JC Master Legal News Issue 1019

Release Date:

2022-06-06 08:26

Key Takeaways for This Issue

Finance & Capital Markets
The China Securities Regulatory Commission has guided stock exchanges in issuing guidelines on the additional fundraising of infrastructure REITs.
The China Securities Regulatory Commission (CSRC) resolutely implements General Secretary Xi Jinping’s important decisions and arrangements, as articulated at the 11th Meeting of the Central Financial and Economic Affairs Commission, to comprehensively strengthen infrastructure development and broaden channels for raising long-term capital. In line with the State Council General Office’s “Opinions on Further Revitalizing Existing Assets and Expanding Effective Investment,” which calls for leveraging REITs and other mechanisms to unlock the value of existing infrastructure and other assets—thereby diversifying social investment channels and boosting effective investment—the CSRC, building on the earlier pilot program for REITs, has guided stock exchanges in formulating and issuing the “Measures for Newly Acquired Infrastructure Projects (Trial),” thereby supporting listed REITs in acquiring assets through additional offerings and other means, intensifying efforts to develop the REITs market, and striving to promote the high-quality development of a multi-tiered capital market.
Fund‑raising through additional offerings is a key feature of REITs and an indispensable component of market development. The “Provisional Measures for the Acquisition of New Infrastructure Projects” sets out the eligibility criteria, procedural requirements, information‑disclosure obligations, and arrangements for offering additional shares in connection with such acquisitions, emphasizing that the requirements for additional offerings are consistent with those governing the initial public offering. It strengthens internal‑information management and safeguards against conflicts of interest, prioritizes the interests of unit holders, rigorously ensures project quality, and holds participating institutions fully accountable. The introduction of a REITs’ additional‑offering mechanism enables REITs to acquire assets by issuing new units and to engage in mergers, acquisitions, and restructuring, thereby further fostering a virtuous cycle of investment and financing.
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 listed REITs that demonstrate sound operations and strong performance, prudent investment management, and robust accounting practices to undertake additional fundraising. At the same time, it will strengthen market supervision to fully leverage the critical role of REITs in revitalizing existing assets and expanding long-term funding sources for infrastructure development.

Notice on Standardizing Business Transactions Between Listed Companies and Corporate Group Finance Companies
To standardize business transactions between listed companies and corporate group financial companies that have related-party relationships (hereinafter referred to as “financial companies”), in accordance with the Measures for the Administration of Corporate Group Financial Companies, the Measures for the Administration of Information Disclosure by Listed Companies, Guideline No. 8 on the Supervision of Funds Transfers and External Guarantees of Listed Companies, and other relevant provisions, the following matters are hereby notified:
I. When a listed company engages in business transactions with a financial company, both parties shall adhere to the principles of equality and voluntariness and comply with the relevant regulations of the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, and the stock exchanges.
II. The controlling shareholder and the actual controller shall ensure the independence of the financial company and the listed company under their control.
Financial companies shall strengthen the management of related-party transactions, shall not, by any means, assist member units in siphoning funds through such transactions, and shall not conceal unlawful related-party transactions or use them to obscure the true destination of funds or engage in illegal or non-compliant activities.
Directors of listed companies shall conscientiously fulfill their duties of diligence and loyalty and exercise due prudence in making decisions related to business transactions between the listed company and its financial company. Senior management of listed companies shall ensure that such transactions comply with the related-party transaction agreements duly reviewed in accordance with applicable laws and regulations, and shall closely monitor the financial company’s operations and risk profile.
III. Financial companies engaging in business transactions with listed companies shall enter into financial service agreements and review publicly disclosed documents of the listed company, such as resolutions of the board of directors or the shareholders’ meeting.
The financial services agreement shall specify the particular scope of financial services that the finance company provides to the listed company and require its public disclosure, including but not limited to the term of the agreement, the types of transactions, the projected limits for each type of transaction, pricing mechanisms, risk assessment, and control measures.
Financial companies engaging in business transactions with listed companies shall strictly adhere to the financial services agreement and may not aggregate funds exceeding the transaction limits stipulated in such agreement.
IV. Listed companies shall not, in violation of Paragraph (2) of Article 5 of “Regulatory Guidance No. 8 for Listed Companies—Regulatory Requirements on Funds Transfers and External Guarantees,” provide funds of the listed company to its controlling shareholders, actual controllers, or other related parties by entering into entrusted loan agreements with financial companies.
V. Prior to a listed company’s first deposit of funds with a financial company, it shall obtain and review the financial company’s audited annual financial statements for the most recent fiscal year, along with relevant risk indicators and other necessary information, and prepare a risk assessment report. Such report shall be disclosed publicly after being approved by the board of directors. During the period in which the listed company conducts business with the financial company, it shall, every six months, obtain and review the financial company’s financial statements and relevant risk indicators, and prepare a continuing risk assessment report. This report shall be disclosed publicly together with the semi‑annual and annual reports, following approval by the board of directors. The financial company shall cooperate by providing the relevant financial statements and other necessary risk‑related information.
VI. Listed companies shall formulate a risk‑management contingency plan aimed at ensuring the safety of deposited funds, which shall be disclosed to the public upon approval by the board of directors. Listed companies shall designate dedicated departments and personnel to conduct ongoing assessments and oversight of the risk profile of funds held with financial institutions. In the event that any of the risk scenarios specified in the contingency plan materialize, the listed company shall promptly disclose such developments and, in accordance with the plan, take proactive measures to safeguard the interests of the company.
VII. The financial company shall promptly inform the listed company of its risk profile, cooperate with the listed company in actively managing and mitigating risks, and ensure the safety of the listed company’s funds. In any of the following circumstances, the listed company shall refrain from making additional deposits with the financial company:
1. In the case of inter‑institutional borrowing, bill acceptance, and other off‑group (or contingent) liability‑related activities conducted by the finance company, any instances of overdue payments lasting more than five business days attributable to the finance company;
2. A financial company or a listed company’s controlling shareholder, actual controller, or other related parties experiences a material credit risk event (including, but not limited to, public-market bond defaults exceeding seven business days or large‑scale guarantee indemnifications).
3. The financial company continuously fails to meet regulatory requirements for capital adequacy ratios, liquidity ratios, and other supervisory indicators as stipulated in the Measures for the Administration of Financial Companies of Enterprise Groups, and its major shareholders are unable to fulfill their obligations to inject capital and provide risk‑mitigation support.
4. Other circumstances stipulated in the risk处置 plan.
VIII. Accounting offices providing audit services to listed companies shall submit, on an annual basis, a special report on related-party transactions involving financial companies, and disclose it concurrently with the annual report. During the period of ongoing supervision, sponsors and independent financial advisors shall conduct annual special reviews of related-party transactions involving financial companies and disclose the results concurrently with the annual report.
9. The China Banking and Insurance Regulatory Commission and the China Securities Regulatory Commission shall jointly establish a regulatory coordination mechanism to standardize business interactions between listed companies and finance companies, strengthen regulatory cooperation and information sharing, and, through measures such as information reporting on high-risk finance companies and joint inspections, intensify efforts to investigate and prosecute illegal and non-compliant conduct, holding the relevant parties legally accountable in accordance with the law.

