JC Master Legal News Issue 1022

Key Takeaways for This Issue

Northbound funds continue to snap up A-shares, with cumulative net purchases reaching a record high of RMB 1.6961 trillion.
Since entering June, northbound capital has markedly accelerated its pace of increasing holdings in A-shares, with another substantial net purchase of over RMB 12 billion this Thursday. Year-to-date, there have been eight trading days when northbound flows exceeded RMB 10 billion in net purchases, four of which occurred in June. This week, northbound flows initially dipped before rebounding, posting a combined net buy of RMB 4.065 billion, bringing the cumulative net inflow to RMB 1.6961 trillion—another record high.
The new energy industry is receiving sustained policy support and is poised to accelerate its growth going forward.
 On June 24, the Ministry of Transport and three other departments officially released their implementation measures for carrying out the “Opinions of the CPC Central Committee and the State Council on Fully, Accurately, and Comprehensively Implementing the New Development Philosophy and Doing a Good Job in Achieving Carbon Peak and Carbon Neutrality.”
Interpretation of Issues Concerning the Application of the Value-Added Tax End-of-Period Credit Refund Policy under the “Regulations on Accounting Treatment for Value-Added Tax”
Recently, the Ministry of Finance and the State Taxation Administration have successively issued the following announcements: “Announcement on Further Intensifying the Implementation of the Value-Added Tax End-of-Period Credit Refund Policy” (Ministry of Finance and State Taxation Administration Announcement No. 14 of 2022), “Announcement on Further Accelerating the Implementation Progress of the Value-Added Tax End-of-Period Credit Refund Policy” (Ministry of Finance and State Taxation Administration Announcement No. 17 of 2022), “Announcement on Further Sustaining the Acceleration of the Implementation Progress of the Value-Added Tax End-of-Period Credit Refund Policy” (Ministry of Finance and State Taxation Administration Announcement No. 19 of 2022), and “Announcement on Expanding the Scope of Industries Eligible for Full Refund of Value-Added Tax Credit Balances” (Ministry of Finance and State Taxation Administration Announcement No. 21 of 2022). These measures have further strengthened the implementation of the value-added tax end-of-period credit refund policy and continued to accelerate its execution.
A case of paperless, end-to-end case handling by the Jilin courts has been included in the “China Court Informationization Blue Book.”
　On June 14, 2022, the Institute of Law of the Chinese Academy of Social Sciences and the Social Sciences Academic Press jointly hosted the launch of the “Rule of Law Blue Book: Report on the Development of Judicial Informatization in China No. 6 (2022)” (hereinafter referred to as the “China Judicial Informatization Blue Book”) and the 2022 Symposium on Judicial Informatization in China, held in Beijing. A case study on Jilin courts’ implementation of end-to-end paperless case handling was selected for inclusion in the China Judicial Informatization Blue Book.

