JC Master Legal News Issue 1018

Key Takeaways for This Issue

The China Securities Regulatory Commission has issued the “Guidelines on Due Diligence by Sponsor Institutions” and the “Guidance on Working Papers for Sponsorship of Securities Issuance and Listing.”
To further enhance the quality of due diligence conducted by sponsoring institutions and to improve the working‑paper system for sponsorship business, the China Securities Regulatory Commission has revised the “Guidelines on Due Diligence by Sponsors” (CSRC Issuance Document No. 15 [2006], hereinafter referred to as the “Due Diligence Guidelines”) and the “Guidance on Working Papers for Securities Issuance and Listing Sponsorship” (CSRC Announcement No. 5 [2009], hereinafter referred to as the “Working Paper Guidance”). These revisions shall take effect from the date of their promulgation.
Two ministries have issued the “Notice on Standardizing and Effectively Carrying Out Relevant Work Related to the Pilot Issuance of REITs for Affordable Rental Housing.”
Recently, the General Office of the China Securities Regulatory Commission and the General Office of the National Development and Reform Commission jointly issued the “Notice on Standardizing the Pilot Issuance of Real Estate Investment Trusts (REITs) in the Infrastructure Sector for Affordable Rental Housing” (hereinafter referred to as the “Notice”), thereby promoting the orderly and standardized development of REITs business in the affordable rental housing sector.
Six departments: Severely crack down on illegal and criminal acts of fraudulently obtaining additional tax refunds.
The State Taxation Administration, the Ministry of Public Security, the Supreme People’s Procuratorate, the General Administration of Customs, the People’s Bank of China, and the State Administration of Foreign Exchange recently issued a notice, specifying that cracking down on illegal and criminal acts involving fraudulently obtaining additional tax credit refunds will be a key priority in the 2022 ongoing campaign against the fraudulent issuance of invoices and tax evasion, with concerted efforts to carry out joint enforcement actions.
The Supreme People’s Court has issued the “Opinions of the Supreme People’s Court on Strengthening the Judicial Application of Blockchain.”
On May 25, 2022, the Supreme People’s Court issued the “Opinions of the Supreme People’s Court on Strengthening the Judicial Application of Blockchain” (hereinafter referred to as the “Opinions”). A new round of the “cars-to-the-countryside” policy is imminent—how can the lower-tier markets boost automobile consumption demand?

Finance & Capital Markets
The China Securities Regulatory Commission has issued the “Guidelines on Due Diligence by Sponsor Institutions” and the “Guidance on Working Papers for Sponsorship of Securities Issuance and Listing.”
To further enhance the quality of due diligence conducted by sponsoring institutions and to improve the working‑paper system for sponsorship business, the China Securities Regulatory Commission has revised the “Guidelines on Due Diligence by Sponsors” (CSRC Issuance Document No. 15 [2006], hereinafter referred to as the “Due Diligence Guidelines”) and the “Guidance on Working Papers for Securities Issuance and Listing Sponsorship” (CSRC Announcement No. 5 [2009], hereinafter referred to as the “Working Paper Guidance”). These revisions shall take effect from the date of their promulgation.
This revision of the Due Diligence Guidelines focuses on refining and clarifying work requirements and standards to enhance their operational feasibility. It carefully examines the due diligence issues and challenges identified during the registration‑based pilot program, thereby articulating targeted baseline requirements and quality standards, while strengthening procedural safeguards and codes of conduct. The guidelines uphold the principle of accountability, delineate clear lines of responsibility, improve the reasonable reliance framework, and specify the criteria and procedures for sponsor institutions to reasonably rely on the professional opinions or underlying work of securities service providers. Moreover, they place greater emphasis on the sponsor’s role as a “referee,” fully leveraging its forward‑looking function in assessing investment value.
The “Working Paper Guidelines” primarily set forth the matters requiring attention and the documentation to be retained in the due diligence working papers of sponsoring institutions, as well as the format and procedures for preparing such working papers. Any documents, materials, or information that have a material impact on the fulfillment of sponsorship duties shall be retained as part of the working papers. This revision introduces three new categories of working paper requirements: first, review materials pertaining to the professional opinions of securities service providers; second, working papers generated during the internal review stage; and third, relevant working papers documenting the analysis and verification processes.
From November 19 to December 18, 2021, the China Securities Regulatory Commission (CSRC) publicly sought comments from the public on the “Due Diligence Guidelines” and the “Working Paper Guidelines.” During the consultation period, stakeholders generally endorsed the revision approach, institutional framework, and key provisions of these documents, while also submitting a number of suggestions and opinions. The CSRC carefully reviewed each comment and incorporated those deemed reasonable.
Going forward, the CSRC will rigorously implement the Due Diligence Guidelines and the Working Paper Guidelines in its day-to-day regulatory work, continue to refine the institutional framework, and urge sponsoring institutions to consistently enhance their professional standards, thereby strengthening the capital market’s capacity to support the high-quality development of the real economy.

The China Securities Regulatory Commission is soliciting public comments on the “Announcement Regarding the Inclusion of Exchange-Traded Open-End Funds in the Mutual Market Access Arrangements.”
To further deepen the mutual market access mechanism between the mainland and Hong Kong stock markets and to promote the joint development of the capital markets on both sides, the China Securities Regulatory Commission has drafted the “Announcement on Including Exchange-Traded Open-End Funds in the Relevant Arrangements for Mutual Market Access” (hereinafter referred to as the “Announcement”) and is now soliciting public comments.
The Notice comprises five provisions: first, it clarifies that the mutual market access mechanism between the mainland and Hong Kong stock markets has been extended to exchange-traded open-ended funds; second, it stipulates that the relevant institutional arrangements shall follow those applicable to stock‑based mutual market access; third, it sets out the arrangements for investor identification codes; fourth, it specifies the requirements for securities offices and public fund managers; and fifth, it outlines the arrangements for implementing the business rules. For detailed information, please refer to the explanatory note accompanying the Notice.
We welcome valuable feedback from all sectors of society on the Notice. The China Securities Regulatory Commission will, based on the results of the public consultation, further refine the document and, after completing the relevant procedures, issue and implement it.