The China Securities Regulatory Commission, the Ministry of Justice, and the Ministry of Finance have jointly issued the “Opinions on Strengthening Oversight of the Ethical Conduct of Intermediary Institutions under the Registration-Based System.”
To implement the relevant requirements of the CPC Central Committee and the State Council on upholding integrity and combating corruption in the financial sector, and to strengthen oversight of the ethical conduct of intermediary institutions—including securities offices, accounting offices, and law offices—and their practitioners under the registration-based system, thereby continuously purifying the capital market ecosystem and advancing both the punishment of financial corruption and the prevention and control of financial risks, the China Securities Regulatory Commission, in conjunction with the Ministry of Justice and the Ministry of Finance, recently issued the “Opinions on Strengthening Oversight of Ethical Conduct by Intermediary Institutions under the Registration-Based System” (hereinafter referred to as the “Opinions”), which shall take effect from the date of promulgation.
Establishing and improving a multi‑dimensional mechanism for preventing integrity‑related risks is a crucial safeguard for the smooth advancement of registration‑based reform. Strengthening oversight of the ethical conduct of intermediary institutions is both an essential step to further reinforce their “gatekeeper” responsibilities and a key component of end‑to‑end risk prevention. The Opinions aim to comprehensively refine relevant systems and mechanisms, clarify regulatory requirements and associated liabilities, address salient integrity‑related risks under the registration system, and urge intermediary institutions to exercise due diligence, maintain high standards of integrity and self‑discipline, thereby fostering intrinsic motivation and institutionalizing routine measures for managing such risks.
The “Opinions” comprise 17 articles, with their main content broadly falling into three key areas. First, they uphold systems‑based thinking and impose comprehensive, stringent requirements. The document brings securities offices, accounting offices, law offices, and other intermediary institutions—along with the securities‑related activities they undertake—under regulatory oversight, achieving full coverage of both entities and types of business. Starting with internal governance, the “Opinions” set out comprehensive requirements for securities offices regarding organizational leadership, internal controls, financial management, personnel administration, and other aspects of preventing integrity‑related risks, thereby further strengthening the supervisory checks and balances within their internal mechanisms.
Second, we remain problem‑oriented and address salient issues in a targeted manner. In light of the key risk areas associated with ethical conduct under the registration‑based system, we have introduced detailed, tailored provisions applicable to securities offices and their practitioners, while also stipulating that intermediary institutions such as accounting offices and law offices shall implement these measures by analogy. These measures primarily include: establishing sound, scientifically grounded incentive‑and‑constraint mechanisms and accountability frameworks to prevent excessive or short‑term incentives; strengthening scrutiny of conflicts of interest, unauthorized investments, and improper shareholdings; explicitly prohibiting typical “hunting” practices such as illicit interactions, unlawful interference, transfer of benefits, and bribery; and forbidding the solicitation of business through unfair competitive means, including unreasonably low pricing or inappropriate promises.
Third, we will uphold professional thinking and adopt tailored measures. The Opinions set forth specific regulatory requirements that take into account the distinct risk profiles of various market participants, including securities offices, accounting offices, and law offices. For violations of regulations on ethical conduct, the competent authorities shall impose regulatory measures in accordance with the law and, pursuant to relevant provisions, refer clues of misconduct or disciplinary breaches to the discipline inspection and supervision bodies. At the same time, in line with the principle of “combining leniency with strictness,” where intermediary institutions or personnel proactively identify, report, and address issues, their corresponding liabilities may be mitigated or reduced in accordance with the law.
Going forward, the China Securities Regulatory Commission (CSRC) will work with the Ministry of Justice and the Ministry of Finance to comprehensively strengthen oversight of the ethical conduct of intermediary institutions. It will urge these institutions to fully recognize and attach great importance to preventing integrity risks under the registration-based system, resolutely reject the misguided notion of taking shortcuts through improper practices, and earnestly implement the requirements set forth in the “Opinions.” By fulfilling their role as gatekeepers of the capital market, they will provide a solid foundation for the full implementation of the stock issuance registration system. The CSRC will intensify regulatory enforcement, further refine on-site inspection and risk‑monitoring mechanisms, and apply “penetrative supervision and end-to‑end accountability” to illegal and non‑compliant conduct. It will make effective use of both “qualification‑based penalties” and “economic sanctions” to enhance the deterrent effect of regulation. At the same time, the CSRC will guide industry associations in strengthening the cultivation of an ethical culture within the sector, fostering core industry values of “compliance, integrity, professionalism, and prudence,” and promoting the deep integration of business development with cultural building. This will help create a healthy and sound industry ecosystem, enabling institutional participants to advance steadily and sustainably on the path of high‑quality development.

State Administration of Foreign Exchange: Recent adjustments in cross-border securities investment do not alter the trend of foreign investors increasing their holdings of RMB‑denominated assets.
On June 2, at a press conference convened by the People’s Bank of China to interpret the State Council Executive Meeting’s measures for solidifying and stabilizing the economy through financial policies, Wang Chunying, Deputy Director and Spokesperson of the State Administration of Foreign Exchange, stated that since the beginning of this year, China’s cross-border capital flows have remained generally stable. Under the combined influence of domestic and international factors, the earlier bias toward inflows has shifted toward near balance, and there remain favorable conditions for maintaining a relatively balanced and broadly stable development trajectory going forward.
She stated that, first and foremost, fundamental surpluses—such as those in the current account and direct investment—will continue to underpin the stability of cross-border capital flows. On the one hand, the current account is expected to maintain a reasonable surplus; on the other, China’s economy is poised for high-quality development over the medium to long term, with vast domestic consumption potential and stable, relatively high returns on foreign investment in China, which will keep attracting sustained inflows of foreign capital.
Secondly, China’s external debt has grown at a reasonable pace and its structure has been optimized, ensuring strong stability going forward. As of the end of 2021, the ratio of total external debt to GDP stood at 15%, compared with 17% at the end of 2014—prior to the previous round of deleveraging in external debt—and it has also declined by one percentage point from the end of 2020.
“From the perspectives of the debt-to-GDP ratio, the debt service ratio, and the debt‑to‑exports ratio, China’s relevant indicators all remain within internationally recognized safe thresholds, indicating that China’s external debt has not accumulated excessively in recent years and that its growth has been aligned with the development of the real economy,” said Wang Chunying. She added that cross‑border deposits and loans have historically been the primary component of external‑debt deleveraging; today, such traditional financing‑related external liabilities account for just over 50 percent, a decline of nearly 30 percentage points from 2014. Moreover, there has been no large‑scale deleveraging trend recently, and the impact of this on overall external‑debt dynamics is expected to diminish going forward.
Regarding the closely watched recent adjustments in cross-border securities investment, Wang Chunying stated at a press conference that these changes have not altered the overall stable pattern of balanced cross-border capital flows, nor will they reverse the long-term trend of foreign investors increasing their holdings of RMB‑denominated assets.
She stated that RMB‑denominated assets remain highly attractive in many respects. First, they offer stable investment returns: China’s economy is advancing at a high quality, its balance of payments is relatively sound, and the RMB exchange rate remains broadly stable. Second, RMB‑denominated assets exhibit a relatively independent price trajectory, making them an excellent choice for diversifying investment risk. Third, these assets can effectively meet investors’ asset‑allocation needs; in recent years, overseas central banks and funds tracking international indices have significantly increased their allocations to RMB‑denominated securities. Most recently, the IMF raised the RMB’s weighting in the Special Drawing Rights basket to 12.28%, a clear reflection of the international community’s recognition of and confidence in China’s economic and financial market development. Moreover, whether viewed from the RMB’s 2.79% share in global foreign‑exchange reserves or from the 3%–5% share held by foreign investors in China’s stock and bond markets, there remains substantial room for further increases in overseas investors’ holdings of RMB‑denominated assets.

Commercial & Corporate
The National Development and Reform Commission, in collaboration with the Agricultural Development Bank of China, is jointly advancing the development of a modern cold-chain logistics system.
To implement the requirements set forth in the Outline of the 14th Five-Year Plan and the “14th Five-Year Plan for Cold-Chain Logistics Development” (Document No. 46 [2021] of the General Office of the State Council, hereinafter referred to as the “Plan”), the National Development and Reform Commission recently issued the “Notice on Promoting the Construction of a Modern Cold-Chain Logistics System” (NDRC Economic and Trade Office Document No. 458 [2022], hereinafter referred to as the “Notice”). In collaboration with the Agricultural Development Bank of China (hereinafter referred to as the ADBC), the Commission will jointly support the development of eligible large-scale, foundational, and public‑interest cold-chain logistics projects, accelerate the high‑quality development of the cold-chain logistics sector, and provide robust support for building a modern cold-chain logistics system.
The Notice clarifies that, during the 14th Five-Year Plan period, efforts will focus on the key areas, major projects, and priority initiatives for cold-chain logistics development identified in the Plan. It will support the construction of a three-tier cold-chain logistics node network—centered on national backbone cold-chain logistics hubs and underpinned by production‑and‑sales cold-chain distribution centers and end‑point cold-chain facilities—while fostering a group of comprehensive leading enterprises with strong international competitiveness. The initiative aims to elevate the standardization, digitalization, and greenness of cold-chain logistics, enhance capabilities in precision, diversification, and quality‑oriented services, and guide the clustering and development of cold-chain logistics resources and upstream and downstream industries along the “Four Horizontal and Four Vertical” national cold-chain logistics corridors, thereby promoting the formation of cold-chain logistics industrial corridors to better underpin the establishment of a new development paradigm. To this end, the Agricultural Development Bank of China will provide RMB 120 billion in comprehensive credit lines, with a particular emphasis on bolstering five key areas: national backbone cold-chain logistics hubs, production‑and‑sales cold-chain distribution centers, the intelligent and green upgrading of cold-chain infrastructure, the development of new business forms and models in cold-chain logistics, and the cultivation of leading cold-chain logistics enterprises.
Development and reform departments at all levels will select eligible major cold-chain logistics projects and recommend them to the corresponding branches of the Agricultural Development Bank of China. In turn, these branches will, based on local conditions, identify priority areas for credit support and, in accordance with the principles of “independent review and approval, autonomous decision-making, preferential support, and stringent risk control,” evaluate the projects recommended by the development and reform authorities. Eligible projects will undergo examination and approval, with loans disbursed on a priority basis. For major cold-chain logistics projects included within the scope of inter‑agency cooperation, development and reform departments at all levels, in coordination with their respective branches of the Agricultural Development Bank of China, will strengthen oversight to ensure that the projects comply with relevant industrial policies.

