58% month over month, partly because the fourth quarter of 2021 served as a relatively low base. Meanwhile, steel demand remained subdued, down 7.63% year over year and 11.53% month over month. By sector, funding constraints in the real estate industry persist, with sluggish construction starts keeping rebar demand at low levels; the broader downturn in real estate has also weighed on demand for construction machinery and household appliances. In addition, the Russia–Ukraine conflict has disrupted chip supplies, prolonging the automotive semiconductor shortage and failing to boost overall demand. Only shipbuilding and container‑related demand have held up, but these segments are insufficient to reverse the broader weakness in aggregate demand. With both supply and demand weak, steel inventories remain at low levels: at the end of Q1 2022, total national steel inventories stood at approximately 23.45 million tonnes, down 12% from the same period in 2021 and 34% from 2020.
In the first quarter of 2022, prices for all five major steel product categories rose, while raw material costs also increased to varying degrees. Despite a substantial decline in demand, supply faced concurrent pressure, leading to volatile upward price movements across the quarter. From the end of December 2021 to the end of March 2022, the prices of the five key products—reinforcing bar, wire rod, hot-rolled sheet, cold-rolled sheet, and medium‑and‑thick plate—increased by 7.1%, 6.2%, 10.4%, 4.8%, and 4.2%, respectively.
On the raw materials side, although steel production cuts have led to a moderation in demand, iron ore, coking coal, and coke prices have all risen amid expectations of a post‑Spring Festival resumption of steel production. For iron ore, despite weak demand stemming from production curtailments, seasonal declines in shipments from overseas mines—coupled with the prospect of a steel output rebound—have driven prices higher in a volatile upward trend, with prices at the end of March 2022 up 25.2% compared to the end of December 2021. Meanwhile, while demand for coking coal and coke remains subdued, supply has also tightened, resulting in price increases of 29.1% and 29.6%, respectively, by the end of March 2022 versus the end of December 2021. Overall, gross margins across different steel product grades have improved month over month, with sheet products showing a more pronounced recovery than long products; in the first quarter of 2022, the weighted average gross margins for long products and sheet products increased by RMB 102 per ton and RMB 141 per ton, respectively, compared with the fourth quarter of 2021.
In the first quarter, the industry’s overall gross margin improved quarter-over-quarter; however, given the varying degrees to which steelmakers were affected by production restrictions in North China, we expect earnings across the sector to diverge. Relatively speaking, special‑steel producers have maintained more stable profitability, while common‑steel offices face significant cost pressures. That said, with no change anticipated in full-year output expectations, we are keeping our annual earnings forecast unchanged. For the first quarter of 2022, key stocks with year-on-year earnings growth exceeding 100% include: Yongxing Materials (516.1%, a leading producer of stainless‑steel long products, benefiting from rising volumes and prices in its lithium carbonate business); key stocks with Q1 2022 earnings growth in the 0–100% range comprise: Yongjin Co., Ltd. (7.2%; a leader in cold‑rolled stainless steel, with continued capacity expansion); CITIC Special Steel (4.5%; a top special‑steel player with a well‑diversified product mix and steady earnings growth); Fushun Special Steel (2.9%; the domestic leader in high‑temperature alloys). Other key stocks with projected Q1 2022 year-on-year earnings growth below 0% are: Valin Steel (-0.9%; a leading steelmaker in Central and South China, with a gradually increasing share of high‑end steel grades); Maanshan Iron & Steel (-3.1%; a highly resilient East China steelmaker that balances long‑product and sheet‑metal operations and offers attractive dividend yields); Ansteel (-3.5%; a company focused on high‑end sheet products); and Baosteel (-12.8%; a leading producer of premium sheet steel, with clear advantages in automotive sheet and silicon steel segments).
Investment Analysis Opinion: Although short-term demand has been disrupted by the pandemic, under the policy goal of stabilizing growth, the early issuance of special-purpose bonds and investment in major projects are expected to provide strong support for subsequent steel demand, with expectations of a rebound in second-quarter demand. We maintain our “Outperform” rating on the sector and on key companies within it. Meanwhile, against the backdrop of carbon neutrality, the steel industry is poised to enter a period of transformation, which should push the overall earnings midpoint higher. For the common‑steel segment, we recommend paying attention to Maanshan Iron & Steel Co., Ltd., a low‑valuation stock with high elasticity that balances long‑product and sheet‑product exposure; Hualing Steel, a low‑valuation player focused on sheet products; and for specialty steels, Fushun Special Steel, a leading producer of high‑temperature alloys; Yongjin Shares, a leader in stainless‑steel cold rolling; as well as CITIC Special Steel, which has demonstrated resilience across economic cycles and stable performance.