The State-owned Assets Supervision and Administration Commission of the State Council has issued a work plan to promote the high-quality development of listed companies controlled by central state-owned enterprises.
Recently, the State-owned Assets Supervision and Administration Commission of the State Council formulated and issued the “Work Plan for Enhancing the Quality of Listed Companies Controlled by Central Enterprises” (hereinafter referred to as the “Work Plan”), laying out measures to improve the quality of such listed companies.
Since the 18th National Congress of the Communist Party of China, the CPC Central Committee and the State Council have introduced a series of policies to advance capital market development and have issued specific documents aimed at enhancing the quality of listed companies, setting clear requirements for related work. The three-year action plan for state-owned enterprise reform has also put forward concrete measures to deepen reforms and standardize operations among state‑controlled listed companies. In earnest implementation, the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) has, in recent years, undertaken extensive efforts to facilitate the integration of high‑quality assets of central enterprises into the capital markets, promote improved corporate governance and operational efficiency among centrally‑controlled listed companies, strengthen oversight of listed offices, and proactively manage and mitigate associated risks. As a result, the “leading‑goose effect” of listed companies within the central enterprise sector has been effectively realized. To date, central enterprises collectively hold stakes in more than 440 domestic and overseas listed companies, including over 350 in China, making them an integral part of China’s capital markets and playing a pioneering role in enhancing value creation, leveraging the functions of listing platforms, optimizing shareholder returns, and fulfilling social responsibilities. Nevertheless, it must be acknowledged that listed companies controlled by central enterprises still face certain shortcomings and weaknesses, leaving a considerable gap between their current performance and the goals of high‑quality development. Accordingly, SASAC has formulated a Work Plan to guide central enterprises in adopting tailored strategies and targeted measures, thereby effectively elevating the quality of their portfolio of listed companies.
The Work Plan sets out the guiding principles and overall approach for enhancing the quality of listed companies controlled by central state-owned enterprises, articulating the overarching goal of “strengthening internal fundamentals while shaping a positive external image, striving to become model entities in the capital market—prominent in their core businesses, achieving high‑quality growth, boasting sound corporate governance, and operating with integrity—so that investors can engage closely, understand clearly, see transparently, and have confidence.” It also specifies two concrete objectives: “building a cohort of flagship leading listed companies with strong core competitiveness and significant market influence,” and “cultivating a group of specialized, industry‑leading listed companies distinguished by clear professional strengths and robust brand reputation.” The Work Plan calls on central SOEs to strike a balanced integration across three key dimensions: aligning efforts to optimize existing holdings with refining new additions; balancing value creation with value realization; and giving equal weight to compliance with the law and reform and innovation. To advance these goals, the Plan outlines 14 specific measures across four priority areas: optimizing the layout and enhancing the functions of listing platforms; promoting improved corporate governance and standardized operations among listed companies; bolstering endogenous growth and fostering innovative development; and strengthening market recognition and value realization. These measures cover critical aspects of listed company reform and development, including public listings, corporate governance, day-to-day operations, capital management, technological innovation, talent cultivation, risk prevention and control, and market performance. Finally, the Work Plan requires central SOEs to formulate tailored implementation plans based on their own circumstances and ensure rigorous execution, while also proposing pilot initiatives to incorporate the quality of listed-company development into the performance appraisal of senior executives at central SOEs.
According to the head of the Property Rights Administration of the State-owned Assets Supervision and Administration Commission of the State Council, in order to draft the Work Plan with high quality, a systematic survey was conducted among central enterprise groups, centrally‑owned listed companies, securities regulators, professional investment institutions, market research offices, and relevant experts. At the same time, the plan drew on key achievements from recent state‑owned enterprise reforms and capital market developments, thereby laying a solid foundation for its preparation. Following the completion of a preliminary draft, opinions were solicited at multiple levels and from all angles, with extensive feedback collected and collated. After several rounds of revision and refinement, the final Work Plan was finalized.
An official from the State-owned Assets Supervision and Administration Commission of the State Council stated that efforts will focus on implementing the Work Plan, strengthening mobilization and communication, providing guidance and coordination, and conducting ongoing monitoring and oversight to ensure tangible results. At the same time, policy coordination with securities regulators and other relevant authorities will be further enhanced, with increased support for related initiatives, to jointly promote the high-quality development of listed companies controlled by central enterprises, bolster their capacity for sustainable development and overall strength, and make new and greater contributions to the healthy and sustained growth of the capital market.

Beijing: Promoting asset management institutions to launch products that invest in the stocks of companies listed on the Beijing Stock Exchange.
On May 28, reporters learned from the official website of the Beijing Local Financial Supervision and Administration that the Beijing Local Financial Supervision and Administration, the Business Management Department of the People’s Bank of China, the Beijing Banking and Insurance Regulatory Bureau, and the Beijing Securities Regulatory Bureau recently jointly issued the “Opinions on Promoting the Development of Beijing as a Global Wealth Management Center” (hereinafter referred to as the “Opinions”).
The Opinions state that comprehensive support will be provided for the development of the Beijing Stock Exchange, fully leveraging its role as a primary platform for serving innovative small and medium-sized enterprises and fostering a financial ecosystem that nurtures their growth. Efforts will be intensified to expand the pool of companies listed on the New Third Board and those poised to list on the Beijing Stock Exchange, with a focus on identifying and cultivating a cohort of local high-tech enterprises for listing on the New Third Board and applying to the Beijing Stock Exchange. Coordination and cooperation with Tianjin, Hebei, and other provinces and municipalities will be strengthened to encourage eligible innovative SMEs nationwide to seek listings on the Beijing Stock Exchange. Municipal and district government investment funds will be encouraged to support both companies listed on the Beijing Stock Exchange and those listed on the New Third Board. Furthermore, asset management institutions—including public fund management companies, bank wealth‑management offices, insurance asset management companies, securities asset management companies, trust companies, fund subsidiaries, and pension‑fund management companies—will be urged to launch products that invest in shares of companies listed on the Beijing Stock Exchange.
The Opinions state that the Beijing Equity Trading Center should be fully leveraged as a platform for transferring equity and venture‑capital interests, providing high‑quality investment opportunities to secondary‑market funds (S‑funds), domestic and overseas private equity funds, and qualified investors. The Center’s functions—including equity trading, registration and custody, investment and financing, and mergers and acquisitions/restructuring—should be strengthened to establish a premier platform supporting the entire lifecycle of SMEs’ venture‑capital and equity‑investment activities, from fundraising and investment to management and exit. Furthermore, the development of secondary‑market private‑equity funds, coupled with the enhancement of post‑investment service mechanisms and institutional frameworks, will enable the provision of full‑cycle equity‑investment services to high‑growth enterprises. Multinational corporations based in Beijing are encouraged to bolster their global or regional treasury‑management capabilities and, upon approval, may participate in interbank foreign‑exchange market transactions.

The CSRC further standardizes and strengthens on-site inspections of investment banks’ internal controls.
To encourage securities offices to continuously strengthen internal controls over their investment banking operations and enhance the quality of their professional practice, the China Securities Regulatory Commission recently issued, within its regulatory framework, the “Guidelines for On-site Inspections of Internal Controls in Securities Offices’ Investment Banking Activities” (hereinafter referred to as the “Guidelines”). These Guidelines aim to institutionalize on-site inspection procedures, further transmit regulatory oversight, clarify regulatory priorities, and urge securities offices to attach great importance to the development and effective implementation of internal control systems in their investment banking businesses, thereby fully leveraging the checks-and-balances function of such mechanisms. At the same time, the Guidelines seek to refine the selection criteria for inspection subjects, specify key areas of focus, reafoffice inspection discipline, and elevate the institutionalization and standardization of on-site inspections.
The quality of investment banking practices at securities offices is critical to the quality of listed companies and the protection of the interests of small and medium-sized investors. In March 2018, the China Securities Regulatory Commission issued the “Guidelines on Internal Controls for Investment Banking Activities of Securities Offices,” setting out clear requirements for establishing robust internal control systems in the investment banking function. Over the past four-plus years, industry participants have generally put in place organizational frameworks for internal controls over investment banking activities, achieving centralized and unified management and establishing a three‑line defense comprising business units, quality control, and the internal review and compliance function. These measures have effectively reinforced self‑discipline and risk prevention, leading to steady improvements in the quality of investment banking services. However, recent investigations into violations in investment banking reveal a range of shortcomings in internal controls, including inadequate regulatory frameworks and insufficient implementation. In some cases, there have even been serious breaches, such as overlapping appointments between investment banking and quality‑control personnel, or unauthorized removal of internal review comments by business‑unit staff, rendering the internal control mechanisms largely symbolic.
The “Work Guidelines” focus on strengthening on-site inspections to encourage securities offices to better leverage the supervisory and checks-and-balances functions of their investment banking internal control mechanisms. The Guidelines set forth key provisions in the following areas: First, they specify five circumstances that mandate inspection, including a high rate of withdrawal or rejection of investment banking projects, low ratings in investment banking practice quality assessments, a large number of negative public comments or significant adverse impacts, a high default rate on corporate bond underwriting or asset‑securitization management projects, and the imposition of major regulatory measures or administrative penalties for violations of laws or regulations in investment banking activities. Second, they delineate three priority inspection areas: the soundness and effective implementation of a securities office’s investment banking internal control systems; the soundness and effective implementation of mechanisms for preventing and controlling integrity risks in investment banking operations; and the performance of duties and responsibilities by senior management, the internal review committee, quality control personnel, and heads of business units. Third, they identify four categories of entities subject to disciplinary action: when inspections reveal illegal or non‑compliant conduct by securities offices, their management, internal control staff, or business personnel, administrative regulatory measures shall be imposed in accordance with the law, or the matter shall be referred to the inspection authorities or judicial organs for further handling.
Going forward, the CSRC will organize the industry to fully implement the Work Guidelines, rigorously address any issues identified during inspections in accordance with the law, and ensure the effective application of穿透式监管 (penetrative supervision) and end-to-end accountability. At the same time, it will place equal emphasis on investigating and rectifying problems and on distilling lessons learned, using enforcement to drive reform, promptly publicizing typical issues and case studies to the industry, continuously strengthening the responsibilities of securities offices, and urging them to adopt sound development principles so as to better support the high-quality development of the capital market.