Finance & Capital Markets
Northbound funds continue to snap up A-shares, with cumulative net purchases reaching a record high of RMB 1.6961 trillion.
Since entering June, northbound capital has markedly accelerated its pace of increasing holdings in A-shares, with another substantial net purchase exceeding RMB 12 billion this Thursday. Year-to-date, there have been eight trading days when northbound inflows surpassed RMB 10 billion, four of which occurred in June. This week, northbound flows initially dipped before rebounding, posting a combined net purchase of RMB 4.065 billion, bringing the cumulative net inflow to RMB 1.6961 trillion—another record high.
This week, the electrical equipment sector saw net inflows of over RMB 2.1 billion from northbound funds. The non-bank financials, pharmaceuticals and biotechnology, machinery and equipment, and food and beverage sectors each recorded net purchases exceeding RMB 1 billion, while the automotive, agriculture, forestry, animal husbandry and fishery, and chemical industries also received additional allocations of more than RMB 100 million. By contrast, the electronics sector experienced substantial net selling totaling RMB 2.863 billion, and the banking sector saw net outflows surpassing RMB 1 billion. Meanwhile, the construction decoration, non-ferrous metals, and steel sectors all faced reductions in holdings exceeding RMB 100 million.
Baijiu stocks are showing mixed signals.
Northbound funds have once again shown mixed sentiment toward baijiu stocks. They net‑purchased Guizhou Moutai to the tune of RMB 3.128 billion, making it the most heavily bought stock this week—and marking the fourth consecutive week of increased holdings. Driven by this inflow, Moutai’s share price has steadily climbed, breaking through RMB 2,000 on June 24 to hit a more than five‑month high, just one step away from its year‑to‑date peak.
On June 24, Kweichow Moutai announced that it will distribute its 2021 annual profits next week. The proposed dividend is RMB 21.675 per share (tax inclusive), totaling RMB 27.228 billion in cash dividends. The record date for shareholders is June 29, and the ex-dividend/ex‑interest date is June 30.
Meanwhile, Wuliangye, which is also set to distribute dividends next week, saw net sales of 1.593 billion yuan from northbound funds this week, bringing its total holdings down to roughly 184 million shares—the lowest level in more than four years. Compared with its peak holding of 432 million shares in March 2019, the company has cumulatively reduced its stake by over 57%. Next week, Wuliangye will implement its annual dividend one day earlier than Kweichow Moutai, distributing 30.23 yuan per 10 shares (including tax), for a total payout of approximately 11.734 billion yuan.
In addition, Jiugui Liquor saw net purchases of RMB 481 million from northbound funds this week, while Shanxi Fenjiu, Luzhou Laojiao, and Kouzijiao each experienced net sales exceeding RMB 100 million. Overall, the baijiu sector recorded total net inflows of RMB 1.261 billion.
Huaxin Securities stated that, as the second half of the year begins, baijiu sales are accelerating and inventory levels are being managed, building momentum for the third quarter’s Mid-Autumn and National Day holidays, with liquor producers striving to meet their full-year targets. High-end baijiu remains relatively certain in its performance, while mid-to-high-end brands are stepping up their catch-up efforts in the second half; controlling inventory and supporting prices will be key.
Large-scale share reduction in CATL
After a 10-month preparation period, CATL’s private placement has finally been finalized this week. The issue price is RMB 410 per share, raising approximately RMB 45 billion in total. The offering attracted a star-studded lineup of institutional investors, with an exceptionally strong roster. Among them, Guotai Junan Securities, J.P. Morgan Chase, and Barclays Bank subscribed for RMB 4.664 billion, RMB 4.073 billion, and RMB 3.36 billion, respectively, ranking first, second, and third.
Immediately following the completion of its private placement, CATL promptly unveiled its third-generation CTP— the Kirin Battery. This battery system boasts an unprecedented level of integration, with a volumetric utilization rate exceeding 72% and an energy density of up to 255 Wh/kg, enabling a vehicle range of 1,000 kilometers. Reportedly, the Kirin Battery will enter mass production and hit the market in 2023.
Driven by multiple factors, CATL’s share price surged, reclaiming the 500-yuan mark. However, northbound investors took the opportunity to reduce their holdings at higher prices, net-selling 2.078 billion yuan—making it the only stock with net sales exceeding 2 billion yuan this week. Total shares held fell to approximately 162 million, hitting a nine-month low.
The sell-offs have not been limited to northbound capital. In 2020, when CATL conducted its most recent share issuance and raised RMB 10 billion, Hillhouse Capital, which subscribed for 62.1118 million shares, has repeatedly reduced its holdings since the lock-up period expired.
According to financial report data, Hillhouse Capital reduced its holdings in CATL by 7.99 million shares in the second quarter of 2021, 2.20 million shares in the third quarter of 2021, and 3.77 million shares in the first quarter of 2022. Additionally, per Wind data, proprietary trading desks at securities offices have also been steadily reducing their stakes in CATL for three consecutive quarters.
Kaiyuan Securities believes the market is concerned that other battery manufacturers may erode CATL’s market share, and that some automakers might even begin producing batteries in-house. However, thanks to CATL’s technological prowess, its ability to control product costs, and its deep, multi‑channel customer relationships, CATL remains poised to be the preferred battery supplier for many automakers.
3 hours, 60,000 viewers! The “top brokerage office” unveils its latest outlook: A slow bull market is making a comeback in A-shares.
In less than three hours, 62,000 viewers tuned in online. What did CITIC Securities’ 2022 Capital Markets Forum—its “Investment Strategy Plenary”—cover?
From June 21 to July 8, CITIC Securities’ 2022 Capital Markets Forum was held online. At the “Investment Strategy Plenary,” convened on the morning of June 22, chief analysts from macroeconomics, A‑share markets, and overseas strategy research delved into topics such as the second-half 2022 macroeconomic outlook, domestic and international investment strategies, and broad asset allocation.
As of noon on June 22, in less than three hours, the online viewership of the “Investment Strategy Main Forum” had reached 62,000.
A slow bull market is making a comeback in the A-share market.
Turning to the outlook for the A-share market in the second half of the year, Qin Peijing, Chief Strategy Analyst at CITIC Securities, sums it up in four characters: “a slow bull is back.”
In Qin Peijing’s view, the most impactful phase of the Russia-Ukraine conflict and U.S. monetary tightening for A-shares has already passed, and economic development and epidemic control will become more coordinated. With a comprehensive package of policies to stabilize growth exerting synergistic effects, market expectations for an improvement in fundamentals are steadily strengthening, heralding the return of a gradual bull market in A-shares.
Qin Peijing believes that the A-share market’s slow bull run will unfold in three phases this year, with the current phase being the second.
The first phase, spanning May, was a period of emotional stabilization, during which a rapid recovery in market risk appetite fueled a sharp rebound from oversold levels.
The second phase, from June to August, is a valuation‑recovery period. During this phase, pro‑growth policies are rolled out in rapid succession; following the bottoming out of interim earnings, A‑shares will enter a mid‑cycle fundamental recovery phase; valuation repair becomes more balanced, with cyclical sectors such as growth‑oriented manufacturing, consumer goods, and healthcare undergoing rotational revaluations.
The third phase, spanning September through the fourth quarter, marks a valuation‑switching period. During this phase, the pace of U.S. monetary tightening is expected to moderate, and the external trade environment should improve. Market conditions will stabilize, with valuations shifting back to a fundamentals‑driven narrative centered on relative growth‑stock advantages. As the market enters this valuation‑switching phase, earnings from steady‑growth stocks and “specialized, refined, distinctive, and innovative” companies will gradually take center stage.