The “Red June” for the resumption of work and production in the construction sector is expected.
With the epidemic gradually stabilizing, construction offices are accelerating the resumption of work and production, making a “Red June” well‑informed. At present, the situation is steadily improving: Beijing has entered the dynamic zero‑COVID phase, while Shanghai is systematically and phasedly facilitating the restart of key enterprises. We believe that construction companies—particularly large state‑owned central enterprises—are responding to the national policy of ensuring steady growth by expediting their return to operations. On June 2, China Power Construction Corporation convened a special meeting on enhancing quality and efficiency and stabilizing growth for the first half of the year, emphasizing that Party committees at all levels should fully exercise their leadership role in setting direction, overseeing the big picture, and ensuring implementation; they must cascade responsibilities down the hierarchy, seize the critical window presented by the CPC Central Committee’s package of policies to bolster growth, and swiftly roll out concrete measures to support economic expansion. The company aims to operate at full capacity to deliver a “Red June,” striving to stabilize operations, unlock potential, improve quality, and boost profitability, thereby ensuring a successful close to the second quarter and contributing tangible results from high‑quality development to the broader goal of maintaining steady national economic growth. Meanwhile, China State Construction Engineering Corporation’s Party Leadership Group studied and implemented the spirit of General Secretary Xi Jinping’s important speeches, formulated plans to ensure stable growth across the group, and called for placing growth stabilization at the forefront, taking proactive responsibility, and working vigorously to sustain steady increases in key performance indicators, thus fulfilling the pivotal role of a central state‑owned enterprise. Similarly, China Railway Construction Corporation is steadily advancing the “restart” of its major projects in Shanghai. CRCC stated it will capitalize on the prime spring‑summer construction season, racing against time to carry out all second‑quarter production and operational tasks, win the tough battle against the pandemic, and secure victory in safeguarding both epidemic control and business operations, ensuring the smooth achievement of the company’s annual targets. In our view, as the epidemic continues to ease, construction offices are pressing ahead with the resumption of work and production, making a “Red June” increasingly likely. Consequently, leading construction companies are expected to continue demonstrating strong stability in their second‑quarter results.
Steady‑growth policies have been rolled out frequently, with both new and traditional infrastructure projects offering attractive investment prospects. On May 31, the State Council issued a notice on implementing a comprehensive package of measures to stabilize the economy, outlining six key areas and 33 specific policy measures along with detailed division of responsibilities. Meanwhile, on June 1, the State Council convened an executive meeting to accelerate the implementation and effectiveness of this package, including the allocation of an additional RMB 800 billion in policy‑bank credit lines to support infrastructure development. In addition, on May 30, the General Office of the State Council forwarded a notice from the National Development and Reform Commission and the National Energy Administration on the Implementation Plan for Promoting High‑Quality Development of New Energy in the New Era, which calls for expanding the use of new energy in the industrial and building sectors. Where conditions permit, industrial enterprises and industrial parks are encouraged to speed up the deployment of distributed photovoltaic and decentralized wind power projects, support the construction of green microgrids and integrated source‑network‑load‑storage systems, promote the efficient, complementary utilization of multiple energy sources, launch pilot programs for direct supply of new‑energy electricity, and increase the share of new‑energy power in end‑use consumption. Furthermore, efforts will be made to deepen the integration of solar energy with buildings, refine the technical framework for building‑integrated photovoltaics, and expand the base of prosumers—households and entities that both generate and consume solar power. Amid mounting economic pressures, steady‑growth policies have been introduced one after another recently, and we believe both new and traditional infrastructure hold significant appeal.
Market Review and Summary: This week (May 30–June 2, 2022), the construction engineering index declined by 1.68%, while the Shanghai Composite Index rose by 2.08% over the same period. Year-to-date in 2022, the construction index has cumulatively fallen 1.59%, compared with a 12.21% decline for the Shanghai Composite Index, placing it 3rd out of 29 industries. By sector, chemical engineering posted the strongest performance, gaining 4.62% for the week, followed by steel structure, specialized engineering, and petroleum engineering, with gains of 2.17%, 1.87%, and 1.47%, respectively. All other sectors recorded losses, with international engineering, engineering consulting, landscaping, interior decoration, residential construction, and infrastructure declining by 0.31%, 0.48%, 1.25%, 2.09%, 2.22%, and 2.57%, respectively.