Commercial & Corporate
Two ministries have issued the “Notice on Standardizing and Effectively Carrying Out Relevant Work Related to the Pilot Issuance of REITs for Affordable Rental Housing.”
To implement the decisions and arrangements of the CPC Central Committee and the State Council on accelerating the development of affordable rental housing, and in accordance with the requirements set forth in the “Opinions of the General Office of the State Council on Further Revitalizing Existing Assets and Expanding Effective Investment,” this initiative aims to facilitate the revitalization of existing assets, broaden equity‑based funding channels for the construction of affordable rental housing, and promote the stable and healthy development of the real estate market. Recently, the General Office of the China Securities Regulatory Commission and the General Office of the National Development and Reform Commission jointly issued the “Notice on Standardizing and Effectively Carrying Out Pilot Issuance of Real Estate Investment Trust Funds (REITs) in the Infrastructure Sector for Affordable Rental Housing” (hereinafter referred to as the “Notice”), thereby advancing the orderly and standardized development of REITs business in the affordable rental housing sector.
The Notice strictly enforces real estate market regulation policies, establishing effective safeguards in areas such as the sponsor entity and the use of proceeds, while reinforcing the responsibilities of participating institutions to prevent illicit flows of REIT‑related funds into the development of commodity housing and commercial real estate. Key provisions include: first, clarifying that the sponsor must be an independent legal entity engaged in affordable rental housing; second, mandating a rigorous closed-loop management system for the use of proceeds, ensuring that net proceeds are prioritized for the construction of new affordable rental housing projects or allocated to other infrastructure initiatives addressing critical shortcomings; third, strengthening institutional accountability by prohibiting controlling shareholders and ultimate controllers of the sponsor from misappropriating these funds; and fourth, enhancing coordination and collaboration, with the China Securities Regulatory Commission and the National Development and Reform Commission providing guidance to the Shanghai and Shenzhen stock exchanges, local securities regulatory authorities, and regional development and reform commissions to ensure proper recommendation, review, and ongoing oversight.
Going forward, the China Securities Regulatory Commission, in coordination with relevant departments and institutions, will, in accordance with market‑based and rule‑of‑law principles, encourage the issuance of REITs for affordable rental housing that features clear ownership, mature operating models, and sustainable market‑driven returns. The Commission will work to expedite the implementation of pilot projects while strengthening market oversight, urging original equity holders and intermediary institutions to act with integrity and fulfill their duties, thereby ensuring the steady and long-term development of affordable rental housing REITs.

Go all out to boost the industrial economy and organize a new round of “New Energy Vehicles to the Countryside” initiatives.
On May 27, the Ministry of Industry and Information Technology convened a videoconference on boosting the industrial economy. Xiao Yaqing, Secretary of the Party Group and Minister of the Ministry, attended the meeting and delivered a speech. The meeting was guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, thoroughly implemented General Secretary Xi Jinping’s important instructions to “contain the epidemic, stabilize the economy, and ensure secure development,” and fully carried out the arrangements set forth at the national videoconference on stabilizing the overall economy. It also outlined plans for the next phase of efforts to revitalize the industrial economy, contributing to the nationwide effort to maintain economic stability. Ministry leaders Xu Xiaolan, Han Xia, and Xu Keming attended the meeting.
The meeting emphasized that industry is the backbone of the national economy and its primary engine of growth; economic stability hinges on industrial stability. The industrial and information technology sectors must align their thinking and actions with the CPC Central Committee’s analysis, assessment, and policy decisions regarding the current situation, further heighten their sense of urgency, fully, accurately, and comprehensively implement the new development philosophy, and efficiently coordinate epidemic prevention and control with economic and social development. Upholding the principle of prioritizing stability while seeking progress within that stability, they should solidly carry out the “Six Stabilities” and “Six Guarantees” initiatives, make every effort to revitalize the industrial economy, and provide robust support for maintaining overall economic stability. With the second quarter serving as a critical period for the year’s development, it is imperative to remain confident, strengthen coordination, supervision, and monitoring and early warning mechanisms, and adopt extraordinary measures and approaches to ensure the effective implementation of the comprehensive package of policies and measures, thereby securing reasonable growth in the industrial sector during the second quarter and striving to achieve the year’s targets and tasks.
The meeting emphasized that ensuring the stability and resilience of industrial supply chains is of paramount importance for boosting the industrial economy. It called for focusing on key enterprises, priority industries, and critical regions, further intensifying efforts, and advancing the resumption of work and full production in a proactive yet prudent and orderly manner to ensure the smooth functioning of industrial and supply chains. Balancing epidemic prevention and control with industrial production, the meeting urged guidance to enterprises to maintain stable operations under pandemic conditions, the establishment of comprehensive closed-loop management plans, and the accelerated enhancement of capacity to sustain and ramp up production. The “whitelist” system for key enterprises should be continuously implemented, with the scope of eligible offices dynamically adjusted, provincial-level whitelist recognition among regions expedited, and coordinated measures put in place to secure the supply of essential production factors. For priority sectors such as automobiles, integrated circuits, equipment manufacturing, and biopharmaceuticals, the platform for coordinating and smoothing industrial and supply chain flows should be leveraged to strengthen upstream–downstream linkages and services, with all efforts directed toward unblocking bottlenecks and chokepoints. Enhanced inter‑provincial and inter‑city coordination in key regions—including the Yangtze River Delta, the Pearl River Delta, and the Beijing–Tianjin–Hebei area—should be pursued through targeted, one‑on‑one approaches to help leading enterprises and critical nodes effectively address practical challenges related to workforce re‑entry, product supply, and material transportation, thereby enabling businesses to operate at full capacity and achieve steady growth in output.
The meeting emphasized placing support for small and medium-sized enterprises (SMEs) in a more prominent position, adhering to policies that benefit businesses, services that assist them, and an enabling environment that invigorates them. Every effort must be made to help SMEs overcome difficulties and achieve steady, healthy development. We will ensure the meticulous implementation of measures to provide targeted relief and address challenges faced by micro, small, and medium-sized enterprises, enrich the functionalities of digital policy‑service platforms such as the SME Assistance Inquiry APP, and organize public service platforms at all levels to reach enterprises, industrial parks, and industry clusters, with a focus on resolving the “last mile” issue in policy delivery. We will deepen the implementation of SME service initiatives, launch SME Service Month activities, and concentrate on addressing key weaknesses—such as innovation and entrepreneurship, digital transformation, and market expansion—by offering precise, high‑efficiency services to foster specialized, refined, distinctive, and innovative development. In addition, we will conduct comprehensive inspections to reduce the burden on enterprises and promote SME growth, intensify efforts to curb illegal and arbitrary fees imposed on businesses and to clear outstanding payments, and publicly disclose and expose cases of serious arrears involving violations of discipline or law, as well as instances of malicious non‑payment, thereby effectively safeguarding the rights and interests of SMEs.
The meeting called for the entire system to act swiftly, strengthening overall coordination, improving working mechanisms, and rigorously enforcing accountability. With a robust work style and unwavering determination, it urged the implementation of multiple measures to ensure that policies and initiatives aimed at stabilizing growth are proactively advanced and effectively put into practice. It emphasized the urgent execution of major projects and programs under the 14th Five-Year Plan for manufacturing, the timely and forward‑looking deployment of new‑generation information infrastructure such as 5G and the industrial internet, and the accelerated progress of energy‑saving and carbon‑reduction technology upgrades in key sectors as well as priority foreign‑invested projects, striving for early commencement, early production, and early results. The meeting also directed the organization of a new round of “New Energy Vehicles to the Countryside” campaigns, the launch of a batch of demonstration cities and projects for information consumption, and efforts to boost demand for major durable goods such as automobiles and home appliances. Furthermore, it called for continued reinforcement of support and safeguards for epidemic prevention and control, including medical supplies and communication‑based big data applications. It stressed the importance of enhancing awareness of safe development, ensuring rigorous workplace safety and quality management. Finally, it urged strengthened policy communication and public opinion guidance, the summarization and dissemination of exemplary cases and best practices from across the country, and the full mobilization of industry associations and other stakeholders, so as to forge a concerted effort to implement measures and overcome challenges together, thereby welcoming the successful convening of the 20th National Congress of the Communist Party of China with concrete actions.