China Railway Construction Heavy Industry Leads a Remarkable Comeback in China’s Tunneling Equipment Sector.
In late spring, as temperatures rise, infrastructure projects across the country are in full swing, with major national engineering feats generating tremendous momentum. In Beijing, China’s largest domestically produced tunnel boring machine, the “Jinghua,” is excavating beneath the East Sixth Ring Road as part of its underground reconstruction project; this 150-meter-long, 4,300-ton behemoth has successfully tunneled through its first Class‑I high‑risk obstacle. Meanwhile, in Dongguan, Guangdong, China’s deepest undersea tunnel TBM, the “Shenjiang No. 1,” has plunged into the depths of the Pearl River Estuary, advancing toward the seabed at a depth of 106 meters.
Full-face tunnel boring machines used in large-scale construction projects are a benchmark for assessing a nation’s capabilities in manufacturing underground engineering equipment. The underground engineering equipment independently developed by China Railway Construction Heavy Industry can handle major tunneling challenges involving ultra‑long, ultra‑deep, ultra‑large, ultra‑steep, and high‑risk complex geological conditions, positioning China’s tunneling machinery among the world’s leading technologies. Liu Feixiang, Party Secretary and Chairman of CRCHI, noted that China’s high‑end underground engineering equipment has progressed from catching up to running alongside others and now taking the lead; the era when “world‑class equipment served China” is behind us, while “China‑made equipment serving the world” is becoming a reality.
More than a decade ago, tunneling machines essential for domestic underground construction projects were largely reliant on imports, leaving this critical national infrastructure technology at the mercy of foreign suppliers. Chinese equipment manufacturers, led by China Railway Construction Heavy Industry, seized the opportunity presented by the surging demand for tunneling equipment in China. Through relentless innovation and technological breakthroughs, they overcame formidable challenges and staged a remarkable turnaround, enabling domestically produced tunneling machines to gradually replace imports and expand onto the global stage.
Since 2008, with the support of China’s National “863” Program, China Railway Construction Heavy Industry has embraced a disruptive innovation approach, breaking the foreign monopoly on core tunneling‑machine technologies and swiftly developing tunneling equipment featuring fully independent intellectual property rights.
At the Yinsong Water Supply Project in Jilin Province, China Railway Construction Heavy Industry’s domestically produced first large-diameter open-type rock tunnel boring machine successfully completed a 16-kilometer tunneling operation, achieving breakthrough 14 months ahead of schedule. It set a monthly tunneling record of 1,209.8 meters and secured a decisive victory over foreign‑brand competitors, officely establishing the reputation of China‑made tunnel boring machines.
On the Moscow Metro project, five tunnel boring machines from China Railway Construction Heavy Industry have become a “five‑flower bouquet,” successfully operating in an extreme cold environment of minus 35 degrees Celsius and setting a benchmark for Chinese tunneling equipment in overseas construction.
Bolstered by the momentum of the Belt and Road Initiative, China Railway Construction Heavy Industry’s underground engineering equipment—including rock tunneling machines, shield tunneling machines, and pipe jacking machines—has been exported to countries and regions such as India, South Korea, Peru, and Turkey, steadily expanding its global network of partners. Yang Fangming, General Manager of CRCHI’s Overseas Division, noted that domestically, tunneling machines manufactured by Chinese offices like CRCHI now command over 95% of the new‑market share, while also capturing roughly two-thirds of the global market.

Taxation TAXATATION
Simplify the process and add prompt features.
The tax authorities have ensured the implementation of the policy exempting small-scale taxpayers from value-added tax.