Private equity, foreign capital, and insurance funds are the primary sources of incremental institutional capital.
Where is the capital supporting the slow bull market in A-shares coming from?
Qin Peijing believes that in the second half of the year, new public‑fund launches will recover slowly, but existing funds will face some redemption pressure. Meanwhile, private equity offices, foreign investors, and insurance capital are expected to be the primary sources of incremental institutional capital in the period ahead.
Qin Peijing forecasts that new public‑fund issuance in the second half of the year will total approximately RMB 200 billion, returning to the average level observed during non‑crisis periods over the past five years. Meanwhile, net redemptions from existing funds are expected to rise; based on historical data from comparable periods, redemptions in the second half could reach around RMB 300 billion, resulting in an overall net outflow of roughly RMB 100 billion across public‑fund channels.
Currently, private equity funds’ overall positioning remains at a historical median level and is expected to continue building positions as market conditions improve. Assuming portfolio levels return to year‑end levels, this would translate into roughly RMB 200 billion in net inflows for the second half of the year.
Foreign investors, drawn by the recovery of domestic fundamentals, have resumed steadily increasing their allocations; based on the 2021 inflow pace, net inflows for the second half of the year are expected to total approximately RMB 200 billion.
In the first quarter, market corrections disrupted the pace of increased equity allocations that insurance investors had begun in the fourth quarter of last year. Currently, insurance investors’ equity positions are at historically low levels; they may resume building positions in the second half of the year, bringing their holdings back to historical average levels, which would translate into roughly RMB 100 billion in net inflows.
Hong Kong stocks continue their recovery, while U.S. stocks are caught in a “recession trade.”
Xu Guanghong, Chief Overseas Strategist at CITIC Securities, believes that Hong Kong stocks have established an upward turning point since May and that the recovery trend will continue in the second half of the year.
Xu Guanghong expects that, in the second half of the year, the Hong Kong stock market will generally follow an N-shaped upward trajectory. Five key factors will continue to drive a “collective recovery” in Hong Kong equities:
First, following the third quarter, liquidity expectations in the overseas Chinese‑listed equity market are expected to improve.
Secondly, growth‑stabilization policies are gaining traction. Monetary and fiscal policies are expected to remain accommodative, while internet‑sector regulation has entered a normalized phase, further bolstering investor confidence in the Hong Kong‑listed new‑economy sector.
Third, following a bottoming-out in the second quarter, fundamentals are expected to rebound rapidly. With localized outbreaks easing and pro‑growth policies continuing to gain traction, a clear upward trend in economic fundamentals has emerged since May.
Furthermore, corporate earnings are expected to rebound gradually in the second half of the year, and during the valuation‑reversion rally in the latter half of 2022, Hong Kong stocks’ valuation advantages will become even more pronounced.
Finally, the latest round of capital market reforms is boosting attractiveness. ETF Connect is expanding overseas investment channels, encouraging medium- and long-term capital to enter the market; SPACs will diversify the range of investable assets in Hong Kong; and with the lifting of restrictions on the first batch of domestic REITs, high‑dividend, high‑quality overseas REITs are likely to draw investor attention.
Regarding U.S. equities, Xu Guanghong believes that, as fundamentals deteriorate, U.S. stocks are likely to remain mired in “recession trading” in the second half of the year.
In Xu Guanghong’s view, U.S. equity valuations have yet to fully adjust. Moreover, taking into account factors such as inflation, supply-chain disruptions, logistics challenges, and a strong U.S. dollar, U.S. corporate earnings are expected to continue the phased downward revision trend that has persisted since the beginning of the year. As financial conditions remain tight, it is unlikely that institutional and retail investors will sustain net inflows into the U.S. stock market.
Accordingly, Xu Guanghong expects that, until expectations of a shift in the Federal Reserve’s monetary policy take hold, U.S. equities are unlikely to stage a sustained rebound, with “recession trading” set to remain the dominant theme in the second half of the year.
The recovery trade is the overarching theme of asset allocation.
From a broad asset allocation perspective, Yu Jingwei, Chief Strategist for Asset Allocation at CITIC Securities, believes that the recovery trade will be the central theme driving asset allocation in the second half of the year.
Yu Jingwei stated that in the first half of the year, global asset classes exhibited a distinct pattern: strong performance in commodities, weak equity markets, and a strong U.S. dollar. Looking ahead to the second half, market uncertainty is expected to persist, necessitating a portfolio‑allocation strategy that adapts to evolving conditions.
Yu Jingwei further stated that, under a neutral outlook, for A-shares, the impact of Federal Reserve rate hikes and the Russia-Ukraine geopolitical conflict—both of which have constrained risk appetite in the first half of the year—is expected to gradually subside. As pandemic-related constraints ease, growth‑stabilization policies are likely to enter a phase of intensive implementation, while fundamentals, liquidity, and market sentiment are poised to improve in tandem, driving A-shares into a mid‑cycle rotation characterized by gradual, sustained gains.
For the bond market, short-term easing of credit conditions and economic recovery could push yields higher, while the risk of a global recession toward year-end may spark a rebound.
Overseas, U.S. equities remain under pressure, and U.S. Treasuries may face some downside risk in the near term; in the longer run, attention should be focused on the strength of inflation expectations and real interest rates. As for the U.S. dollar, a turning point remains elusive in the short term.
In the commodities space, crude oil prices are likely to remain at a relatively high range throughout the year. Over the medium to long term, the key source of uncertainty for gold will hinge on whether the pace and magnitude of the U.S. economic slowdown significantly exceed market expectations.
China’s economy will continue to climb steadily.
Chief economists at CITIC Securities are broadly optimistic that Chinese assets will outperform U.S. equities in the second half of the year, with a steady recovery in economic fundamentals serving as a key driver. At the “Macro and Policy Main Forum” hosted by CITIC Securities on the morning of June 21, Chief Economist Zhu Jianfang stated unequivocally, “The second quarter marks the year’s economic low point, and the economy is set to climb steadily in the second half.”
Zhu Jianfang stated that over the past six months, the global economy has faced a severe shock stemming from the combined impact of multiple factors. However, China’s economy has demonstrated remarkable resilience, pressing forward even in the face of adversity. The Chinese government has rolled out a comprehensive package of policies and measures to stabilize the overall economy; these measures are highly targeted, robust, and sustained, with initial positive effects already becoming apparent. As favorable factors continue to accumulate, China’s economy is expected to stage a strong rebound in the second half of the year, steadily regaining momentum.
Zhu Jianfang expects that the second quarter will mark this year’s economic trough, with quarterly growth rates rebounding strongly in the third and fourth quarters, potentially enabling the economy to achieve a relatively robust growth rate by year-end—one that would be comparatively favorable on a global scale.
Zhu Jianfang stated that, despite short-term pressures, China will continue to be the economy that contributes most to global growth. On the one hand, during the 14th Five-Year Plan period, China maintains a potential growth rate of over 5%, leaving ample room for expansion. On the other hand, given that China’s trade volume is currently the largest in the world, its workforce boasts both quantity and quality advantages, and it has established a complete industrial chain, its pivotal role in the global economy remains irreplaceable in the near term.