The Beijing Stock Exchange has rebounded, but the healthcare and pharmaceutical sector has underperformed.
This week (May 30–June 2), market sentiment on the Beijing Stock Exchange improved across the board, with 64 companies posting gains and 20 declining. Total weekly turnover reached RMB 1.572 billion, down RMB 271 million from the previous week. The median trailing‑twelve‑month (TTM) price‑earnings ratio stood at 20.15 times, up from last week, while the median price‑to‑book ratio remained unchanged at 1.94 times.
In terms of sector and individual stock performance, the top three sectors by gain this week were Specialty Retail, Aerospace & Defense III, and Metals, Non-Metals & Mining, with median stock price gains of 25.31%, 6.19%, and 3.65%, respectively. The three worst-performing sectors were Integrated Utilities III, Pharmaceuticals, and Medical Equipment & Supplies, with median stock price declines of –8.15%, –3.85%, and –1.27%, respectively.
Among individual stocks, the top five gainers were Bond Shares (838171.BJ), Dezhong Auto (838030.BJ), Changhong Energy (836239.BJ), Betray (835185.BJ), and Kexin New Materials (833580.BJ), with gains of 27.86%, 25.31%, 16.22%, 14.56%, and 10.66%, respectively. Notably, Bond Shares, which posted the largest increase, is a newly listed stock this week, while Betray and Kexin New Materials, both of which saw substantial gains, have been among the most closely watched targets in institutional research over the past few weeks.
The top five decliners were Zhisheng Information (832171.BJ), Senxuan Pharmaceutical (830946.BJ), Datang Pharmaceutical (836433.BJ), Tongxin Transmission (833454.BJ), and AVIC Taida (836263.BJ), with declines of -11.09%, -8.83%, -8.70%, -8.25%, and -8.15%, respectively. This week, the pharmaceutical sector remained generally sluggish, with two of the five worst‑performing companies belonging to the industry.
In terms of sector valuations, the overall price-to-earnings (P/E) ratio on the Beijing Stock Exchange edged up this week. The sectors with the highest P/E ratios are diversified utilities, software, and healthcare equipment and supplies, with trailing‑12‑month (TTM) P/E multiples of 58.20, 56.44, and 31.76, respectively. Meanwhile, the sectors with the highest price-to-book (P/B) ratios are biotechnology, software, and aerospace and defense, at 8.43, 4.65, and 3.31, respectively. By contrast, the gas, chemical, and biotechnology sectors exhibit relatively low P/E levels, at 12.85, 12.70, and –1.06, while the chemical, internet software and services, and business services and supplies sectors have comparatively modest P/B ratios, standing at 1.29, 1.23, and 1.22, respectively.
Regarding new stock listings, one company went public this week: Bond Shares (838171.BJ). The offering price was RMB 7.00 per share, with a price-to-earnings ratio of 25 times. The company operates in the automotive manufacturing sub‑sector under the CSRC’s manufacturing industry classification, where the sector’s PE ratio stands at 24.1 times. Its core business is the production of components for cooling systems, serving markets such as automobiles, household air conditioners, and refrigeration equipment.
Tracking of Key Announcements from Companies Listed on the Beijing Stock Exchange: (1) Institutional Research—This week, Keda Zikong (831832.BJ) was visited by six institutions via video conference.
Taxation TAXATATION
Xiamen: Accelerated Implementation of Refunds for Input VAT Credits Boosts Business Growth
Since the implementation of the large-scale policy for refunding outstanding input VAT credits, the Xiamen Municipal Tax Service of the State Taxation Administration has earnestly put into practice the guiding principle of “enhancing efficiency, improving effectiveness, and boosting benefits,” establishing a work framework in which each level takes responsibility and ensures thorough execution at every tier. This approach has ensured that the tax rebate benefits are swiftly delivered directly to enterprises’ accounts, playing a positive role in alleviating their difficulties and supporting the stable operation of the economy.
Faster approval processes and continuously improving tax refund efficiency.
To ensure that input VAT refunds are processed promptly, efficiently, steadily, and accurately, the Xiamen Municipal Tax Service has streamlined the refund procedure by implementing tiered, category-based review and assigning dedicated personnel to oversee each stage of the process. This approach achieves seamless end-to-end integration across the entire workflow—“application–acceptance–review–approval–invoice issuance–refund to treasury”—ensuring that policy benefits are delivered safely and swiftly.
An efficient tax‑refund process hinges on close interagency coordination. The Xiamen Municipal Tax Authority, in collaboration with the finance department and the People’s Bank of China, has established a cross‑departmental coordination mechanism for implementing tax‑rebate, tax‑reduction, and fee‑cutting policies. It has formulated a work plan, clarified operational procedures, and convened joint meetings on an ad hoc basis, leveraging the synergistic strengths of the tax‑refund and tax‑reduction task force and the city‑wide tax‑cooperation and assistance team. This approach has effectively ensured the timely implementation and effective application of various tax and fee‑support measures, delivering “convenient reductions and swift refunds.”
While ensuring that policy benefits are delivered swiftly and directly to eligible taxpayers, the authorities have also compiled the “Compilation of Refundable Credit Tax Policies” and the “Tax Compliance Guidance on Refundable Credit Tax Refunds.” By strengthening the analysis of typical cases, these measures further mitigate the risk of tax-related violations arising from non‑intentional factors.
A relevant official from the Xiamen Municipal Tax Service stated that, going forward, they will continue to deepen the application of tax‑related big data, strengthen risk controls to prevent improper benefits, and adopt a zero‑tolerance approach—striking at the first sign of fraud and addressing violations early and at an initial stage—to intensify efforts to prevent and crack down on illegal acts involving the fraudulent acquisition of additional tax credit refunds, thereby ensuring the effective implementation of the policy.
Enhanced publicity and guidance continuously improve service efficiency.
Winning the tough battle of implementing large-scale additional tax credit refunds hinges on effective publicity and guidance. To ensure that the VAT credit refund policy reaches businesses swiftly and directly, the Xiamen Municipal Tax Service has moved its services upstream, leveraging big data to identify enterprises with genuine needs and providing them with personalized, precision‑driven advisory support, thereby accelerating the flow of refunded funds back into businesses.
To ensure taxpayers understand the policies, can implement them effectively, and benefit promptly, a dedicated section has been established on the official portal to provide one-stop access to policy information. Through the electronic tax bureau and the taxpayer‑enterprise interaction platform, 41 batches of targeted policy announcements have been delivered to small and micro enterprises, manufacturing offices, and other sectors, reaching over 5.48 million enterprise instances. More than 60,000 copies of brochures summarizing the package of tax and fee support measures have been printed and distributed via tax service halls, invoice mailing, and delivery channels, ensuring timely access for taxpayers. In addition, interactive Q&A livestreams and taxpayer training sessions have been launched, with specialized tutorials on VAT credit refund procedures, providing professional, meticulous, and high‑quality services to bridge the “last mile” in policy implementation.
“The training course was both intensive and packed with practical insights, helping us not only to fully understand the relevant policies and regulations but also to master the procedures for swift compliance,” said Ms. Chen, a finance professional at Orange Hotel, expressing her appreciation for the Siming District Tax Bureau’s innovative outreach efforts.
To ensure the precise and targeted delivery of policies, Xiamen’s tax authorities have leveraged the grid‑based management resources of subdistricts across all districts, reaching commercial districts, communities, office buildings, and enterprises to conduct comprehensive policy briefings, thereby bringing favorable measures directly to a wide range of market entities.
Policy outcomes are more tangible, and confidence in supporting development is stronger.
In April, among taxpayers in Xiamen who received tax refunds, small and micro enterprises accounted for 24,900 entities, representing 97.46% of the total; their total refunds amounted to RMB 2.133 billion, or 57.57% of the overall refund sum. The six sectors—manufacturing; electricity, heat, gas, and water production and supply; transportation, warehousing, and postal services; scientific research and technical services; software and information technology services; and ecological protection and environmental governance—that benefited from both existing‑stock and incremental credit‑refund policies saw particularly significant gains, with 9,700 taxpayers receiving a combined RMB 1.658 billion in refunds.
“For us, the 1.08 million yuan in outstanding tax refunds is equivalent to more than two months’ worth of operating expenses,” said Chen Conghua, head of Mingjian (Xiamen) Technology Co., Ltd., adding that this funding not only injects fresh momentum into the company’s cash flow but also provides new impetus for stepping up its R&D efforts.
Deng Liping, a professor at the School of Economics of Xiamen University and the Xiamen National Accounting Institute, pointed out that tax and fee reductions have consistently prioritized small and micro enterprises as well as key sectors such as manufacturing—market entities that form the backbone of employment. “By implementing these policies to alleviate the difficulties faced by the aforementioned businesses, we can officely anchor employment as a stabilizing force, thereby bolstering our confidence in maintaining macroeconomic stability and ensuring overall social stability,” Deng Liping said.
“Going forward, the Xiamen Municipal Tax Authority will meticulously plan across six key areas—establishing robust mechanisms, setting clear standards, efficiently processing tax refunds, safeguarding critical checkpoints, effectively managing risks, and fostering coordinated efforts—to continuously enhance taxpayer services, wage a decisive battle to implement the carryforward VAT refund policy, further help enterprises alleviate financial burdens, and demonstrate the tax authorities’ commitment through concrete actions,” said Zhang Guojun, Secretary of the Party Committee and Director of the Xiamen Municipal Tax Service Bureau.