Recently, the Ministry of Finance and the State Taxation Administration issued the “Announcement on Exempting Small-Scale VAT Payers from VAT,” stating that, from April 1 to December 31, 2022, taxable sales revenue of small-scale VAT payers subject to a 3% tax rate will be exempt from VAT, and VAT prepayments previously subject to a 3% withholding rate will be temporarily suspended. On the same day, the State Taxation Administration concurrently released the “Announcement of the State Taxation Administration on Matters Related to the Administration of VAT Exemptions for Small-Scale Taxpayers and Other Collection and Management Issues” (No. 6, 2022), specifying concrete administrative and service measures to promptly address taxpayers’ concerns.
According to Liu Yunmao, Deputy Director-General of the Department of Goods and Services Tax at the State Taxation Administration, the CPC Central Committee and the State Council have attached great importance to alleviating the difficulties faced by small-scale taxpayers and have continuously strengthened tax support for micro and small enterprises, building up momentum and enhancing their capabilities through a series of measures over the past nine years. In 2013, building on the previous policy that applied the VAT threshold only to individual business households among small-scale taxpayers, the scope of the policy was expanded to exempt all small-scale taxpayers with monthly sales below RMB 20,000 from VAT. In 2014, 2019, and 2021, in line with economic development trends and social needs, the VAT threshold was successively raised to RMB 30,000, RMB 100,000, and RMB 150,000 per month. Since the onset of the COVID‑19 pandemic in 2020 through the end of March this year, a policy has been implemented reducing the VAT rate from 3% to 1%.
Liu Yunmao stated that the newly introduced policy exempting small-scale taxpayers from value-added tax has two salient features. First, it benefits a broad base of taxpayers: at present, there are over 60 million small-scale taxpayers nationwide. With the launch this year of a temporary VAT exemption for small-scale taxpayers, combined with existing preferential measures such as the VAT threshold, the policy effectively covers virtually all small-scale taxpayers. Second, it provides substantial relief: previously, small-scale taxpayers whose monthly sales exceeded RMB 150,000—thus surpassing the threshold and ineligible for the exemption—can now also enjoy full VAT exemption, reducing their tax burden to zero and freeing up valuable funds to help businesses weather the challenges they face.
To ensure that the policy is implemented on schedule and that taxpayers can promptly benefit from the tax‑preferential measures, the tax authorities have, building on the existing framework of self‑declaration, self‑application for VAT exemptions, and exemption without any approval procedures for small‑scale taxpayers, optimized and upgraded the invoicing and filing systems. They have added a prompt function to notify taxpayers when they are eligible for the tax‑exempt treatment, and in cases where small‑scale taxpayers have not issued tax‑exempt invoices, the system automatically provides friendly reminders, helping taxpayers conveniently access the policy while minimizing errors or missed benefits.
Alongside the issuance of the tax administration service announcement, the tax authorities have released detailed policy guidance, clarifying and refining practical issues such as invoice issuance and tax filing and payment. Building on extensive training and advisory services, the State Taxation Administration has developed a targeted outreach program to deliver information on preferential policies and administrative procedures directly to taxpayers, ensuring they are well‑informed about the policies and proficient in their application.

Tax incentives are being effectively implemented and refined to help nurture “specialized, refined, distinctive, and innovative” enterprises.
This year’s Government Work Report calls for vigorous efforts to cultivate “specialized, refined, distinctive, and innovative” enterprises, providing robust support in areas such as financing, talent development, and the establishment of incubation platforms.
“Specialized, Sophisticated, Distinctive, and Innovative” SMEs have long been deeply engaged in niche markets, boasting strong innovation capabilities, high market shares, and mastery of core technologies. They occupy critical links in industrial and supply chains, playing a vital role in strengthening and completing these chains and addressing “bottleneck” challenges.
To support the development of “specialized, refined, distinctive, and innovative” small and medium-sized enterprises (SMEs), in November 2021, the Office of the State Council Leading Group for Promoting SME Development issued the “Action Plan for Tackling Practical Issues for ‘Specialized, Refined, Distinctive, and Innovative’ SMEs” and the “Measures to Enhance the Competitiveness of SMEs,” thereby injecting new momentum into the growth of these enterprises.
At present, both the domestic and global economic landscapes remain complex and challenging, with growing instability and uncertainty, placing significant pressure on the development of small and medium-sized enterprises. How can we provide more robust, tangible support to help “specialized, refined, distinctive, and innovative” SMEs thrive?