The three major indices fluctuated and diverged, with automation equipment stocks leading the gains, five of which hit their daily upper limits. Institutions remain optimistic about the market’s medium-term outlook.

 On June 21, the A-share market experienced volatility, with the three major indices showing pronounced intraday swings and slight divergence. As of 11:30 a.m., the Shanghai Composite Index edged up 0.18% to 3,321.24 points; the Shenzhen Component Index gained 0.10%, while the ChiNext Index fell 0.15%. Total turnover across both markets reached RMB 657.29 billion. Overall, A-shares were evenly split between gains and losses.
   
From a liquidity perspective, as of the morning of June 21, northbound funds recorded net outflows totaling RMB 441 million.
   
In the margin trading and securities lending market, as of June 20, the total outstanding balance stood at RMB 1.568567 trillion, up RMB 8.356 billion from the previous trading day. Specifically, the financing balance was RMB 1.483146 trillion, an increase of RMB 6.207 billion from the prior day, while the securities lending balance reached RMB 85.421 billion, up RMB 2.159 billion from the previous session.
Table: Margin Trading Activity for SW Level-1 Industries as of June 20:
   
As of 11:30 a.m. on June 21, among the 76 industry sectors tracked by Tonghuashun, 38 posted gains, accounting for 50%. Automation equipment led the pack with a 3.24% increase, while the small metals sector suffered the largest decline, falling 2.42%. Additionally, sectors such as education and non-metallic materials each saw drops exceeding 2%.
   
Looking at the automation equipment sector, which has been leading gains, as of 11:30 a.m. on June 21, among the 76 individual stocks trading, 60 were up and 5 hit their daily upper limit.
   
On the news front, on June 20, according to an official WeChat account post by JD Industrial, during JD’s 618 shopping festival, industrial enterprises across more than 70 sub‑sectors—including engineering and construction, energy, and manufacturing—procured industrial goods through JD. Among them, the machinery manufacturing, automotive manufacturing, and engineering‑construction sectors saw year‑over‑year growth in procurement spending of 394%, 187%, and 182%, respectively. The top three provinces in terms of the number of corporate buyers were Guangdong, Beijing, and Jiangsu. Additionally, JD Industrial’s 618 data revealed that procurement spending on industrial control and automation grew by 320% year over year.
Kaiyuan Securities stated that, according to the universal automated data‑monitoring framework we have developed, manufacturing indicators in the first quarter of 2022 remained weak. However, as subsequent policies aimed at stabilizing growth take effect and full resumption of work and production proceeds, the broader automation sector is poised for a recovery. Notably, unlike the previous cycle, the domestic‑content segment is now entering a critical window of opportunity, with greater certainty; leading players in specific automation sub‑sectors are seeing their competitive advantages further strengthened. The sectors set to benefit include industrial control servos, industrial robots, cutting tools, and automation components.
As for the outlook, industry analysts believe that medium-term market expectations remain positive.
Guosheng Securities believes that, amid improving economic fundamentals, relatively ample market liquidity, and an overall net inflow of both domestic and overseas capital, medium-term market expectations remain positive. Any short-term volatility or corrective pullback may simply be a consolidation phase, paving the way for further upside momentum. Going forward, investors should closely monitor how the Shanghai Composite Index holds above its 60-day moving average; if trading volume remains robust, the index could continue to strengthen. In terms of strategy, it is advisable to adopt a more stock‑specific approach rather than focusing on broad market indices, while maintaining prudent position sizing and emphasizing disciplined timing—selling high and buying low on individual stocks. At lower levels, sectors such as new energy, defense, and consumer goods present attractive opportunities and could be well‑suited to the current market environment.
Wangxin Securities notes that, weighed down by the six-month moving average, stock indices in both markets may experience a brief pullback in the near term. Today, investors should monitor the sustainability of any rebound and changes in trading volume. In terms of strategy, favor individual stocks over broad market indices, steer clear of structural adjustment risks, prudently manage position sizes, and capitalize on rotational opportunities across hot sectors.

The auto parts sector rose nearly 1% despite the broader market downturn, with 13 strong performers hitting their daily upper limits.