Shanxi: Streamlined Tax Services Empower Market Entities
To effectively help market entities of all types that have been affected by the pandemic emerge from their difficulties, the Shanxi Provincial Tax Authorities, as part of the “Spring Breeze Action for Convenient Tax Services,” have continued to promote “non-contact” tax and fee‑payment services, proactively alleviating burdens and providing relief to market players, bolstering their confidence in development, and ensuring that taxpayers and payers enjoy faster, more standardized services.
Adopt a comprehensive set of measures to ensure effective implementation of policies.
“This year marks the company’s inaugural year, as we transition from infrastructure development and pilot production to bringing our products to market. The infusion of deferred tax refunds has given us greater confidence to move forward with all our initiatives,” said Shi Yuhua, Chairman of Changzhi Hongruixiang Environmental Protection Technology Co., Ltd., visibly excited.
To enable enterprises to benefit more quickly and effectively from the carryforward VAT refund policy, the Xiangyuan County Tax Service Bureau has established a dedicated task force to ensure its effective implementation. It has also set up a green channel for taxpayers to process refund applications and assigned dedicated personnel to handle document acceptance and review, thereby ensuring that businesses receive their refunds in a timely manner.
Since April 1, many enterprises have submitted applications for tax refunds to the tax authorities. Refining and stabilizing the policy on refunding outstanding input VAT credits is a key measure for maintaining macroeconomic stability. In Lüliang City, the tax authorities have been working tirelessly to clarify operational procedures, upgrade information systems, enhance taxpayer services, strengthen publicity and guidance, and guard against fraudulent refund claims, doing their utmost to ensure that taxpayers can promptly, fully, and conveniently benefit from the policy’s advantages. Meanwhile, in Yuncheng City, the tax authorities have rigorously ensured data quality by meticulously verifying the authenticity and accuracy of refund account details and amounts, thereby preventing failures caused by mismatches between accounts and applicants’ names, and guaranteeing that taxpayers receive all the benefits to which they are entitled—both in full and without delay.
Innovative Services and Precise Guidance Help Businesses Operate with Peace of Mind
“The online classes are going really well. From my office, I simply scroll through my WeChat Moments each day to stay up to date on the latest tax policies, and I can even interact online to get my questions answered. This special service introduced during the pandemic is truly commendable!” On May 6, Zhou Meiyе, the financial director of Shanxi Laoniwan Ice Vinegar Brewing Co., Ltd., left this message in her WeChat Moments. What Zhou Meiyе praised was the “One Tax a Day” taxpayer‑focused online training program recently launched by the Pianguan County Tax Bureau.
Niu Jingzhen, an accountant at Qingfeng New Agriculture Co., Ltd. in Fangshan County, said excitedly over the phone: “It’s truly considerate—any tax-related issues our company faces can be promptly addressed by contacting tax officials at any time.” By listening to concerns, identifying needs, and conducting reflective improvements, only when tax‑enterprise communication remains smooth can the benefits of tax and fee policies be fully realized through enhanced service. The Fangshan County Tax Bureau has made full use of both online “cloud platforms” and on‑site visits to solicit feedback, ensuring uninterrupted tax filing and payment services even during the pandemic.
This wave of the epidemic has coincided with the tax filing period, making it imperative for every tax official to promptly communicate favorable policies and ensure uninterrupted taxpayer services. To safeguard the quality and efficiency of hotline services during the pandemic and minimize taxpayers’ anxious wait times, the Taiyuan Municipal Tax Service Bureau has launched a new “Respond to Every Call” tax‑and‑fee hotline model. Leveraging an intelligent telephone PBX system, the service establishes horizontal coordination across six urban districts and seamless linkage between city‑ and district‑level authorities, effectively alleviating line congestion. Meanwhile, an intelligent business‑processing platform enables instant responses to routine matters, streamlined workorder routing for specialized cases, and automated callback feedback on outcomes, ensuring that every inquiry receives a timely reply.
Dual‑track synergy ensures policy benefits are delivered swiftly and enjoyed without delay.
Shanxi Haokun Renewable Resources Recycling Co., Ltd. completed its business registration on March 29. However, the company’s principal, Wu Zhuangzhuang, had just returned to Jiaocheng from Taiyuan, and his travel itinerary code was yellow, preventing him from handling on-site procedures such as registering as a new taxpayer. “I was really very anxious at the time,” he said. Wu then called the service hotline of the Jiaocheng County Tax Service Hall, where tax officials guided him through the tax registration process and helped him obtain a U‑key device via the electronic tax bureau. With great satisfaction, Wu remarked, “‘Full‑process online handling’ is so convenient—my newly established company can now issue invoices right away.”
In Linyi County, Yuncheng City, after Shanxi Xinxing Pump Industry Co., Ltd. received its tax rebate, the company’s finance officer, Lu Yongzhen, said, “Though a few hundred thousand yuan may not seem like much, in these challenging times it has nonetheless provided significant relief to our company’s cash‑flow pressures.”
In these extraordinary times, the provincial tax authorities have remained steadfast in addressing taxpayers’ most pressing concerns—urgent needs, difficult challenges, and long‑standing expectations—by meticulously refining tax services with dedication and care. They have rolled out “customized packages” that offer “full online coverage and seamless offline support,” riding the favorable winds of taxpayer‑friendly reforms to inject robust tax‑driven momentum into business development.
Du Feibiao, Chief Accountant of the Shanxi Provincial Tax Service Bureau, stated: “Going forward, we will continue to assume full responsibility for epidemic prevention and control, while delivering tax and fee services that are more standardized in enforcement, more convenient in service delivery, more precise in supervision, and more effectively risk‑managed. This will help taxpayers and payers build confidence, pursue innovative development, and move toward the future, enabling them to truly experience tangible improvements in the tax‑related business environment.”

Jiangsu: The new package of tax and fee support policies is taking effect.
In the first month of implementing the value-added tax credit refund policy, Jiangsu Province disbursed 84.5 billion yuan in credit refunds directly to businesses, boosting cash flow for 214,000 taxpayers. Coupled with ongoing measures to cut taxes, reduce fees, defer tax payments, and grant tax exemptions, the impact of policies aimed at supporting and relieving enterprises is steadily becoming evident.
Corporate “liquidity crunch” coincides with the introduction of new policies.
Affected by the pandemic, Jiangsu Changgong Power Machinery Co., Ltd., located in Yixing City, was unable to receive its required raw materials and components on time, resulting in a first-quarter operating rate of less than 50%. By April, with a sudden surge in local cases, the number of days the company could maintain normal production was reduced to just a handful. Looking back over the past few months, the company’s head, Kang Yan, still feels a lingering sense of apprehension: “With production falling short, cash collection has slowed, and operating costs have not only failed to decline but have actually risen due to the measures needed to contain the outbreak.”
“Our cash flow is at risk of drying up at any moment. It’s like a pool: if the inlet gets blocked and the outlet widens, the water level keeps dropping,” said Yan Xiaoxiang, the company’s finance manager. With production capacity now recovering, rising costs for raw materials and logistics have further tightened liquidity, pushing the enterprise into a period of “painful adjustment” as it resumes work and production.
Coincidentally, Nantong-based Maoyou Wood has introduced advanced German equipment for producing wood-based panels, planning to build a fully CNC‑controlled, zero‑pollution, automated production line that spans the entire process—from pressing bark into pellets to manufacturing finished particleboard. Originally slated to begin commercial operations last March, the project has yet to materialize due to the pandemic. “With recent resurgences of COVID‑19, the company’s production rollout has been slow, and financial pressures remain significant,” said Guo Jinfu, the office’s chief financial officer, outlining the company’s current situation.
Businesses have expectations, and government policies are guided by them. At a time when countless small and medium-sized enterprises—like Changgong Power and Maoyou Timber—are navigating financial challenges with extreme caution, the tax authorities promptly rolled out the new policy on refunding outstanding input VAT credits and provided detailed explanations of the comprehensive package of tax and fee support measures, offering step-by-step guidance to help companies apply and benefit. On May 13, upon receiving news that a refund of 3.96 million yuan had been credited to its account, Kang Yan finally felt a great weight lifted from her shoulders. Guo Jinfu also told reporters that the tax authorities recently processed precise, expedited refunds totaling over 47 million yuan in existing input VAT credits held by the company. The company plans to make full use of these funds to accelerate project commissioning and aims to commence trial production by July.
A “policy package” is helping to restore business confidence.
The measures include tax and fee reductions, tax payment deferrals, tax exemptions, and, most notably, large-scale refunds of outstanding input VAT credits—delivering a comprehensive, multi‑pronged approach with breakthroughs across multiple fronts. This year’s new package of tax and fee support policies features three key characteristics: first, its scale and intensity are unprecedented; second, it leverages the synergistic effects of a combination of policy tools; and third, it targets the real economy—particularly manufacturing—to ensure steady growth, while providing tailored measures to help small, medium, and micro enterprises, as well as struggling industries, overcome difficulties and regain momentum.
Professor Bu Hua, a tax expert at China University of Mining and Technology, stated that the new package of tax and fee support policies, rolled out in tandem with Tax Publicity Month, has proven highly effective—leveraging limited resources to achieve significant results. By directly boosting enterprises’ disposable cash flow, these measures will inject strong momentum into market entities across the board.
In Nanjing’s Jiangbei New Area, the technology‑focused SME Creative Electronics (Nanjing) Co., Ltd., with meticulous guidance from local tax policy specialists, expects to claim an additional RMB 2.12 million in R&D expense deductions this year, reducing its corporate income tax liability by RMB 320,000. According to the company’s finance officer, Chen Li, the savings will be reinvested in R&D to continuously strengthen the office’s core competitiveness. In Yangzhou, the small and micro enterprise Huasheng Welding Pipe Equipment Co., Ltd. is set to benefit from a RMB 74,000 reduction in “six taxes and two fees” this year. General Manager Wang Hong told reporters that while this amount may seem modest, for a small, low‑profit enterprise like theirs, it can help cover loan interest payments or fund the purchase of machinery parts, effectively boosting overall cash flow. Businesses generally agree that the carryforward VAT refund—a timely lifeline—directly bolsters their cash reserves, significantly bolstering their confidence and momentum for growth.
The effects of policies aimed at helping businesses and alleviating their difficulties will continue to emerge.
Liandao is the largest island in Jiangsu Province, blending mountains, sea, forests, rocks, beaches, and cultural attractions into a single destination. Last year marked the “double‑acceptance” phase for Liandao’s bid to achieve 5A status and for the Lianyun District to be designated a demonstration zone for all‑area tourism. The scenic area undertook upgrades across infrastructure, functional enhancements, service quality, and market expansion, delivering a comprehensive, immersive experience for visitors. On March 5, however, as the pandemic resurged, the site abruptly suspended operations overnight, remaining closed until April 1; visitor numbers and revenue were negligible during that period.
“The pandemic disrupted the company’s production and operations throughout March and during the Qingming Festival holiday, resulting in a revenue decline of more than 3 million yuan across all segments, including scenic‑area ticket sales, hotel rooms, catering, and merchandise.” During that period, Cheng Jie, the finance director of Lianyungang Liandao Tourism Development Co., Ltd., found himself under mounting pressure.
“Fortunately, a series of tax‑benefit policies have come just in the nick of time. By taking advantage of the tax incentives for the life‑service sector, our company has truly felt the warmth of these measures,” said Cheng Jie. As the epidemic situation continues to improve, it is foreseeable that the developmental impact of these relief policies will keep unfolding.
As policies are further implemented and refined, the temporary exemption of value-added tax for small-scale taxpayers will help the vast number of micro and small enterprises further reduce their operating costs. “Under the previous tax‑reduction measures, our company was able to cut its quarterly tax bill by nearly RMB 30,000. Now, with the introduction of the VAT exemption policy, we expect to enjoy an additional tax benefit of more than RMB 20,000 per quarter,” said Wu Xiang, head of Nanjing Jiahao Environmental Protection Technology Co., Ltd., after learning from the Pukou District tax authorities on May 16 about the preferential policy exempting small-scale taxpayers from VAT, as he calculated the potential savings.
“Going forward, the provincial tax authorities will continue to intensify efforts in publicity and guidance, relentlessly enhance service quality, and strengthen regulatory oversight, ensuring the precise and efficient implementation of tax and fee support policies. We will work to make tax and fee benefits more readily accessible and swiftly realized, doing our utmost to help enterprises alleviate difficulties and overcome challenges, thereby accelerating the resumption of work and production and injecting greater momentum into the province’s high-quality economic development through expanded tax and fee incentives and enhanced policy effectiveness,” said Cheng Minghong, Chief Accountant of the Jiangsu Provincial Tax Service Bureau.