The reporter learned that, to further support the development of small and medium-sized manufacturing enterprises, the State Taxation Administration and the Ministry of Finance recently issued the “Announcement of the State Taxation Administration and the Ministry of Finance on Extending the Implementation of Measures to Deferral of Certain Taxes and Fees for Small and Medium-Sized Manufacturing Enterprises” (No. 2, 2022). Building on the earlier deferral of certain taxes and fees for the fourth quarter of 2021, the relevant preferential policies have been extended for an additional six months.
Tax authorities across the country are actively implementing tax and fee preferential policies, engaging with enterprises to gain a deeper understanding of their development needs, and providing tailored support—through one‑on‑one guidance and meticulous “online plus offline” services—to help specialized, refined, distinctive, and innovative enterprises drive innovation and growth.
In Shijiazhuang, Hebei Province, the tax authorities are supporting the new development of “specialized, refined, distinctive, and innovative” SMEs through more precise policy implementation and meticulous services.
“In 2021, the company benefited from an additional R&D expense deduction of RMB 3.99 million and an export tax rebate—both exempt‑and‑credited—of RMB 672,800, providing crucial support for its innovative development,” said Chen Wenjin, head of Hebei Naili Co., Ltd.
According to reports, the company is a nationally recognized “Little Giant” enterprise specializing in niche, specialized, and innovative fields, primarily engaged in the R&D of high-end gas compressors, electric vehicle controllers, and industrial robots. To enhance its product competitiveness, the company has steadily increased its R&D spending, resulting in significant cash-flow pressures. After learning of the situation, the Yuanshi County Tax Service Bureau of the State Taxation Administration reviewed the tax incentives available to the company—such as corporate income tax reductions for high-tech enterprises and additional deductions for R&D expenses—and delivered a comprehensive package of tax benefits to support the company.
According to reports, the local tax authorities have tailored a package of tax incentives for 17 “specialized, refined, distinctive, and innovative” enterprises within their jurisdiction. They have implemented a management system that assigns a dedicated file and a dedicated team to each enterprise, injecting fiscal momentum into their innovation and development.
As a nationally recognized “Little Giant” enterprise specializing in niche, specialized, and innovative fields, and also a medium-sized manufacturing company, Xiamen Lida Xin Lighting Co., Ltd. benefited from a 50% tax deferral totaling RMB 1.98 million in the fourth quarter of last year. “The extension of this policy means the company has gained several additional ‘interest-free loans.’ We will allocate these funds to smart manufacturing projects, develop diversified products, and further enhance our market competitiveness,” said Luo Yanhui, the company’s finance director.
In Shenzhen, the Bao’an District Tax Service Bureau of the State Taxation Administration has fully unlocked the benefits of tax and fee policies by providing targeted policy guidance, tailored “drip‑irrigation”‑style services, and regular “health‑check” consultations, thereby helping specialized, refined, distinctive, and innovative “little giant” enterprises thrive.
As a high-tech enterprise and a “Little Giant” specializing in niche, specialized, and innovative fields, Shenzhen Huatu Measurement and Control Systems Co., Ltd. has consistently maintained substantial R&D investment and has turned around to achieve profitability in recent years. Affected by the COVID‑19 pandemic, rising raw material prices have increased production costs, while delayed collection of sales proceeds, coupled with expenses such as employee wages and rent, pushed the company’s financial position into a difficult situation.
Upon learning of the actual situation, the tax authorities convened a consultation meeting to address the company’s needs and provided guidance on applying for a deferral of tax payments totaling RMB 3.08 million, thereby easing the company’s financial strain. “The tax benefits have given our company much-needed reassurance, and we’re now more motivated than ever,” said Zhang Yonggang, the company’s finance director.

Tax deductions for infant and toddler care help reduce the cost of raising children.
Families with children can now begin claiming the individual income tax special additional deduction! Recently, the State Council issued the “Notice on Establishing a Special Additional Deduction for Childcare Expenses of Infants and Toddlers Under 3 Years Old,” bringing childcare costs for children under three into the scope of this tax benefit. On March 29, the National Tax Administration launched the dedicated feature in its Individual Income Tax App for this special additional deduction. Guardians who have infants or toddlers under three and pay individual income tax can, after entering their child’s relevant information, claim the full deduction when they receive their April paycheck—resulting in a reduced or even zero tax liability for that month and easing the financial burden of raising young children.