On June 22, the auto parts sector bucked the market trend and posted strong gains. By the close, data from Tonghuashun showed the sector rose 0.96%, outperforming the Shanghai Composite Index, which fell 1.20%. Within the sector, 105 individual stocks advanced, accounting for more than half of the constituents. Notably, 13 stocks—including Jingwei Shares, Qin’an Shares, Tianlong Shares, Weidi Shares, and Zhejiang Liming—hit their daily upper limits, underscoring the sector’s robust momentum.
Meanwhile, major institutional investors are actively positioning themselves. On June 22, 88 individual stocks within the auto parts sector saw net inflows from major funds, accounting for more than 40% of the sector. Specifically, six stocks—Moulding Technology, Guangdong Hongtu, Jingwei Shares, Changshu Auto Trim, Luchang Technology, and Beit Technology—each recorded net purchases exceeding RMB 70 million from major investors, with total net buying amounting to RMB 502 million.
In this regard, Chen Li, Chief Economist and Director of the Research Institute at Chuan Cai Securities, stated that the strong performance of the auto parts sector stems primarily from two factors: First, since May, with the resumption of work and production and the gradual rollout of local policies to stimulate automobile consumption, the automotive industry has shown an overall recovery. On June 22, according to the official WeChat account of the China Association of Automobile Manufacturers, retail sales of automobiles in May 2022 reached RMB 318.6 billion, up 24.1% month-on-month but down 16% year-on-year; the year-on-year decline narrowed by 15.6 percentage points compared with the previous month, and this rebound in the automotive sector has bolstered the related component‑supply chain. Second, from a valuation perspective, the industry’s overall profitability remains stable. While short-term results have been affected by pandemic-related disruptions, in the medium term, as businesses resume operations, corporate profits are expected to return to normal levels. Meanwhile, with recent declines in the prices of certain raw materials, the industry’s overall profitability is likely to improve.
Senior analyst Qin Hong stated that the sharp rally in auto‑parts stocks is primarily driven by the rapid growth of China’s new‑energy vehicle sector in recent years. According to data released earlier by the China Association of Automobile Manufacturers, domestic NEV sales reached 447,000 units in May this year, up 105.2% year over year and 49.6% month over month. This robust momentum has persisted, with both year‑on‑year and month‑on‑month figures remaining positive, thereby boosting activity across the automotive‑parts value chain. Moreover, the rise of NEVs has spurred significant structural changes in the automotive industry, paving the way for the emergence of a thriving Chinese auto‑parts ecosystem—spanning areas such as vehicle lightweighting, semiconductor technologies exemplified by automotive‑grade chips, and innovations in lithium‑battery architectures. Consequently, individual stocks within the auto‑parts sector have delivered strong performance, underpinned by a solid industrial foundation, leaving room for continued optimism in their future price trajectories.
Regarding investment opportunities in the automotive components sector, Chen Li noted that a one-size-fits-all approach is not advisable. As the electrification of vehicles accelerates, the penetration rate of new-energy vehicles is expected to rise further, and automobiles will gradually become more intelligent. For traditional component manufacturers, profit growth prospects are likely to be relatively limited, so their valuations should not be set too high; by contrast, component offices that have successfully navigated the shift toward intelligent technologies can command comparatively higher valuation multiples.
CaiXin Securities noted in its research report that as the penetration rate of new-energy vehicles continues to rise, the market size for lightweight materials and integrated die-casting will keep expanding. With the ramp-up of production capacity and a recovery in gross margins, companies that have strategically positioned themselves in these areas are poised to deliver earnings growth.
Over the past 30 days, institutions have expressed a bullish outlook on auto‑parts concept stocks. Specifically, 31 individual stocks have received favorable ratings such as “Buy” or “Add,” with Lingdian Electric Control receiving the highest number of positive ratings—four times. Other stocks—including Baolong Technology, Huayang Group, Aikodi, Zhongding Co., Ltd., Fuyao Glass, and General Shares—each garnered three favorable ratings.