Coal prices in producing regions have risen, boosting sector sentiment.
Recently, thermal coal prices at the production end have remained strong, and expectations for coking coal and metallurgical coal prices are gradually stabilizing. Market sentiment regarding coal demand has shown signs of recovery. We remain optimistic about the impact of policy measures, such as a stronger push on infrastructure investment and further easing of real estate policies, and expect market expectations for the industry’s full-year performance to continue rising. We recommend increasing allocations to undervalued individual stocks.
Last week, the sector significantly outperformed the broader market, with thermal coal futures prices rising and coking coal and coke futures prices declining. For the week ending May 27 (the same applies hereafter), the CITIC Coal Sector Index posted a gain of +7.05%, outpacing the CSI 300 Index by 8.92 percentage points. The top five performers were Dayou Energy (+28.04%), Zhengzhou Coal & Electricity (+19.11%), Shaanxi Heimao (+14.23%), Haohua Energy (+13.85%), and Shanghai Energy (+12.38%). Last week, the most active thermal coal futures contract, ZC2209, settled at 870.6 yuan/ton, up 4.89% from the previous week; the leading coking coal futures contract, JM2209, closed at 2,559 yuan/ton, down 4.16%; and the benchmark coke futures contract, J2209, ended at 3,351.5 yuan/ton, down 3.58%.
Port‑side thermal coal prices edged lower, while coking coal prices at the producing regions posted their fourth consecutive cut. Last week, the market price for 5,500 kcal/kg thermal coal at Qinhuangdao stood at RMB 1,270 per tonne, down 2.31% from the previous week; profit margins for coal shipped to the port from Inner Mongolia and Shanxi were +RMB 275 and +RMB 200 per tonne, respectively. At Jingtang Port, spot prices for Shanxi‑origin coking coal were RMB 3,445 per tonne (flat versus the prior week), while spot prices for Grade‑2 metallurgical coke from Tangshan remained unchanged at RMB 3,250 per tonne. Meanwhile, coking coal prices at the producing sites recorded a fourth round of declines, with cuts again averaging RMB 200 per tonne. Last week, average rail inbound volumes at Qinhuangdao reached 520,000 tonnes, up 20.08% from the prior week, with daily throughput averaging 490,000 tonnes. The number of vessels anchored in Qinhuangdao’s anchorage averaged 55, an increase of 1.31% week over week, while port inventories rose to 4.73 million tonnes, up 4.65% from the previous week. Combined coal stocks across the three northern ports totaled 10.56 million tonnes, up 5.07% from the prior week.
In the eight coastal provinces, daily power‑plant coal consumption rose 5.74% month over month, while inventories increased 1.17% from the previous period. Nationally, blast‑furnace operating rates remained unchanged compared with the prior week. Last week, average daily road sales in Ordos totaled 1.3329 million tonnes, down 16.06% month over month, primarily due to a shortage of coal‑transport permits at month’s end.
Short-term industry fundamentals update: In the thermal coal pit‑gate market, supply remains tight, and “coking coal and metallurgical coal” prices are likely to stay weakly stable in the near term. At major production hubs—primarily in Inner Mongolia—coal‑transport permits have once again become scarce as month‑end approaches, while robust government‑mandated supply‑guarantee efforts further tighten market availability, keeping prices office. In key non‑power‑sector coal‑producing regions of Northwest China, spot prices have risen across the board by 30–80 yuan per ton compared with the previous period. At ports, thermal coal trading volumes remain subdued. On the one hand, downstream demand is constrained by hydropower generation and subdued price‑setting expectations, leading to lower bid levels; on the other, elevated pit‑gate prices translate into higher cost bases for sellers, widening the gap between buyers and sellers and limiting transaction activity. We expect that, as power plants enter their summer inventory‑replenishment phase in June, non‑power‑sector coal supplies could tighten further, pushing market prices higher.
Coking coal prices have now been cut across the board in four rounds, and this price decline has weighed on the operating rates of some coking enterprises, leading to a slight contraction in supply. Following these adjustments, certain steel mills are also inclined to modestly build up their coking coal inventories. As a result, coking coal prices are expected to remain broadly stable in the near term. On the coking coal front, production‑supervision authorities in Inner Mongolia’s Wuhai and other key producing regions have tightened oversight of overproduction, curbing supply and pushing regional prices higher, while prices at major coking coal hubs such as Shanxi have remained largely unchanged.
Risk factors: a slowdown in economic growth; a concentrated release of supply that suppresses coal prices; and localized COVID‑19 outbreaks that exceed expectations, among others.
Investment Strategy: With sentiment and expectations rebounding, we recommend actively increasing allocations to undervalued individual stocks. In the short term, market sentiment and expectations have improved markedly, driven primarily by improving demand outlooks. We expect that, as localized outbreaks ease and infrastructure investment gains momentum, coal demand will see another round of pulse‑like improvement. Meanwhile, medium‑term policy expectations—such as steady‑growth initiatives and the gradual easing of real‑estate policies—will also support industry demand prospects. Although supply‑guarantee and production‑expansion policies are being rolled out, the incremental capacity currently foreseeable remains limited, leaving the sector in a relatively tight supply environment. In addition, listed companies have recently announced ex‑dividend dates, which should provide further support to the share prices of high‑dividend-paying offices. We advise actively adding to positions in undervalued companies, including LanHua Sci‑Tech, Lu’an Environmental Energy, Shanxi Coking Coal, Yankuang Energy, DianTou Energy, and Shanxi Coal International.
Taxation TAXATATION
Six departments: Severely crack down on illegal and criminal acts of fraudulently obtaining additional tax refunds.
The State Taxation Administration, the Ministry of Public Security, the Supreme People’s Procuratorate, the General Administration of Customs, the People’s Bank of China, and the State Administration of Foreign Exchange recently issued a notice, specifying that cracking down on illegal and criminal acts involving fraudulently obtaining additional tax credit refunds will be a key priority in the 2022 ongoing campaign against the fraudulent issuance of invoices and tax evasion, with concerted efforts to carry out joint enforcement actions.
The notice states that, in accordance with operational needs and the specifics of each case, local authorities shall organize and carry out case investigations and prosecutions through joint law enforcement, collaborative case handling, and other measures; conduct joint fact-finding and evidence collection; and actively promote coordinated inspections and investigations into tax-related violations and crimes, as well as related criminal activities.
The notice clarifies that the criminal policy of combining leniency with strictness must be accurately implemented, seamlessly integrating the crackdown on illegal and criminal acts involving fraudulently obtaining additional tax refunds with the criminal justice policy of minimizing arrests, cautious prosecution, and prudent detention, as well as with the application of the system of lighter penalties for those who admit guilt and accept punishment. For cases involving large sums, egregious circumstances, and serious harm, such offenses shall be resolutely punished severely. Meanwhile, for first-time or occasional offenders—particularly bona fide enterprises that promptly pay back the evaded taxes and mitigate fiscal losses—more lenient penalties may be imposed in accordance with the law, ensuring the organic unity of political, social, and legal outcomes in case handling.
The notice stipulates that policy communication should be strengthened to send a strong signal of zero tolerance and severe punishment for illegal acts such as fraudulently obtaining additional tax refunds; furthermore, efforts to publicize cases should be intensified, with typical cases disclosed in a categorized and tiered manner, thereby continuously reinforcing deterrence and warning against unlawful actors.