What is the amount of the deduction? The Notice clarifies that, effective January 1, 2022, taxpayers may claim a standard deduction of RMB 1,000 per month for each child under the age of three, to be applied before calculating and paying individual income tax. Parents may choose either for one parent to claim the full 100% of the standard deduction, or for both parents to each claim 50% of the standard deduction; once selected, the method of deduction cannot be changed within a given tax year.
The reporter learned that, like the other six special additional deductions, the special additional deduction for childcare of infants and toddlers under age 3 adopts a service‑management model of “enjoyment upon declaration, with supporting documents retained for record‑keeping.” Eligible taxpayers can claim the benefit without submitting any supporting documentation: they may either report the deduction when their employer withholds individual income tax on their regular wages, or include it during the individual income tax settlement period from March 1 to June 30 next year. They can file the deduction themselves via the mobile Individual Income Tax App, or provide the relevant information to their employer for submission on their behalf. Taxpayers are required to enter the identity details of their eligible children, choosing from identification cards, birth certificates, passports, or other personal documents.
Some taxpayers have questions: Since the new policy took effect on January 1, how can they claim deductions for the earlier months of this year? An official from the Income Tax Department of the State Taxation Administration explained that taxpayers may claim the missing deductions in a lump sum when their employer issues salaries in subsequent months. For example, if a taxpayer provides information about an infant or young child to their employer in April, the employer can file a one-time claim for the special additional deductions covering the first four months. Similarly, if the taxpayer submits the child’s information in May, the employer can file a one-time claim for the special additional deductions covering the first five months.
Li Xuhong, Director of the Institute of Fiscal and Tax Policies and Applications at the National Accounting Institute in Beijing, stated that including childcare expenses for infants and toddlers under the age of three in the individual income tax special additional deductions is a tangible benefit that will reach countless families. As one of the supporting measures to optimize the birth policy, increasing pre‑tax deductions for infant and toddler care helps alleviate taxpayers’ financial burden in raising children, demonstrates the state’s encouragement and care for people’s childbearing and parenting, and contributes to promoting the long-term balanced development of the population.
Previously, Chinese taxpayers were already eligible for six special additional deductions: expenses for children’s education, continuing education, housing loan interest, housing rent, eldercare, and major‑illness medical expenses. “From childcare costs for children up to age three to education expenses once they turn three; individuals with continuing‑education expenses; families that take out housing loans or pay rent—both of which qualify for dedicated deductions; and major‑illness medical expenses—all these are covered. On the parental side, there is a special deduction for eldercare expenses. The individual income tax special additional deduction policy now provides comprehensive coverage across the entire life cycle,” said Li Xuhong.
The reporter also learned from the State Taxation Administration that, to ensure taxpayers can promptly benefit from tax reductions, the tax authorities promptly revised the Measures for the Administration of Special Additional Deductions and the relevant declaration forms, upgraded the individual income tax app and other dedicated deduction‑filing systems, issued policy FAQs, tax‑administration Q&A, and user guides for the mobile individual income tax app, and activated the 12366 hotline to promptly address taxpayers’ key concerns and challenges, thereby making comprehensive preparations to facilitate filing and enhance taxpayer services.

Litigation & Arbitration
The Supreme People’s Court has issued the “Opinions of the Supreme People’s Court on Providing Judicial Services and Guarantees for Implementing the National Strategy to Actively Address Population Aging.”
“Respect one’s own elders and extend that respect to others’ elders”—filial piety and reverence for the elderly are time-honored virtues of the Chinese nation. Respect and care for older adults serve as hallmarks of societal progress and civility. On November 18, 2021, the CPC Central Committee and the State Council issued the “Opinions on Strengthening Aging‑Related Work in the New Era” (hereinafter referred to as the “Opinions”), which set forth a national strategy to proactively address population aging, reinforce aging‑related work in the new era, and enhance the sense of gain, happiness, and security among the elderly. To ensure the comprehensive implementation of these Opinions, the Supreme People’s Court, after thorough research and extensive consultation, formulated and promulgated the “Opinions on Providing Judicial Services and Guarantees for the Implementation of the National Strategy to Proactively Address Population Aging” (hereinafter referred to as the “Implementation Opinions”), and concurrently released a second batch of typical cases on the protection of the rights and interests of older persons. The Supreme People’s Court remains steadfast in its commitment to justice for the people and impartial adjudication, treating the safeguarding of the rights and interests of older adults as a key component of its judicial and enforcement work. The issuance of these Implementation Opinions and the second batch of typical cases on the protection of elderly rights not only constitutes a robust measure to thoroughly implement the decisions and arrangements of the CPC Central Committee and the important expositions of General Secretary Xi Jinping on strengthening family values, family education, and family traditions, but also represents a vivid demonstration of the people’s courts’ efforts to enforce the Civil Code and strengthen the protection of the rights and interests of older adults.