Commercial & Corporate
The new energy industry is receiving sustained policy support and is poised to accelerate its growth going forward.
Policies are helping the industry accelerate its development.
On June 24, the Ministry of Transport and three other departments officially released implementation guidelines for carrying out the “Opinions of the CPC Central Committee and the State Council on Fully, Accurately, and Comprehensively Implementing the New Development Philosophy and Doing a Good Job in Achieving Carbon Peak and Carbon Neutrality.” The guidelines call for “actively developing new‑energy and clean‑energy transportation vehicles.” On June 16, the National Development and Reform Commission held its June press conference, stating that it would promptly commence construction on a number of nuclear and hydropower projects and accelerate the development of large‑scale wind and solar power bases, with a particular focus on desert, gobi, and arid regions. On May 30, the General Office of the State Council forwarded the “Implementation Plan for Promoting High‑Quality Development of New Energy in the New Era,” jointly issued by the National Development and Reform Commission and the National Energy Administration. The plan sets a target of achieving a total installed capacity of over 1.2 billion kilowatts for wind and solar power by 2030, while speeding up the establishment of a clean, low‑carbon, safe, and efficient energy system.
In response, Liu Cunxin, an assistant fund manager, stated, “The development of the new‑energy sector is supported by two key factors: First, the transition to new energy has become a global consensus, and the industry boasts substantial growth potential and high certainty; over the next three to five years, it is expected to maintain a rapid expansion trajectory. Second, policy plays a pivotal role in driving new‑energy development—over recent years, the government has consistently introduced favorable measures for the sector, and this supportive stance is likely to strengthen further in the future.”
The new energy industry primarily encompasses sub-sectors such as photovoltaics, wind power, and energy storage. Regarding the development of the photovoltaic sector, Chen Li, Chief Economist and Director of the Research Institute at Chuan Cai Securities, stated: “In May, China’s newly installed photovoltaic capacity significantly exceeded expectations, driven by robust policy support, strong demand in the European market, and relatively high price acceptance. Looking ahead, overseas demand and domestic demand for distributed PV installations are expected to remain robust, while the continued advancement of large-scale wind and solar projects will further bolster the overall prosperity of the photovoltaic value chain.”
Regarding the development of the wind power industry, Chen Li noted that recent tender volumes have been accelerating, providing strong support for wind‑power capacity additions. Large-scale wind‑solar base projects and offshore wind‑power initiatives are entering an accelerated implementation phase, and coupled with the downward trend in turbine unit prices, the sector holds significant growth potential going forward.
Regarding the development of the energy storage industry, Chen Li believes that “as the dual-carbon goals have become a global consensus and the share of new energy continues to rise, coupled with the sharp increase in global energy prices, the energy storage sector is poised for explosive growth.”
Industry sentiment is expected to continue improving.
Regarding investment opportunities in the second half of the year, Zhongyuan Securities analyzes that a major global energy transition is underway, with Europe and the United States accelerating the pace of their new‑energy revolution. Domestically, policies continue to bolster the new‑energy sector, and the office recommends maintaining a focused allocation to this field in the second half.
Yuan Huaming, General Manager of Huahui Chuangfu Investment, stated that, driven by technological advancements and the maturation of the industrial chain, new energy sources—led by photovoltaic and wind power—are gradually replacing traditional fossil fuels and emerging as the primary direction of industrial development. With robust policy support, China’s new‑energy sector has experienced rapid market expansion, and industry sentiment is expected to remain on an upward trajectory.
According to data released by the National Energy Administration, from January to May 2022, cumulative new photovoltaic capacity reached 23.71 GW, up 139.25% year on year; meanwhile, new domestic wind power capacity added during the same period totaled 10.82 GW, a year-on-year increase of 39%.
Since the beginning of this year, influenced by geopolitical tensions and other factors, European countries have accelerated the transition from conventional to renewable energy, driving overseas demand beyond expectations. According to data from the General Administration of Customs, from January to May, solar cell exports totaled 3.74 million tons, up 62.5% year on year. In May alone, solar cell exports reached 850,000 tons, a year-on-year increase of 68.7% and a month-on-month rise of 25.0%.
Yang Delong, chief economist at Qianhai Open Source Fund, stated that in the first quarter of this year, wind and solar power accounted for 13.4% of total electricity generation. According to relevant plans, by the time carbon neutrality is achieved in 2060, the share of non‑fossil energy consumption could exceed 80%. This implies vast growth potential for the new‑energy sector, with projected market value reaching one trillion yuan.
Development of oral COVID-19 drugs is accelerating, and the clinical trial for Sinovac Biotech’s SHEN26 has been accepted.
The concept of oral COVID‑19 medications has garnered intense market enthusiasm, with developments in this area sparking widespread debate. As a critical component of pandemic control, this sector is closely watching investors’ nerves.
On June 24, Sinovac Biotech announced that its clinical trial registration application for SHEN26 capsules, a small-molecule oral COVID‑19 drug co-developed with Shenzhen Antaiwei Biopharmaceutical Co., Ltd. (referred to as “Antaiwei”), has been accepted by the National Medical Products Administration. This marks an acceleration in the development of Sinovac Biotech’s oral COVID‑19 medication.
According to the announcement, SHEN26 is a novel coronavirus RNA-dependent RNA polymerase (RdRp) inhibitor that exerts antiviral activity by inhibiting viral nucleic acid synthesis. Preclinical studies have demonstrated that SHEN26 exhibits potent anti-SARS-CoV-2 activity both in vitro and in vivo, with significant inhibitory potency against SARS-CoV-2 and its variants. It demonstrates antiviral efficacy against both the original strain and known major variants, while its mechanism of action is well-defined. Additionally, it boasts favorable oral bioavailability, a good safety profile in repeated dosing studies in animals, no mutagenic risk, and no off-target effects.
It is reported that the core members of Shenzhen Antaivii, the project’s partner, are Professor Zhang Xumu and Professor Guo Deyin. Professor Zhang Xumu currently serves as the Director of the Pingshan Biomedical Research Institute at the Southern University of Science and Technology, with research interests spanning medicinal chemistry, the development of small-molecule anti‑tumor and antiviral drugs, and the green synthesis of chiral pharmaceuticals. Professor Guo Deyin is a professor at the School of Medicine, Sun Yat-sen University, and currently chairs the Virology Professional Committee of the Chinese Society for Microbiology. His primary research areas include the pathogenic mechanisms and immune regulatory pathways of coronavirus infections, as well as viral gene therapy and the screening of antiviral agents.
Currently, this project is a key initiative under the Ministry of Science and Technology’s Special Program for Public Safety Risk Prevention and Control and Emergency Technology Equipment. It has also been included in Guangdong Province’s 2021 Emergency Scientific and Technological Research Program for Preventing and Controlling Novel Coronavirus Infection, as well as in the Guangdong Provincial Drug Administration’s “Triple‑Pronged” (key projects, key enterprises, and key regions) innovation program for the biopharmaceutical industry.
Consistent with the level of market attention, Sinovac Biotech has demonstrated a strong commitment and substantial investment in the SHEN26 project. As early as February 20 this year, following the company’s announcement that it would collaborate with Antaiwei to develop the oral anti‑COVID‑19 drug SHEN26, it has continuously updated progress on the initiative and, via its investor‑relations platform, stated that it would leverage all available resources to advance the SHEN26 program. Earlier this month, Sinovac Biotech issued another announcement indicating that, to accelerate the SHEN26 project, it had entered into a CDMO technical services and contract manufacturing agreement with Xinlitaide, further expediting the program’s development.
Additionally, according to informed sources, the SHEN26 project team at Sinovac Biotech has been actively advancing the project’s progress. In compliance with the International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (ICH) guidelines and the guidance issued by the Center for Drug Evaluation (CDE), the team has successfully completed preclinical studies, including pharmacology, pharmacokinetics, and toxicology. During the Investigational New Drug (IND) submission process, the team has maintained efficient collaboration with all relevant parties, engaged in close communication with regulatory authorities such as the CDE, and provided timely feedback, thereby accelerating the project’s advancement. The Phase I clinical trial is expected to commence patient enrollment in July.