Litigation & Arbitration
The Supreme People’s Court has released “China Environmental and Resource Adjudication (2021).”
On June 5, the Supreme People’s Court released the “China Environmental and Resource Adjudication (2021).” The following are its main contents:
The year 2021 marked a milestone in the history of environmental and resource adjudication within the people’s courts. On May 26, 2021, General Secretary Xi Jinping sent a congratulatory letter to the World Environmental Justice Conference, stating: “The Earth is our common home. All countries must join forces and act promptly to build a beautiful home where humanity and nature coexist in harmony. China adheres to the new development philosophy of innovation, coordination, green development, openness, and shared benefits, comprehensively strengthens ecological and environmental protection, and actively participates in global cooperation on ecological civilization. China continues to deepen reform and innovation in environmental justice, accumulating valuable experience in judicial protection of the ecological environment. China stands ready to work hand in hand with all nations and international organizations to jointly advance global ecological and environmental governance.” General Secretary Xi Jinping’s letter fully afofficeed the beneficial experiences gained from China’s reforms and innovations in environmental justice, providing clear guidance and fundamental principles for the development of environmental and resource adjudication in the people’s courts. On December 10, 2021, the Supreme People’s Court convened the Third National Conference on Environmental and Resource Adjudication, systematically reviewing the work of the past three years, analyzing the current situation and tasks facing environmental and resource adjudication, and making specific arrangements across key areas—including serving and safeguarding the overall work of the Party and the state, striving to establish an environmental and resource adjudication system with Chinese characteristics and international influence, actively promoting the systematic codification of legal rules applicable to ecological and environmental matters, and endeavoring to build a high-caliber, professional team of environmental and resource judges. These measures clarified the overarching approach and developmental direction for advancing this work, thus ushering in a new stage in the field of environmental and resource adjudication.
In 2021, people’s courts at all levels, guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, thoroughly implemented Xi Jinping Thought on Ecological Civilization and Xi Jinping Thought on the Rule of Law, fully carried out the spirit of the 19th National Congress of the Communist Party of China and the successive plenary sessions of the 19th CPC Central Committee, and earnestly acted upon the important instructions contained in General Secretary Xi Jinping’s congratulatory letter to the World Environmental Justice Conference. Closely focusing on the coordinated advancement of the Five‑in‑One overall layout and the Four‑Pronged Comprehensive Strategy, they officely upheld the people‑centered development philosophy, grounded themselves in the new stage of development, comprehensively, accurately, and thoroughly applied the new development理念, fostered a new development pattern, and promoted high‑quality development. Taking the establishment of an environmental and resource adjudication system with Chinese characteristics and international influence as the central task, they leveraged the professionalization of judicial proceedings as a key driver, harnessed reform and innovation as the engine of progress, relied on the enhancement of smart justice as a supporting pillar, and utilized expanded international cooperation and exchanges as a platform, thereby fully exercising the functions and roles of environmental and resource adjudication and elevating all aspects of their work to a new level.