Expert: A Two-Pronged Approach of “External Enforcement and Internal Investigation”
Ensuring that VAT credit refund funds are directly channeled to law-abiding enterprises.
On May 26 and 27, the State Taxation Administration publicly disclosed two cases of fraudulently obtaining additional tax credit refunds, as well as one case involving a tax official who accepted bribes in the course of processing such refunds and is now under disciplinary investigation. To date, tax authorities at all levels have cumulatively made public 215 cases of enterprises fraudulently obtaining additional tax credit refunds, along with 30 cases of tax officials held accountable for dereliction of duty and 6 cases of tax officials colluding with external parties that have been placed under investigation.
Tax and fiscal experts generally agree that, amid mounting downward economic pressures, market entities urgently need the funds from the carryforward VAT refund policy. While accelerating the implementation of this policy, tax authorities are stepping up efforts to crack down on illegal and criminal activities involving fraudulent claims for such refunds, and internally are rigorously investigating instances of dereliction of duty or negligence among tax officials—particularly launching formal investigations into a small number of tax personnel who collude with external parties. These measures help ensure that funds are swiftly and precisely channeled directly to enterprises that meet the eligibility criteria.
215 cases of fraudulently obtaining additional tax refunds have been uncovered.
The carryforward VAT refund is, in itself, “real money,” and the more urgent its implementation, the more pressing it becomes to crack down on fraudulent claims. According to Xu Sheng, a researcher at the China Academy of Macroeconomic Research, the 1.64 trillion yuan in refunds will provide market entities with an unprecedented “blood transfusion” and “self‑sustaining” boost—serving as a lifeline for law-abiding offices while also becoming a tempting prize for those seeking to exploit the system. Only by continuously intensifying efforts to combat fraudulent claims can these measures truly play their critical role in helping businesses and addressing their most pressing needs.
“The key to cracking down on fraudulent claims for additional tax refunds lies in emphasizing ‘early’—and the earlier, the better,” says Yang Yanying, a professor at the Central University of Finance and Economics. As the policy for refunding outstanding input VAT credits is being implemented at an accelerated pace, the fight against tax fraud has grown increasingly challenging. Signs of organized, syndicate‑style fraud have already emerged, and illegal and criminal methods are constantly evolving. Therefore, it is imperative to further strengthen interagency coordination among tax authorities, public security organs, banks, and other relevant entities to ensure early detection, timely prevention, and swift enforcement.
The reporter learned that, this year, as the large-scale value-added tax credit refund policy has been steadily implemented, the State Taxation Administration, the Ministry of Public Security, the Supreme People’s Procuratorate, the General Administration of Customs, the People’s Bank of China, and the State Administration of Foreign Exchange have further refined their collaborative mechanisms on the basis of previous efforts. They have taken strong measures to crack down on fraudulent claims for credit refunds, fostered a fair and equitable market competition environment, and maximized the positive impact of the credit refund policy.
Shi Zhengwen, Director of the Research Center for Fiscal and Tax Law at China University of Political Science and Law, stated that at this critical juncture—when implementing the carryforward VAT refund is entering its decisive phase—it is both timely and necessary for six departments to convene a joint promotion meeting and issue a notice to coordinate and deploy efforts to combat fraudulent claims for such refunds. This move has significantly enhanced the precision, intensity, and speed of enforcement, yielding results that “crack down on a group while deterring a wider circle.”
“Since the implementation of the carryforward VAT refund policy, the coordinated efforts of six government departments have yielded significant results. A number of cases involving fraudulent claims for carryforward VAT refunds have been rigorously investigated and prosecuted, with typical cases regularly publicized, sending a strong signal that tax fraud will be met with strict crackdowns and illegal conduct will be severely punished,” said Li Hangxing, a professor at the School of Economics of Sichuan University. He added that this multi‑agency collaborative model can fully leverage the respective expertise of each department in areas such as case investigation, evidence collection, judicial prosecution, information sharing, and fund tracing, thereby maximizing the ability to deliver end‑to‑end, integrated, and penetrating enforcement against fraudulent claims for carryforward VAT refunds.
Another “internal investigation” case has been exposed.
On May 27, the State Taxation Administration announced a case in which a tax official was placed under investigation for allegedly accepting property in connection with the refund of outstanding input VAT credits, constituting a violation of discipline. In this case, Chen, the section chief of the Goods and Services Tax Division of a district tax bureau in Ningbo, repeatedly accepted property from the head of a certain enterprise and bears responsibility for the enterprise’s fraudulent acquisition of such refunds through concealment of income and false declarations, thereby violating disciplinary regulations. At present, the local tax authority’s disciplinary inspection body has initiated an investigation and will hold him strictly accountable in accordance with relevant rules, disciplines, and laws.
An official from the State Taxation Administration stated that it will further strengthen oversight and inspection of tax officials’ implementation of the carryforward VAT refund policy, rigorously investigating and addressing inaction, slow action, and improper conduct in this area. In particular, it will launch thorough dual investigations into cases of collusion between internal and external parties or concerted fraud to illegally obtain carryforward VAT refunds, and proactively publicize high‑profile instances where tax officials’ violations or misconduct have led to enterprises being investigated for fraudulent claims. The authorities will ensure that every violation is identified, investigated, and punished in accordance with the law, with zero tolerance, to guarantee the effective and accurate delivery of the carryforward VAT refund policy.
In response, Li Chungen, Vice President of Jiangxi University of Finance and Economics, stated that the tax authorities have proactively disclosed typical cases of dereliction of duty and negligence in implementing the carryforward VAT refund policy, and have initiated investigations into tax officials suspected of colluding with external parties or engaging in fraudulent schemes to obtain such refunds. This demonstrates a clear “zero-tolerance” stance and underscores the tax authorities’ unwavering commitment to ensuring the effective implementation of relevant policies.
In response to the impact on China’s economy stemming from unexpected changes in both domestic and international conditions, the CPC Central Committee and the State Council have called for accelerating the implementation of established policies designed to support businesses and alleviate their difficulties. On the basis of taxpayers’ voluntary applications, the rollout of outstanding tax credit refunds for medium- and large-sized enterprises has been advanced to begin on May 1 and June 1, respectively, with completion expected by the end of the first half of the year. At the same time, the scope of industries eligible for these refunds has been further expanded, and higher standards have been set for the timeliness and progress of implementation.
Experts note that market entities now have an even more urgent expectation for the effective implementation of policies, and relevant authorities will accordingly accelerate the pace of tax rebate disbursements. At this juncture, it is all the more critical for the six departments to strengthen their concerted cooperation—swiftly investigating, rigorously cracking down on, promptly processing, and efficiently closing cases involving fraudulent claims for additional tax credit refunds—while maintaining a stringent enforcement stance, reinforcing the deterrent effect of crackdowns, and enhancing the effectiveness of governance, thereby jointly safeguarding the robust defense against fraudulently obtained tax credit refunds.

The State Taxation Administration has released a new list of “non-contact” tax filing and payment services.
To further advance the 2022 “Doing Practical Things for Taxpayers and Payers—Spring Breeze Action 2.0” and to ensure the effective implementation of the new package of tax and fee support policies, particularly the large-scale value-added tax credit refund policy, the State Taxation Administration, taking the opportunity of undergoing a central inspection, recently released an updated version of the “List of ‘Non‑Contact’ Tax and Fee Services.” Building on last year’s rollout of 214 items, it has added another 19, bringing the total number of “non‑contact” tax and fee services to 233. As a result, with the exception of matters required by law or involving the physical delivery of documents, the majority of tax and fee‑related services available to taxpayers and payers are now accessible through non‑contact channels.
In recent years, the State Taxation Administration has, in accordance with the principle of “handling as much as possible online,” leveraged information technology and tax‑related big data to vigorously promote “non‑contact” tax filing and payment services across three key areas. First, it has focused on high‑frequency tax‑related matters, gradually enabling the entire process—ranging from tax returns and payments to information reporting and preferential‑policy registration—to be conducted entirely online. Second, it has addressed taxpayers’ urgent, difficult, and pressing concerns by facilitating cross‑regional tax‑related procedures and electronic payment services through the electronic tax bureau. Third, it has introduced innovative measures to continuously expand the reach of non‑contact services; for example, complex matters such as tax registration cancellation and administrative reconsideration applications can now be handled in a non‑contact manner through an integrated online‑offline approach.
In expanding “non-contact” channels for tax filing and payment, the tax authorities have actively broadened online services, steadily advanced digital‑based processing, and continuously expanded mobile‑app‑based solutions, making online and mobile transactions the norm. This effort enables taxpayers and payers to handle their tax and fee obligations without leaving home, thereby enhancing convenience while minimizing the risk of COVID‑19 transmission associated with in‑person gatherings.
To further advance “contactless” tax filing and payment, the tax authorities have focused on enhancing the functionality of the electronic tax bureau, providing robust support for the addition and optimization of online tax‑related services. By strengthening data collection within information systems and promoting inter‑agency data sharing, they are enabling data to flow more freely while reducing the need for taxpayers and payers to make in‑person visits, thereby significantly easing their reporting burdens. At the same time, they continue to refine mobile app features, optimize use cases, and create a new, convenient “tax filing and payment at your fingertips” experience.
Affected by the pandemic, “contactless” tax filing and payment have become the preferred option for the vast majority of taxpayers. For instance, since the implementation of the large-scale value-added tax credit refund policy, tax authorities have optimized and upgraded their information systems, introduced proactive notifications and automated data pre‑filling, streamlined application procedures, and adopted online acceptance and back‑office review—providing taxpayers with contactless services that enable them to handle credit refund applications efficiently and conveniently, thereby ensuring the swift and smooth rollout of this crucial measure.
Going forward, the State Taxation Administration will continue to leverage online platforms such as the Electronic Tax Bureau and mobile apps to expand “non-contact” channels for tax filing and payment, thereby further enhancing convenience for taxpayers and payers.