In its announcement, Sinovac Biotech also stated that the acceptance of the clinical trial registration application for SHEN26 capsules represents a key step in accelerating the company’s efforts to advance its innovative drug pipeline. The company will, in accordance with relevant national technical guidelines, advance the clinical development of SHEN26 capsules with high quality and at an accelerated pace.
At present, China’s domestically developed oral anti‑COVID‑19 drugs are fiercely competitive; the ultimate winner remains to be seen. For this very reason, Sinovac Biotech’s R&D progress is drawing close attention.
Pioneering cutting-edge quantum communication AR glasses technology, Tengjing Technology continues to innovate in the field of optical and optoelectronic applications.
From optical communications and fiber lasers to quantum information research, biomedicine, and consumer optics, as a master of precision manufacturing technologies in the field of optical and optoelectronic devices, Tengjing Technology holds four core technology portfolios: optical thin-film technologies, precision optical technologies, molded-glass aspheric technologies, and fiber-optic device technologies. It is widely recognized as an indispensable upstream supplier of critical precision optical components for downstream industries such as optical communications and fiber lasers.
On the occasion of the third anniversary of the launch of the STAR Market, a comprehensive assessment was recently conducted to gain an in-depth understanding of the company’s scientific and technological innovation capabilities, its industry standing, and its future development plans.
Optical communications and the fiber laser industry are key components of China’s innovation-driven development strategy and vital sectors in the country’s transition toward becoming a manufacturing powerhouse and a science-and‑technology leader. Liu Yi, secretary of the board at Tengjing Technology, stated, “At present, the company boasts a robust portfolio of clients, including many well-known industry players and prominent research institutions. In light of the favorable industry trends and promising market prospects ahead, we will continue to ramp up R&D investment and maintain our technological edge in the production of precision optical components and fiber‑optic devices.”
Continuously developing cutting-edge technologies in precision optical manufacturing.
Fuzhou has long been known as the “Capital of Optical Components in China,” boasting a thriving industrial cluster and a wealth of talent.
Tengjing Technology’s new headquarters is located within the Mawei Science and Technology Park in Fuzhou. Founded in October 2013, under the leadership of its controlling shareholders Yu Hongrui and Wang Qiping, the company achieved a listing on the STAR Market in just over seven years, by 2021.
In the first-floor showroom of the company’s new headquarters, staff explained that these seemingly unremarkable optical components actually represent the cutting edge of China’s optical‑component manufacturing industry. For instance, only a handful of companies in the sector have mastered mold‑pressing glass aspheric technology capable of stable mass production. Both China’s independently developed quantum‑computing prototypes, “Jiuzhang” and “Jiuzhang‑2,” incorporate precision optical components supplied by this company.
Reflecting on the company’s journey to IPO, Liu Yi remarked that the optical and optoelectronic industry—where the company operates—stands at the forefront of technological innovation, and that the company has achieved rapid growth thanks to its robust R&D capabilities and innovative strength. At the time of its listing application, Tengjing Technology benefited from the favorable conditions of the STAR Market, securing not only capital support but also laying a more solid foundation for standardized governance and high‑quality development.
On the other hand, Tengjing Technology’s core team—comprising academic and research leaders—aligns closely with the “science and technology innovation” ethos. According to reports, the company’s controlling shareholder, Yu Hongrui, holds degrees in Applied Physics from Tsinghua University and from the Fujian Institute of Structure of Matter, Chinese Academy of Sciences, while Wang Qiping graduated from the Changchun Institute of Optics and Precision Mechanics, Chinese Academy of Sciences. Both previously worked at Gaoyi Optics, a well‑known industry player in precision optical components. Furthermore, more than 80% of Tengjing Technology’s core team holds master’s or doctoral degrees; its Chief Technology Officer, Dr. GANZHOU, earned his Ph.D. in Physics from Tsinghua University and served as a visiting professor at the California Institute of Technology, specializing in laser sensing, device development, and system integration.
Moreover, the company’s strength is underscored by its technological prowess—its products have already secured a leading position across multiple niche markets and application areas. The data‑center CWDM filters and multi‑layer/ultra‑multi‑layer interference stacks it manufactures have all achieved import substitution.
“We have always been committed to driving technological innovation and delivering solutions that meet the demand for high-end import substitution,” said Liu Yi. The company remains dedicated to serving China’s strategic emerging industries, continuously deepening its expertise and expanding its footprint across sectors such as 5G optical communications, high-end equipment manufacturing, quantum information research, biomedicine, and consumer optics.
According to LightCounting, the global optical module market is expected to grow at a compound annual growth rate (CAGR) of 14% from 2021 to 2026, with the market size approaching US$18 billion by 2026. Meanwhile, IndustryPerspective forecasts that the global industrial laser market was valued at US$5.157 billion in 2020 and will expand at a CAGR of 11.3% over the next five years, reaching an overall market size of US$8.808 billion by 2026.
Continuously expanding into new consumer‑oriented market segments.
Data show that in 2021, the company reported revenue of RMB 303 million, up 12.44% year over year, and net profit attributable to shareholders of RMB 52 million, down 26.25% year over year. In the first quarter of 2022, revenue reached RMB 78 million, a 37.81% year-over-year increase, while net profit attributable to shareholders stood at RMB 10 million, up 36.34% year over year. The company stated that last year’s results were primarily affected by factors such as the relocation of its manufacturing facilities. With the relocation completed at the end of 2021, the company has effectively expanded its production capacity, and its order‑fulfillment capabilities continue to improve.
Currently, Tengjing Technology’s product portfolio comprises two main segments: precision optical components and fiber-optic devices. Among these, the company places particular emphasis on expanding its business, advancing technological development, and building a robust pipeline of innovations in the LiDAR and AR application domains.
In May and early June this year, Google and Apple each held their respective developer conferences, with AR glasses emerging as the central focus—widely regarded by the industry as a key growth driver for the next generation of consumer electronics.
Industry insiders believe that Tengjing Technology’s core technologies and products will enjoy even broader application prospects in the future.
In fact, the company has already begun building up its technological capabilities in this field. According to Tengjing Technology, in the AR application sector, the company is focusing on refining manufacturing processes and strengthening its technical reserves, continuously enhancing and expanding its product portfolio. The timing of mass production will depend on customer demand and the needs of downstream end‑users. Notably, in the LiDAR application domain, Tengjing Technology’s product sampling and small‑batch validation projects are progressing smoothly.
Pacific Research Report notes that LiDAR is widely used in autonomous vehicles and robotics, often referred to as the “eyes” of generalized robots. It finds applications across diverse sectors, including autonomous driving, advanced driver-assistance systems (ADAS), service robots, and vehicle-to-everything (V2X) networks, with a market potential approaching hundreds of billions of yuan. As the company’s AR and LiDAR businesses gradually scale up, they are expected to unlock new growth drivers.
“The company, leveraging its unique strengths and competitive advantages, is officely rooted in the opto‑electronics industry and is comprehensively advancing its strategies for technological innovation, diversified application areas, and intelligent manufacturing, steadily expanding its influence in fields such as biomedical optics and consumer‑grade optics,” said a representative from Tengjing Technology. “Going forward, we will continue to significantly increase our investment in technology and R&D, maintain our technological leadership in the optics sector, prioritize the development of key components to replace imports, and progressively achieve domestic substitution. We will also keep expanding into the consumer optics market and aim to make breakthroughs this year in automotive optics and AR applications.”