Implementation Measures of the Supreme People’s Court, the Supreme People’s Procuratorate, the Ministry of Public Security, and the Ministry of Justice on the Sealing of Juvenile Criminal Records
In order to strictly implement the system of sealing juvenile criminal records as stipulated in Article 286 of the Criminal Procedure Law of the People’s Republic of China, as well as the provisions on the protection of minors’ privacy and personal information set forth in Article 103 of the newly revised Law on the Protection of Minors and Article 59 of the Law on the Prevention of Juvenile Delinquency, and to effectively address issues such as information leaks arising from improper management of juvenile criminal records and related data—issues that hinder the reintegration of wayward minors into society—the Supreme People’s Court, the Supreme People’s Procuratorate, the Ministry of Public Security, and the Ministry of Justice recently jointly issued the “Measures for the Implementation of the Sealing of Juvenile Criminal Records” (hereinafter referred to as the “Measures”). The relevant details are hereby communicated as follows:
I. The Necessity of Formulating the “Implementation Measures”
The 2012 amendment to the Criminal Procedure Law introduced a system for sealing juvenile criminal records. However, due to the relatively general nature of these provisions, there has been inconsistent application in practice regarding the entities responsible for sealing, the specific content and procedures involved, as well as the entities, scope, and procedures for accessing such records. This inconsistency has led to problems in the implementation of the system, including inadequate management of sealed records and disorderly oversight by relevant authorities. For example, some enterprises have illegally disclosed, sold, or used juvenile criminal records, resulting in unauthorized leaks. In recent years, deputies to the National People’s Congress and members of the Chinese People’s Political Consultative Conference have repeatedly put forward proposals and suggestions aimed at improving the system for sealing juvenile criminal records. Accordingly, in June 2021, we conducted a special survey on the implementation of this system.
Surveys have revealed that in the vast majority of provinces, cases involving juvenile offenders—whether due to unsealed criminal records or unauthorized access leading to information leaks—have resulted in discrimination against these young people in areas such as examinations, further education, employment, and daily life. Many of them, unable to resume normal work and living conditions, have been driven to seek redress through petitioning and rights‑protection channels. According to statistics from judicial authorities, from April 2017 to April 2022, 80,855 juveniles were not prosecuted for crimes, and 157,962 received sentences of five years’ imprisonment or less, totaling 238,817 individuals. If such a large cohort of delinquent minors faces difficulties in securing employment or enrolling in school owing to the leakage of their criminal records, they may once again fall into the cycle of crime, rendering all efforts made at the case‑handling stage—education, rehabilitation, and reintegration—entirely futile and undermining the modernization of social governance. In response to these practical challenges, and with the aim of standardizing and refining relevant legal provisions at the national level, fostering a unified understanding, regulating procedural practices, and enhancing coordination among public security, procuratorial, judicial, and prison administration agencies to pool resources and ensure the effectiveness of educational, rehabilitative, and restorative measures for juvenile offenders, the Supreme People’s Court, the Supreme People’s Procuratorate, the Ministry of Public Security, and the Ministry of Justice, after extensive deliberation and research, jointly formulated the “Implementation Measures.”
II. Main Provisions of the Implementation Measures
The Implementing Measures consist of a total of 26 articles, covering such matters as the definition and scope of juvenile criminal records, circumstances for sealing, the entities and procedures for sealing, the entities authorized to conduct inquiries and the conditions for submitting applications, the entities providing inquiry services and the relevant procedures, the conditions and consequences of lifting the seal, as well as confidentiality obligations and associated liabilities. These provisions essentially address the principal issues currently encountered in the sealing of juvenile criminal records. Specifically:
(1) Strive for comprehensive sealing of records. Specifically, all materials pertaining to cases involving minors shall be sealed to the fullest extent possible. First, with respect to case files in criminal proceedings involving minors, all such materials must be encrypted and kept confidential until the conclusion of the litigation; they may not be disclosed to the public. Following a lawful judgment by the people’s court, if the offender is sentenced to a term of imprisonment of five years or less, or is exempted from criminal punishment, the relevant authorities shall proactively seal any criminal records related to the minor that are in their possession. In cases of joint offenses, the covers of adult case files that have not been sealed after the case has been split shall bear a notation indicating “Contains information subject to criminal record sealing,” and appropriate confidentiality measures shall be implemented for the relevant data. Second, records concerning instances where minors are not subject to criminal punishment, where criminal liability is not pursued, where prosecution is declined, or where criminal coercive measures are applied; as well as records of social investigations, educational assistance and supervision, psychological counseling, judicial relief, and other related activities conducted with juvenile offenders, shall likewise be sealed in accordance with the law. Third, in cases involving minor victims, and in civil, administrative, and public-interest litigation cases involving minors, special attention must be paid to safeguarding the personal information of minors. Fourth, for cases concluded prior to December 31, 2012, which meet the statutory conditions for sealing criminal records or related records, such records shall also be sealed.
(2) Measures for sealing records shall be as effective as possible. First, with respect to all case materials, the relevant provisions of the Personal Information Protection Law must be strictly enforced: materials shall be encrypted and subject to a rigorous custody regime. In addition to physically sealing paper-based case files and archival documents, special emphasis is placed on simultaneously sealing, encrypting, and separately managing electronic data, with strictly limited access permissions. Second, it is stipulated that sealed case materials may not be provided to any platform or authorized to interface with any such platform, nor may online platforms be permitted to directly access juvenile criminal information via network connectivity. Third, all judicial personnel are obligated, at the stage of the proceedings under their responsibility, to inform those who have knowledge of the minor’s involvement in the case of the applicable rules on the protection of minors’ privacy and personal information, and legal liabilities are prescribed for failure to fulfill this obligation. Fourth, once a juvenile’s criminal record has been sealed, it may not be unsealed except under statutorily prescribed circumstances; however, if the individual concerned, upon reaching adulthood, intentionally commits another crime, the people’s court shall expressly state the prior criminal record in its judgment.
(3) The inquiry procedures are designed to be stringent. First, the scope of entities authorized to make inquiries has been further clarified. In accordance with the law, access by organizations is strictly limited; unless expressly provided for by national regulations, relevant authorities shall not grant permission to access juvenile criminal records. Individuals may submit applications to access their own criminal records, which will be processed upon receipt. Second, the inquiry process is rigorously regulated: except for legally prescribed reasons and through legally mandated procedures, no juvenile criminal record may be disclosed to any organization or individual. For requests from organizations or individuals seeking access to juvenile criminal records, the rationale, legal basis, and intended purpose must be carefully reviewed; strict oversight is maintained, and responses are provided promptly. Third, the format of the certificate issued has been specified: where an inquiry conoffices the existence of a criminal record that is subject to sealing, a standardized “Certificate of No Criminal Record” — identical in form to that issued to persons with no criminal record at all — must be provided, accompanied by a uniform supplementary document. Fourth, when an inquiry is approved, the requesting entity and relevant personnel must be informed that they are required to use the information solely for the stated purpose and within the designated scope, and to strictly adhere to confidentiality obligations. Any failure to comply with these requirements—whether by misusing the accessed records or by disclosing related information in violation of applicable rules—shall result in the imposition of legal liability on the responsible parties. Fifth, the channels for making inquiries have been standardized. To facilitate administrative work, the Measures continue to uphold the current practice whereby public security organs, procuratorial organs, judicial organs, and judicial administration organs each provide criminal record‑inquiry services within their respective jurisdictions.
(4) Accountability is rigorously enforced. First, legal liability for improper disclosure of information has been clearly defined. Article 20 stipulates that public officials entrusted with the sealing of criminal records and the protection of minors’ privacy and personal information shall be subject to disciplinary action if they improperly disclose such records, privacy, or information; if their actions result in serious consequences, causing substantial losses to the state or individuals, or giving rise to adverse impacts, they shall also be held criminally liable in accordance with the law. Second, the People’s Procuratorate’s power of prosecutorial oversight over the sealing of criminal records has been explicitly established. The provision requires that the procuratorial organs include the entire process of sealing juvenile criminal records and protecting minors’ privacy and personal information within the scope of prosecutorial supervision, and that relevant departments promptly review and provide feedback upon receiving corrective recommendations.
III. Interdepartmental Coordination to Ensure Effective Implementation of the System for Sealing Juvenile Criminal Records
“Laws alone cannot enforce themselves.” Going forward, we will take the Measures for Implementation as our guiding framework, strengthen inter‑departmental coordination and collaboration, and work together to ensure effective enforcement of the system. First, we will continue to intensify public awareness campaigns, encouraging relevant agencies and individuals to move beyond traditional retributive thinking and uphold the principle of acting in the best interests of minors. This will help foster a broader societal understanding of and support for the system, thereby facilitating the successful reintegration of juvenile offenders into society. Second, we will organize targeted training programs to bolster the sense of mission, responsibility, and proactive engagement among the departments and personnel tasked with managing juvenile criminal record sealing, ensuring they fully grasp and correctly apply this制度. Third, we will deepen research on the juvenile criminal record sealing system, conducting thorough investigations and analyses of contentious and cutting‑edge issues. We will systematically distill lessons learned from judicial practice and address emerging circumstances and challenges, promptly responding to public concerns and making timely revisions and refinements to the Measures for Implementation, so as to maximize the value of this important mechanism.
The healthy growth of minors is vital to the future of the nation and the ethnic community. We will take the thorough implementation of the Law on the Protection of Minors and the Law on the Prevention of Juvenile Delinquency as our guiding principles, further strengthen and improve judicial protection for minors, rigorously enforce the responsibilities of all relevant departments, and strive to effectively implement the system of sealing juvenile criminal records. In doing so, we will do our utmost to educate and rehabilitate every child who has erred, safeguard their legitimate rights and interests—including their right to privacy, the right to education, and the right to employment—and better ensure that young offenders are treated equitably and can successfully reintegrate into society.