Sichuan: Mobilizing Multiple Stakeholders to Advance Collaborative Tax Governance
In 2022, Sichuan’s “Spring Breeze” initiative for taxpayer convenience focused on “joint tax governance,” with the implementation of the “Taxation Plus” program as its key pillar. The province undertook proactive efforts in data-driven applications, service coordination, and collaborative regulatory oversight, thereby rallying greater support for tax administration and compliance.
Taxation + Electricity: A “New Member” in the Family of National Economic Indicators
In January 2022, the “Tax‑Electricity Index” was officially incorporated into Sichuan’s regular economic outlook reporting, becoming the latest addition to the province’s suite of national economic indicators.
According to reports, this economic measurement index—jointly developed by Sichuan’s tax and power authorities—has been continuously refined into a “comprehensive” indicator that covers all market entities in Sichuan as well as 1,380 industry sub‑sectors. It serves to monitor the quality and efficiency of economic performance and to analyze economic development trends, making it an invaluable tool for local governments in formulating economic policies.
As the tax‑electricity index evolves from an economic model into a tool for deep‑level application, it has also cultivated a powerful “magnetic field” of collaborative governance, bringing together an expanding array of government departments and forging an increasingly robust synergy in tax‑related co‑governance. Recently, the Meishan Municipal Tax Service Bureau has extended the use of the tax‑electricity index to the financial lending sector, partnering with the local Financial Bureau, the Banking and Insurance Regulatory Commission, and the State Grid Meishan Power Supply Company to launch the innovative “Tax‑Electricity Index Loan.” Operating on the principle of “granting credit based on tax data and increasing credit limits based on electricity usage,” this initiative addresses the challenges faced by small, medium, and micro enterprises—namely, difficulty in accessing financing, high borrowing costs, and slow approval processes.
Taxation + Postal Services: Tax and fee services now reach the public right at their doorsteps.
“The Tianfu·Tax‑Post Service Station” addresses the gap between insufficient grassroots tax and fee service resources and taxpayers’ and payers’ demand for convenient services. Leveraging the extensive network of postal outlets, it has been established as a new, taxpayer‑friendly service venue that complements and extends traditional in‑person tax service halls, meeting the majority of tax‑related and payment‑related needs of taxpayers and payers at the township level.
Zhang Jian, Director of the Taxpayer Services Division of the Sichuan Provincial Tax Service Bureau, stated that the “Tianfu·Tax‑Post Service Stations” have bridged the “last mile” in extending tax and fee services to the grassroots level. The range and variety of tax‑related services offered at these stations continue to expand, and they have now evolved into “mini tax service halls” that cover scenario‑based services such as invoice issuance on behalf of taxpayers and tax‑awareness campaigns.
Zhang Jian stated that this year, the tax‑post cooperation will be further deepened to promote the standardization of services between tax‑post service stations and tax service halls. The plan is to establish 500 new tax‑post service stations at residents’ doorsteps and to build two cross‑regional centers in Chengdu and Liangshan, thereby achieving full coverage of invoice delivery.
Taxation + Education: Building a “Think Tank” That Meets the Demands of Modernization
The Sichuan Provincial Tax Service Bureau and Southwestern University of Finance and Economics have signed the “Co‑construction Agreement for the SWUFE Taxation Practice Education Base,” marking the official launch of their joint effort to establish this base. According to reports, the base will focus on cultivating top‑tier talent in digital taxation and finance and supporting major tax‑related research projects, thereby fostering greater synergy among government, industry, academia, and research institutions.
In addition to the provincial tax bureau and Southwestern University of Finance and Economics jointly establishing the “SWUFE Tax Practice Education Base,” tax authorities across Sichuan have also seized the opportunity presented by the government’s drive to streamline tax services, expanding their network of collaborative governance partners. Tailoring their approaches to local conditions, they have signed joint‑construction agreements with regional universities and launched co‑development initiatives, thereby harnessing the academic expertise of higher education institutions to strengthen tax‑governance efforts.
In Luzhou, the tax authorities have joined forces with Sichuan Police College to establish the “School–Tax” collaborative brand. Leveraging the college’s disciplinary and professional strengths, this partnership has opened up new avenues for enhancing the quality of discipline inspection and supervision work and for strengthening the use of information‑based strategies in tax audits.
In Chengdu, the “IP Tax‑School Co‑Construction” model jointly developed by the Jinniu District Tax Bureau of Chengdu and Chengdu Finance and Trade Vocational Senior High School not only turns the school’s outstanding teachers into a pool of intellectual resources for the tax authorities, but also enables experienced part-time instructors from the tax bureau to serve as a source of expertise for the school, thereby establishing a dual‑channel support system that integrates taxation and education.
At present, the Sichuan tax authorities have signed data-sharing agreements with 21 departments, including the China Banking and Insurance Regulatory Commission and Chengdu Customs, to aggregate, interconnect, and share tax- and fee-related data, thereby vigorously fostering a collaborative governance framework involving multiple agencies.

Litigation & Arbitration
Supreme People’s Procuratorate: Prosecuted a number of major elder‑fraud cases in accordance with the law, swiftly establishing a strong deterrent against such crimes.
On the morning of May 23, a national working conference was held to advance the special campaign by procuratorial organs to combat and rectify fraud targeting the elderly. The meeting outlined plans and set forth measures to ensure the full implementation of the central government’s directives on cracking down on and addressing pension fraud, as well as the spirit of the national conference on advancing this special campaign.
The meeting noted that launching a special campaign to combat and rectify fraud targeting the elderly is a concrete step to implement the CPC Central Committee’s directives on aging-related work in the new era, and an important measure to safeguard the legitimate rights and interests of senior citizens. Given that this effort affects countless households, it must be given the highest priority. Procuratorial organs at all levels should, in accordance with the Supreme People’s Procuratorate’s requirement to “focus on salient problems, closely integrate with routine supervision and case handling, and advance the special campaign in a forceful and effective manner,” perform their duties proactively and in strict compliance with the law, demonstrating a strong sense of political responsibility, rule-of-law awareness, and prosecutorial commitment, so as to ensure tangible results from the campaign.
The meeting emphasized that procuratorial organs at all levels must, from the standpoint of implementing national strategies, treat the effective launch and execution of this special campaign as a major political task, ensuring its thorough planning and vigorous advancement. They are to elevate their perspective, strengthen leadership, introduce innovative measures, and take proactive steps to secure tangible results. Procuratorial organs must conscientiously fulfill their leading responsibilities, remain centered on case handling, place all ongoing elder‑fraud cases under ledger‑based management, and fully leverage the integrated advantages of arrest and prosecution. They should intensify early intervention in investigations to guide evidence collection, rigorously review arrest applications, and provide post‑arrest guidance to ensure continued investigative efforts. During the campaign, they are to prosecute, in accordance with the law, a number of high‑profile elder‑fraud cases, swiftly establishing a strong deterrent. Efforts must be made to recover stolen assets and mitigate losses through innovative approaches. Working in coordination with public security authorities, they should trace the flow of funds involved, employ legal measures to compel recovery and order restitution, and combine these with policies such as balancing leniency and severity, exercising restraint in arrests, prosecutions, and detention, and granting leniency to those who plead guilty and accept punishment—thus encouraging suspects to voluntarily return illicit gains and compensate victims, thereby maximizing the restoration of property losses suffered by elderly victims. Furthermore, source‑level governance must be strengthened. In conjunction with case handling, procuratorial organs should proactively collaborate with administrative supervisory authorities to carry out rectification and standardization efforts. Focusing on the key areas of oversight identified in the campaign—particularly the protection of personal information of older adults and the false advertising of elderly‑care products—they should initiate public interest litigation. They should also work with relevant departments to analyze regulatory gaps and shortcomings across sectors, including internet platforms and elderly‑care service providers, promptly informing member agencies or issuing prosecutorial recommendations. At the same time, efforts to enhance media outreach and establish dedicated working teams must be intensified.
At the meeting, the procuratorates of Jiangsu and Zhejiang provinces shared their experiences. The Jiangsu Provincial Procuratorate established and refined three mechanisms—interdepartmental joint conferences, dedicated task forces, and liaison officers—to strengthen organizational leadership over the special campaign. At the same time, it conducted a comprehensive review of ongoing elder‑fraud cases across the province and meticulously sorted through leads received via the 12309 platform, maintaining dynamic case management through the creation of a case ledger to enhance guidance in handling such matters. Meanwhile, the Zhejiang Provincial Procuratorate leveraged digital reform to bolster the special campaign. Drawing on common characteristics identified in companies involved in illegal fundraising schemes targeting seniors, it developed and launched a digital case‑handling application module to analyze, assess, and verify suspicious clues related to potential criminal activity. By taking timely and lawful action against elder‑fraud offenses, the procuratorate has helped shift the legal supervision of the campaign from a case‑by‑case approach—driven by quantity, focused on individual cases, and centered on file reviews—to a more systematic, category‑based governance model that emphasizes quality, prioritizes similar cases, and is empowered by data.
The meeting was held via videoconference, extending to procuratorial organs at all four levels nationwide. Sun Qian, a member of the Party Leadership Group and Vice Procurator-General of the Supreme People’s Procuratorate, attended the meeting and delivered a speech. Chen Guoqing, also a member of the Party Leadership Group and Vice Procurator-General, and Gong Ming, a full-time member of the Procuratorial Committee, were in attendance, while Zhang Zhijie, a full-time member of the Procuratorial Committee, presided over the session.