First, the document focuses on the policy context and thoroughly implements the national strategy for proactively addressing population aging. From the perspective of comprehensively building a modern socialist country, it calls for strengthening the Party’s overall leadership over work related to aging, upholding a people-centered approach, and carrying out the national strategy for actively responding to population aging. It sets forth specific requirements for enhancing aging-related work in the new era across eight key areas, including promoting social participation among older adults and striving to build an age-friendly society. Population aging is a fundamental feature of China’s national conditions for a considerable period ahead; effectively addressing this challenge bears on the overall course of national development, the well-being of hundreds of millions of people, and social harmony and stability, and holds great significance for the comprehensive construction of a modern socialist country. Therefore, we must adopt a more proactive stance toward population aging, further improve the policy framework for elderly care, filial piety, and respect for the elderly, and endeavor to meet the aspirations of older adults for a better life.
Second, we will focus on top-level design and refine and strengthen the supporting judicial policies for aging-related work in the new era. The “Implementation Opinions” comprise three main sections: The first section seeks to align thinking and ensure a clear understanding of the overarching requirements for providing judicial services and safeguards in support of the national strategy to proactively address population aging, thereby ensuring that all policy measures adopted by the people’s courts to implement this strategy are effectively put into practice, fully implemented, and meticulously carried out. The second section aims to give full play to the adjudicatory functions and enhance the protection of the rights and interests of older persons. This includes intensifying law-based efforts to crack down on criminal and unlawful acts that infringe upon the personal and property rights of older adults, properly adjudicating cases involving marriage and family matters, guardianship, contracts, torts, and other disputes affecting older persons, and strengthening enforcement in cases concerning the rights and interests of older adults. Through impartial, efficient, and authoritative judicial rulings, we will promote adequate care, medical services, opportunities for continued participation, lifelong learning, and joyful lives in old age. The third section calls for the ongoing deepening of reform and innovation, with the establishment and improvement of judicial service mechanisms that are convenient and beneficial to older adults. This involves further developing one-stop, diversified dispute-resolution mechanisms to address conflicts at their source, establishing and refining early-warning, screening, and mediation systems for disputes related to marriage, family, and torts involving older persons, and creating age-friendly litigation service frameworks to facilitate the participation of older adults in legal proceedings.
Third, by focusing on landmark cases and providing judicial guidance, we are effectively safeguarding the legitimate rights and interests of older adults. Adjudicating all types of cases involving the rights and interests of older persons in accordance with the law and employing judicial measures to protect those rights is a core responsibility and mission of the people’s courts. To support the Implementation Opinions, the Supreme People’s Court has concurrently released a second batch of typical cases on the protection of the rights and interests of older adults. This represents a concentrated showcase of the people’s courts’ phased achievements in this area, as well as a clear commitment to continuously enhancing the quality and efficiency of adjudication and strengthening safeguards for the rights and interests of older adults. Building on last year’s publication of ten landmark cases on the protection of older adults, and taking into account new circumstances and emerging issues arising in judicial practice, five representative cases have been carefully selected—each addressing concerns that are of particular importance to older adults. On the one hand, these cases protect the personal rights and interests of older adults. For example, timely issuance of personal safety protection orders in accordance with the law for elderly victims of domestic violence helps prevent and curb such abuse; similarly, appropriate adjudication of disputes involving marriage and family matters, guardianship, and elderly‑care service contracts ensures the freedom of marriage and personal safety of older adults, while also urging their children to conscientiously fulfill their obligations to provide support. On the other hand, these cases safeguard the property rights and interests of older adults. For instance, properly handling disputes over the protection of property rights enables older adults to exercise, in accordance with the law, their rights to possess, use, derive income from, and dispose of their personal assets; likewise, upholding the right of retired seniors to compensation for lost earnings resulting from traffic accidents provides judicial support for their participation in social development. It is hoped that, through the release of these typical cases, standards for the application of the law will be further harmonized, thereby offering clearer guidelines and normative references to better protect the rights and interests of older adults.