The Supreme People’s Procuratorate convened a Party Group meeting to deliberate measures for the procuratorial organs to effectively safeguard national security and social stability.
On June 1, Zhang Jun, Secretary of the Party Group and Procurator-General of the Supreme People’s Procuratorate, presided over a meeting of the Supreme People’s Procuratorate’s Party Group to thoroughly study and implement the important instructions of General Secretary Xi Jinping, convey and study the spirit of the Ninth National Conference on Letters and Visits and the plenary session of the Central Political and Legal Commission, and deliberate measures for the procuratorial organs to safeguard national security and social stability.
The meeting emphasized that the procuratorial organs must further deepen their understanding of the decisive significance of the “two establishments,” resolutely implement the important instructions of General Secretary Xi Jinping and the major decisions and arrangements of the CPC Central Committee, and officely prioritize stability. They should elevate the alignment of thinking, perception, and action to a level that effectively strengthens political judgment, political comprehension, and political execution, integrating the safeguarding of security and social stability into routine case handling and all aspects of their work. By proactively fulfilling their prosecutorial duties, they will help create a safe and stable social environment conducive to the successful convening of the 20th National Congress of the Communist Party of China.
Zhang Jun pointed out that, amid a complex and evolving international landscape and the arduous tasks of reform, development, and maintaining stability, procuratorial organs must, from a higher vantage point, resolutely safeguard national political security and overall social stability. They should further strengthen the practice of “viewing matters from a political perspective,” leveraging political acumen, rule-of-law expertise, and prosecutorial wisdom to make full use of legal tools and handle cases involving national security in an appropriate and prudent manner. In particular, for cases that, at first glance, do not appear to pose a threat to national security but may nonetheless harbor factors that could undermine political stability, they must be handled in strict accordance with the law, officely preventing a narrow, case‑by‑case approach. Furthermore, procuratorial organs must earnestly implement the Party Central Committee’s policies and decisions on epidemic prevention and control; while maintaining rigorous internal preventive measures, they should actively fulfill their duties, combat the pandemic in accordance with the law, balance leniency with severity in handling epidemic‑related cases, ensure that epidemic‑control efforts proceed smoothly within the framework of the rule of law, and guide the public to consciously comply with and jointly uphold epidemic‑prevention order.
Zhang Jun urged procuratorial organs at all levels to demonstrate a stronger sense of responsibility and urgency, and to earnestly strengthen ideological work within the procuratorial system. They must rigorously implement the accountability system for ideological work, safeguard key ideological frontlines—including procuratorial education and training, theoretical research, and news and publicity—and strictly prevent any activities in the procuratorial process from undermining ideological security.
Zhang Jun emphasized that the procuratorial organs must proactively fulfill their duties to serve the overarching goals of economic and social development. In particular, in response to the current severe economic situation, they should comprehensively advance and steadily implement all aspects of the pilot program for corporate compliance reform in cases involving enterprises, strengthen equal protection, and help businesses of all types overcome difficulties and achieve sustainable growth.
Zhang Jun pointed out that maintaining stability requires a long-term perspective and a comprehensive approach that addresses both symptoms and root causes. The procuratorial organs must, in light of their functions, strengthen the popular support underpinning social stability; deepen source‑level governance to foster endogenous social stability; and more consciously and skillfully “detect the subtle signs and discern the larger trends,” thereby ensuring that source‑level governance is effectively implemented and thoroughly carried out. They should proactively respond to the new expectations of the people, earnestly deliver concrete measures that serve the public, help resolve the pressing, difficult, and concerning issues they face, and consolidate the political foundations of the Party’s governance. Moreover, they must coordinate the implementation of the criminal justice policy of “fewer arrests, cautious prosecution, and prudent detention,” as well as the system of lenient treatment for those who admit guilt and accept punishment, so as to continuously and effectively reduce social antagonisms at the very outset of case handling, thereby reinforcing and enhancing the factors of social harmony.
The meeting conducted a focused study of the spirit of the Ninth National Conference on Letters and Visits, and deliberated measures for its implementation. All participants unanimously agreed to thoroughly implement the guiding principles of the Ninth National Conference, earnestly enforce the Regulations on Letters and Visits, and persistently ensure that every petition from the public receives a response, that case-handling is assigned to court leadership for first-time petitions, that backlog cases are systematically reviewed and resolved, and that routine governance mechanisms are maintained. Special attention should be given to judicial assistance and other key tasks. The meeting also outlined plans to carry out work at the procuratorial stage aimed at identifying and resolving信访-related disputes, rigorously enforcing the principle of “first-instance responsibility,” and effectively conducting mediation and conflict resolution to resolutely prevent incidents or cases that could undermine overall stability. In particular, the meeting emphasized the importance of addressing disputes at their source: in the very first stage of prosecutorial proceedings, efforts must be made to resolve conflicts. For difficult, complex, and high‑profile cases, when deciding whether to approve or reject arrest, or to prosecute or decline prosecution, appropriate methods such as public hearings should be employed to settle disputes once and for all, with thorough legal explanations and reasoned arguments, thereby effectively defusing tensions, reducing the number of appeals at the source, and promoting social harmony and stability.

The Supreme People’s Procuratorate has released the “White Paper on Procuratorial Work Involving Minors (2021).”
A preliminary framework for the comprehensive judicial protection of minors under the “Four-Pronged Prosecutorial System” has taken shape.
On June 1, the Supreme People’s Procuratorate released the “White Paper on Procuratorial Work Involving Minors (2021)” (hereinafter referred to as the White Paper). According to reports, this marks the third time the Supreme People’s Procuratorate has issued such a white paper. Unlike previous editions, this year’s report for the first time conducts an in-depth analysis and assessment of data related to the four major areas of procuratorial work involving minors.
The white paper covers six key areas: analysis of case-handling data in juvenile prosecution; strengthening two-way protection in accordance with judicial principles; coordinating the “four major types of prosecution” to deepen comprehensive and integrated judicial protection; enhancing interagency collaboration and proactively integrating into the “five‑fold protection” framework; emphasizing crime prevention to improve the effectiveness of legal education and publicity; and prioritizing both quality and efficiency to advance professionalization and standardization. Together, these efforts comprehensively highlight the new achievements made in juvenile prosecution over the past year.
The white paper shows that in 2021, procuratorial organs nationwide reviewed and approved the arrest of 55,379 juvenile criminal suspects and reviewed and prosecuted 73,998. Following review, 27,208 were approved for arrest, while 27,673 were not; public prosecution was initiated against 35,228 individuals (including those prosecuted after completing the probationary period under conditional non-prosecution), and non-prosecution was granted to 22,585 (including those not prosecuted upon expiration of the conditional non-prosecution probationary period). Conditional non-prosecution was applied to 19,783 individuals, with non-arrest, non-prosecution, and conditional non-prosecution rates of 50.4%, 39.1%, and 29.7%, respectively. In 2021, procuratorial organs nationwide approved the arrest of 45,827 individuals for crimes harming minors and instituted public prosecution against 60,553.
The white paper notes that in 2021, the unified and centralized handling of procuratorial work involving minors was fully rolled out across all procuratorial organs nationwide. The criminal, civil, administrative, and public-interest litigation functions related to minors are now uniformly exercised by the juvenile prosecution departments or specialized juvenile case-handling teams, marking the initial establishment of a comprehensive judicial protection framework encompassing the “four major areas of procuratorial work” for minors.
The white paper also highlights how the procuratorial organs have strengthened two-way protection, provided comprehensive judicial protection, proactively integrated with the other “five forms of protection” (namely, family, school, society, cyberspace, and government), and carried out legal publicity and education while enhancing professionalization and standardization. It further compiles cases, exemplary practices, and innovative mechanisms that have had a significant impact on juvenile prosecution and judicial protection, thereby enabling the general public to gain a more comprehensive and intuitive understanding of juvenile prosecution work.
The white paper reveals that the protection of minors currently faces a severe and complex situation: the number of crimes harming minors is on the rise, juvenile delinquency is showing signs of increase, family guardianship issues remain particularly acute, the internet exerts a profound influence on minors, and the social environment conducive to their healthy development still requires further improvement. In short, protecting minors remains a long and arduous task.
It is reported that this year, the procuratorial organs will take the Supreme People’s Procuratorate’s report to the Standing Committee of the National People’s Congress on juvenile prosecution work as an opportunity, use the supervision and implementation of the “No. 1 Prosecutorial Recommendation” as a driving force, and leverage the “Year of Quality Enhancement” as a key initiative. With a focus on strengthening comprehensive judicial protection for minors, they will pursue innovation and proactive performance of duties, comprehensively elevating the quality and effectiveness of juvenile prosecution work. This effort will help ensure the effective implementation of family, school, social, online, and governmental safeguards, thereby safeguarding the safe and healthy growth of minors and, through concrete actions, marking the successful convening of the 20th National Congress of the Communist Party of China.

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