The Supreme People’s Court has issued the “Opinions of the Supreme People’s Court on Strengthening the Judicial Application of Blockchain.”
On May 25, 2022, the Supreme People’s Court issued the “Opinions of the Supreme People’s Court on Strengthening the Judicial Application of Blockchain” (hereinafter referred to as the “Opinions”). This document represents a concrete measure by the people’s courts to thoroughly implement Xi Jinping’s thought on the rule of law and to carry out the important instructions of General Secretary Xi Jinping on promoting innovation and development in blockchain technology. It will further advance the use of key technologies—led by blockchain—by the people’s courts, accelerating their digital transformation, fostering a higher level of digital justice, and promoting the deep integration of the rule of law with science and technology, thereby elevating the construction of smart governance under the rule of law to an even higher stage.
The Party Central Committee with Comrade Xi Jinping at its core attaches great importance to the application and development of blockchain technology. General Secretary Xi Jinping has emphasized that blockchain should be regarded as a key breakthrough for independent innovation in core technologies, accelerating the innovative development of blockchain technology and related industries, and actively promoting the integrated development of blockchain with the economy and society. In recent years, the people’s courts have vigorously advanced the application of blockchain technology in the judicial field, establishing the People’s Courts Judicial Blockchain Platform. To date, more than 2.2 billion pieces of evidence have been recorded on the judicial blockchain, and the effectiveness and standardization of applications—including evidence preservation, intelligent assistance, and case file management—have continued to improve. Concrete results have been achieved in practical scenarios such as electronic evidence management, electronic service of process, and tamper‑proof verification.
To further strengthen the application of blockchain technology in the judicial field and fully leverage its role in enhancing public trust in the judiciary, supporting social governance, preventing and mitigating risks, and promoting high-quality development, the Supreme People’s Court has formulated and issued the “Opinions” based on thorough research, extensive consultation, and multi‑party deliberation. The document comprises seven sections and 32 provisions, setting out the overarching requirements for courts to advance blockchain‑based judicial applications and the standards for building court‑specific blockchain platforms. It identifies four key areas of typical application—enhancing judicial credibility, improving judicial efficiency, strengthening inter‑judicial coordination, and supporting economic and social governance—and outlines corresponding safeguard measures. The “Opinions” exhibit several distinct features:
First, it proposes establishing an interoperable and shared judicial blockchain consortium. The Opinions set forth that by 2025, a blockchain consortium will be in place, enabling seamless interconnection and data sharing between the people’s courts and various sectors of society. Core supporting capabilities—including data verification, trusted operations, smart contracts, and cross-chain collaboration—will be significantly enhanced. The judicial blockchain cross-chain consortium will be integrated into the broader economic and social operating system, proactively contributing to the optimization of the business environment, socio‑economic governance, risk prevention and resolution, and industrial innovation and development. It will also support the building of a safe China, a law‑based China, a digital China, and an honest China, thereby forging a distinctive Chinese model of blockchain applications in the judicial field that is world‑leading.
Second, the requirements for building blockchain platforms in the people’s courts have been clarified. The Opinions explicitly call on the people’s courts to strengthen top-level design for blockchain applications, steadily advance the development of cross-chain interoperability capabilities, enhance their judicial blockchain technical expertise, establish an internet-based judicial blockchain verification platform, and put in place a sound system of standards and specifications. The Opinions further propose creating an open and shared national judicial blockchain platform for the courts, bolstering cross-chain alliances between the judicial blockchain platform and blockchain platforms across various sectors to continuously improve collaborative capabilities; and developing an internet‑based judicial blockchain verification platform to enable parties and other relevant stakeholders to authenticate the authenticity of judicial data, including mediation records, electronic evidence, and litigation documents.
Third, the document proposes leveraging blockchain’s tamper-proof data‑storage technology to enhance public trust in the judiciary. It calls for migrating judicial data—including electronic case files, electronic archives, and judicial statistical reports—onto the blockchain; for recording execution‑related data and procedural actions on the chain as evidence; and for centrally storing court‑issued litigation documents and delivery acknowledgments on a judicial blockchain platform, thereby ensuring the security of judicial data and compliance with operational procedures. The document also specifies the need to refine and strengthen the blockchain platform’s evidence‑verification capabilities, enabling parties and judges to conduct online verification of electronically stored evidence via the blockchain, while promoting the development of standardized protocols and rules for blockchain‑based evidence preservation, thus improving the efficiency and reliability of electronic‑evidence adjudication.
Fourth, the document proposes leveraging blockchain technology to streamline business processes and enhance judicial efficiency. The Opinions identify five typical application scenarios: facilitating the circulation of case‑filing information; integrating mediation with trial procedures; linking and coordinating trial and enforcement processes to boost execution efficiency; and enabling enforcement officers to handle cases more conveniently. These measures aim to increase the level of automation in business workflows and improve overall judicial productivity. Additionally, the Opinions call for establishing smart‑contract‑based rules and procedures that automatically trigger case filing or enforcement initiation when mediation agreements are not honored, thereby strengthening the judicial authority of mediation and supporting diversified dispute resolution.
Fifth, the document proposes leveraging blockchain interoperability and interconnection to enhance judicial collaboration. It calls for establishing cross-chain collaborative applications between the people’s courts and judicial administrative authorities, enabling online access to and verification of lawyers’ qualifications and credit reports in litigation proceedings, thereby improving the timeliness of such verifications. It also advocates developing cross-chain collaborative systems linking the people’s courts with procuratorial organs, public security agencies, and judicial administrative departments, to boost the efficiency of online case workflows and strengthen data trustworthiness. Furthermore, it envisions building cross-chain collaborative platforms connecting the people’s courts with administrative law enforcement bodies, real estate registration authorities, financial, securities, and insurance institutions, as well as joint credit‑penalty entities, to establish automated mechanisms for enforcement inquiries and credit‑based sanctions, thus enhancing the efficiency of coordinated enforcement efforts.
Sixth, the document proposes leveraging blockchain‑based consortium trust services to enhance economic and social governance. It calls for advancing the establishment of cross‑chain interoperability mechanisms among blockchain platforms covering intellectual property, market regulation, property registration, trading platforms, data ownership, data transactions, financial institutions, and relevant government agencies, thereby supporting areas such as intellectual property protection, business environment optimization, data development and utilization, financial information flow and application, corporate bankruptcy and restructuring, and credit information system building.