Strengthening the protection of the rights and interests of older persons in the new era is a long and arduous task. People’s courts at all levels will take Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as their guiding principle, thoroughly implement Xi Jinping’s Thought on the Rule of Law, fully leverage the functions of judicial adjudication, and effectively enhance the sense of gain, happiness, and security among the elderly, thereby providing robust judicial services and safeguards to advance the development of an age-friendly society and strengthen the protection of the rights and interests of older persons.

The Supreme People’s Court and the Supreme People’s Procuratorate have issued a judicial interpretation on crimes involving the destruction of wildlife resources.
Today, the Supreme People’s Court and the Supreme People’s Procuratorate jointly issued the “Interpretation on Several Issues Concerning the Application of Law in Handling Criminal Cases Involving the Destruction of Wildlife Resources” (Fa Shi [2022] No. 12, hereinafter referred to as the “Interpretation”). The Interpretation was adopted at the 1856th meeting of the Adjudication Committee of the Supreme People’s Court on December 13, 2021, and at the 89th meeting of the 13th Session of the Procuratorial Committee of the Supreme People’s Procuratorate on February 9, 2022, and shall enter into force as of April 9, 2022.
The Interpretation adheres to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, thoroughly implements Xi Jinping Thought on Ecological Civilization and Xi Jinping Thought on the Rule of Law, and, in response to new developments and challenges in crimes involving the destruction of wildlife resources, strengthens judicial efforts to punish such offenses in accordance with the law, thereby providing robust legal safeguards for advancing ecological civilization. The Interpretation primarily clarifies the following issues:
First, the criteria for conviction and sentencing in crimes involving the destruction of wildlife resources have been adjusted. Such offenses include smuggling of endangered animals or their products, illegal fishing of aquatic products, endangering protected and endangered wildlife, illegal hunting, and the unlawful capture, acquisition, transport, or sale of terrestrial wild animals. Previously, judicial interpretations set the standards for conviction and sentencing based on the number of animals involved; however, practical experience has shown that this approach does not fully accommodate the complexity of individual cases. Accordingly, the Interpretation no longer relies solely on the quantity of animals but instead adopts value as the fundamental criterion for determining guilt and sentencing, thereby better reflecting the principle of proportionality between crime, culpability, and punishment.
Second, crimes that undermine wildlife resources must be prosecuted across the entire criminal chain. At present, such offenses have evolved into a profit‑driven chain spanning “catching/hunting–acquisition–sale.” In judicial practice, it is essential not only to punish the initial stages of illegal fishing and hunting but also to address the subsequent stage of disposing of stolen goods. Accordingly, the Interpretation explicitly provides that anyone who acquires or sells illegally caught aquatic products or illegally hunted wild animals shall be convicted and punished for the crime of concealing or covering up proceeds of crime. The Interpretation further clarifies the criteria for conviction and sentencing applicable to the newly added offense under Amendment XI to the Criminal Law—namely, the unlawful hunting, acquisition, transportation, or sale of terrestrial wild animals for the purpose of consumption.
Third, the rules for handling cases involving artificially bred wild animals have been clarified. At present, with economic and social development and advances in scientific research, significant breakthroughs have been achieved in the artificial breeding of many wild animal species, and stable, fully captive‑bred populations have been established for some precious and endangered species, no longer reliant on wild resources. In criminal prosecution, cases involving artificially bred wild animals should not be treated on an equal footing with those involving wild animals that naturally reproduce in their natural habitats. Accordingly, the Interpretation stipulates that where the animals involved are artificially bred and fall under any of the following circumstances, such cases shall generally not be prosecuted as crimes; if criminal liability must be pursued, it shall be handled leniently in accordance with the law: (1) they are listed in the National Key Protected Wild Animal Catalogue for Artificial Breeding; and (2) the artificial breeding techniques are mature and well‑established, and the animals are traded or transported as pets.