The Supreme People’s Procuratorate has released typical cases of accountability for mandatory reporting in cases involving harm to minors.
On May 27, the Supreme People’s Procuratorate released typical cases of accountability for mandatory reporting in cases involving harm to minors. The six cases publicized this time include: some instances where accommodation providers, upon registering a minor and an adult staying together, failed to record guest information as required by law, neglected to verify or inquire into relevant circumstances, and did not report when they detected that the minor was at risk of harm, thereby allowing serious abuse to occur; others involve school administrators who, upon discovering clues of teacher‑perpetrated crimes against minors, suppressed the case without reporting it and privately arranged “mediation,” resulting in grave adverse consequences; still others concern private medical institutions that, after treating a pregnant young girl, failed to report the situation, leading to continued abuse with no protective measures in place; there are also cases where medical personnel, upon seeing a child injured by domestic violence, failed to report it—only thanks to the proactive reporting of nurses within the hospital and officials from the Women’s Federation that the victimized child received timely protection; and yet another involves a community residents’ committee that, upon learning that a person with limited capacity to act was raising a child alone despite lacking the ability to provide proper care, failed to report the situation, ultimately resulting in the child’s death by suffocation due to improper feeding practices. In all these cases, the entities and individuals who failed to fulfill their mandatory reporting obligations were subjected to varying degrees of disciplinary action, administrative penalties, or admonitory education, while those who proactively reported were commended and rewarded.
An official from the Ninth Procuratorial Office of the Supreme People’s Procuratorate stated that in May 2020, nine departments—including the National Supervisory Commission, the Supreme People’s Procuratorate, the Ministry of Education, and the Ministry of Public Security—jointly issued the “Opinions on Establishing a Mandatory Reporting System for Cases Involving Harm to Minors (Trial Implementation).” This mandatory reporting system was incorporated into the Law of the People’s Republic of China on the Protection of Minors, which was revised and came into effect in June 2021, thereby becoming a legally mandated requirement. In accordance with the aforementioned laws and regulations, state organs, residents’ committees, village committees, organizations that have close contact with minors, and their staff members, upon discovering in the course of their work that a minor’s physical or mental health has been harmed, is suspected of being harmed, or is otherwise at risk, shall immediately report such cases to the relevant authorities, including public security, civil affairs, and education departments. Furthermore, lodging establishments such as hostels, guesthouses, and hotels, when accommodating minors or allowing minors to check in together with adults, are required to inquire about the contact information of parents or other legal guardians and the relationship between the occupants; if any suspicion of illegal or criminal activity arises, they must promptly report it to the public security authorities.
Since the establishment of the mandatory reporting system, the Office of the State Council Leading Group for the Protection of Minors has incorporated its implementation into the assessment framework of the national demonstration‑creation campaign on the protection of minors; the Supreme People’s Procuratorate has instituted a “case‑by‑case review” mechanism for mandatory reports; the Ministry of Education has included specific provisions in the Regulations on School Protection of Minors; and the Ministry of Public Security has mandated that hotel operators adhere to five strict requirements when accommodating minors. These measures have all effectively advanced the implementation of the mandatory reporting system. Many teachers, medical personnel, and entities and individuals—including residents’ committees and village committees—that bear reporting obligations have actively fulfilled their duties, enabling the timely detection of numerous crimes harming minors and ensuring prompt protection for children. From May 2020 to March 2022, among the cases handled by the procuratorial organs, as many as 2,854 leads originated from mandatory reports.
Overall, the implementation of the mandatory reporting system has been generally satisfactory; however, significant challenges remain in its execution, and there is still a gap before it achieves broad societal consensus and widespread acceptance. For instance, some organizations and personnel demonstrate weak awareness of the rule of law and lack a sense of responsibility for fulfilling their mandatory reporting obligations, with particularly acute issues arising in lodging establishments such as hotels that fail to report when required. During case handling, procuratorial organs have identified more than 1,600 instances where reporting was mandated but not carried out, leading to accountability measures against 299 individuals.
To further advance the implementation of the mandatory reporting system and guide entities and personnel with mandatory reporting obligations to fulfill their duties in accordance with the law, the Supreme People’s Procuratorate has compiled and released a set of typical cases in which individuals were held accountable for failing to comply with these obligations. Moving forward, the procuratorial organs will fully implement Xi Jinping’s Thought on the Rule of Law, strengthen coordination and cooperation with relevant departments, persistently ensure rigorous oversight and enforcement on a case-by-case basis, and work steadfastly to ensure that the mandatory reporting system is effectively put into practice and yields tangible results.

Supreme People’s Procuratorate: Strengthening Comprehensive and Integrated Judicial Protection for Minors Through High-Quality Prosecutorial Performance
On the morning of May 26, the National Conference on Promoting the Unified and Centralized Handling of Juvenile Prosecution Matters was held via videoconference. Tong Jianming, Deputy Secretary of the Party Group and Executive Vice Procurator-General of the Supreme People’s Procuratorate, attended the meeting and set forth clear requirements for procuratorial organs to thoroughly implement Xi Jinping’s Thought on the Rule of Law, further deepen the unified and centralized handling of juvenile prosecution matters, and strengthen comprehensive and integrated judicial protection for minors through high-quality prosecutorial performance.
Tong Jianming pointed out that the unified and centralized handling of procuratorial work involving minors is an urgent necessity for comprehensively safeguarding their legitimate rights and interests; it is the proper implementation of the principle of acting in the best interests of the child throughout the entire process; and it is also an inevitable requirement for promoting social governance in the field of juvenile protection across all domains. Procuratorial organs at all levels must earnestly strengthen their sense of responsibility and mission, fully implement Xi Jinping’s thought on the rule of law, and rigorously enforce the CPC Central Committee’s Opinions on Strengthening Legal Supervision by the Procuratorates in the New Era, as well as the newly revised Law on the Protection of Minors and the Law on the Prevention of Juvenile Delinquency. In close conjunction with advancing the “Year of Quality Building” campaign, they should be guided by the principle of acting in the best interests of the child, aim to achieve comprehensive and integrated judicial protection for minors, adopt an approach that integrates and advances the four major functions of procuratorial work related to minors, and rely on strengthened coordinated performance of duties. By doing so, they will further update their judicial concepts, grasp the underlying patterns of case handling, continuously deepen the unified and centralized handling of juvenile‑related cases, and promote the seamless integration and concerted efforts of the six major areas of protection—family, school, society, cyberspace, government, and the judiciary—thereby creating a better environment for the safe and happy growth of minors.
Tong Jianming emphasized that the unified, centralized handling of juvenile prosecution work is aimed at achieving coordinated performance of duties. It requires accurately grasping the distinctive patterns inherent in cases involving minors, substantially strengthening case-handling efforts across the “four major areas of procuratorial work” for juveniles, and enhancing the overall effectiveness of protective measures. We must take full‑process case management as the key to optimizing criminal prosecution for minors; prioritize oversight of parental custody to reinforce civil prosecution concerning minors; use the substantive resolution of administrative disputes as a driving force to strengthen administrative prosecution for minors; and pursue all‑round protection as the overarching goal to improve public interest litigation involving minors. By promoting the organic integration of the “four major areas of procuratorial work,” we will proactively integrate judicial protection into the other five pillars of protection, advance integrated duty‑performance through source‑level governance, and strive to elevate the quality of unified, centralized handling of juvenile prosecution matters.
Tong Jianming emphasized the need to strengthen guidance at the grassroots level, enhance overall competence, and build a highly capable team; to deepen the development of “Smart Pre-Prosecution,” upgrade the pre-prosecution case-handling system, and bolster the application of big data, thereby driving a new leap in pre-prosecution oversight—from diversification to digitalization.
The meeting briefed participants on the overall progress since the full-scale rollout of the unified, centralized handling of juvenile prosecution matters. Officials from the provincial procuratorates of Hebei, Shanghai, Jiangsu, and Sichuan delivered remarks and shared their experiences at the meeting.
 

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