Going forward, the Supreme People’s Court and the Supreme People’s Procuratorate will guide people’s courts and people’s procuratorates at all local levels to strictly implement the Criminal Law and relevant judicial interpretations, fully leverage their judicial functions, punish crimes that damage wildlife resources in accordance with the law, effectively protect the ecological environment, and safeguard biodiversity and ecological balance.
The “Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues Concerning the Application of Law in Handling Criminal Cases Involving the Destruction of Wildlife Resources” was adopted at the 1856th Meeting of the Adjudication Committee of the Supreme People’s Court on December 13, 2021, and at the 89th Meeting of the 13th Procuratorial Committee of the Supreme People’s Procuratorate on February 9, 2022. It is hereby promulgated and shall enter into force as of April 9, 2022.

Supreme People’s Procuratorate: Strengthen assistance and support for women and other groups who have been victimized by trafficking and other illegal and criminal acts.
The document, disclosed on the 6th by China’s Supreme People’s Procuratorate, states that among the five categories of women in need— including those who have suffered domestic violence, sexual assault, human trafficking, and other illegal or criminal acts—the procuratorial organs shall treat them as priority cases and, in coordination with the All-China Women’s Federation, intensify efforts to provide assistance and support.
From March to the end of this year, the Supreme People’s Procuratorate and the All-China Women’s Federation will jointly launch a special campaign titled “Focusing on Women in Difficult Circumstances and Strengthening Specialized Judicial Assistance.”
In this initiative, elderly women who lack the means to provide support or who are effectively without caregivers, women suffering from serious illnesses or disabilities, and rural women identified as being at risk of falling back into poverty are also designated by the prosecution as priority beneficiaries for assistance and support.
For women who face financial hardship due to civil torts such as gender discrimination in employment or workplace sexual harassment—cases that are difficult to resolve through legal channels—and for those who, having filed for divorce on the grounds of domestic violence, are also experiencing severe economic difficulties, the procuratorial authorities will, in accordance with the specific circumstances, collaborate with the All-China Women’s Federation to organize assistance and relief efforts.
The Supreme People’s Procuratorate also stated that, when the assisted women are raising minor children, judicial assistance should be provided concurrently. Furthermore, in administering judicial assistance, due regard must be given to the lawful rights and interests of women in need, including their personal dignity, right to reputation, and right to privacy, so as to prevent “secondary victimization.”
From 2000 to 2021, the number of individuals prosecuted by Chinese prosecutors for the crime of trafficking women and children decreased from 14,458 to 1,135, an average annual decline of 11.4%; meanwhile, prosecutions for the crime of purchasing trafficked women and children rose from 155 to 328. The Supreme People’s Procuratorate emphasized that, in implementing the “China Action Plan against Human Trafficking (2021–2030),” it will continue to pursue human trafficking offenses with strictness and severity, “resolutely prosecuting—pursuant to law—and imposing severe penalties on those who purchase, fail to rescue, or obstruct the rescue of trafficked women and children.”

The Supreme People’s Court and the Ministry of Veterans Affairs have jointly issued guidelines to provide enhanced judicial services for resolving disputes involving veterans.
　A reporter learned from the Supreme People’s Court that, in order to meet the diverse dispute-resolution needs of veterans and enhance their sense of honor, belonging, and fulfillment, the Supreme People’s Court and the Ministry of Veterans Affairs recently jointly issued a set of working guidelines, providing stronger judicial services and safeguards for veterans seeking diversified dispute resolution.
The guidelines stipulate that grassroots service centers (stations) for veterans shall serve as front-line platforms for resolving disputes and conflicts. Through home visits, symposiums, and other forms of communication, regular outreach and support activities for veterans shall be carried out, while efforts to promote legal awareness and clarify the law through case-based education shall be strengthened. Grassroots people’s courts and people’s tribunals may establish mobile adjudication stations at county-level veteran service centers to promptly and efficiently resolve disputes.
The guidelines require people’s courts to establish veterans’ mediation rooms, tailored to local conditions, in litigation service centers and other suitable venues. They also call for fully leveraging the online integration capabilities of the people’s courts’ mediation platform to bring eligible veteran‑mediation organizations, active‑duty or retired military personnel willing to engage in dispute resolution, people’s mediators, industry‑specific and specialized mediators, expert lawyers, and others onto the courts’ online and offline dispute‑resolution platforms, thereby providing veterans with a “menu‑style” array of diversified dispute‑resolution services.

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