Loongson China has successfully listed on the STAR Market, building an independent information technology system and industrial ecosystem in China.
On June 24, Longxin Zhongke Technology Co., Ltd. (referred to as “Longxin Zhongke”), sponsored by CITIC Securities Co., Ltd., was officially listed on the STAR Market. Longxin Zhongke’s principal business involves the research, development, sales, and services of processors and related chips. The company raised approximately RMB 2.462 billion through this public offering, with the proceeds earmarked for the “Advanced-Process Chip R&D and Industrialization Project,” the “High-Performance General-Purpose Graphics Processor Chip and System R&D Project,” and the replenishment of working capital.
General-purpose processors (CPUs) are fundamental components of the information industry, core devices in electronic equipment, and strategic national assets. Due to the lack of indigenous CPU technology and related foundational software, China’s information industry has largely been built upon foreign Wintel (Intel CPUs plus Microsoft Windows) and AA (ARM CPUs plus Android) ecosystems. This not only leaves the industry subject to external control but also poses risks to national security. Although domestic companies have introduced X86‑ or ARM‑based CPU chips through joint ventures with overseas offices or by obtaining technology licenses, they continue to develop products within the established X86 and ARM ecosystems, leaving their core technologies still dependent on foreign sources. Therefore, independently developing and “building a secure and controllable information technology system” is an indispensable path for China’s information industry to achieve high‑quality growth.
The prospectus indicates that the Loongson team began developing the “Loongson” series of CPUs as early as 2001, making it one of China’s earliest groups to design general-purpose processors. Loongson Technology is the only domestic CPU company that has consistently built an open information technology ecosystem—independent of both the Wintel and ARM ecosystems—based on a self‑developed instruction set architecture. Through sustained independent R&D, Loongson Technology has systematically mastered the core technologies underlying instruction sets, CPUs, GPUs, and operating systems, fundamentally breaking free from reliance on foreign technologies and emerging as a leader in China’s indigenous CPU sector and a key architect of its independent ecosystem. The release of LoongArch, Loongson Technology’s fully self‑reliant instruction set architecture, stands as one of the major achievements of China’s independent information industry. Leveraging the LoongArch framework, Loongson Technology has launched the Loongson 3A5000 series chips, whose performance now approaches that of mainstream products in the open market. This milestone signals that domestically produced CPUs are poised to achieve independent self‑sufficiency while delivering advanced performance, and that they possess the capability to comprehensively advance both software ecosystem development and industrial chain building.
Mr. Hu Weiwu, Chairman of Loongson China, stated upon announcing the company’s IPO that, after two decades of development since its inception at the Institute of Computing Technology of the Chinese Academy of Sciences, Loongson China has essentially completed a comprehensive technological catch-up—covering instruction sets, CPUs, GPUs, and operating systems—and its general-purpose CPU performance is now approaching the level of mainstream market products. As an enterprise spun off from the Academy, Loongson China will uphold the Academy’s guiding principle of “national talent serving national priorities, with the national team shouldering national responsibilities.” Seizing this pivotal opportunity to enter the capital markets, the company will accelerate the research and development of critical core technologies and the building of a robust industrial ecosystem, thereby making fresh contributions to achieving high‑quality self-reliance and strength in China’s information industry and to establishing a new development paradigm of dual circulation for the sector.

Taxation TAXATATION
Interpretation of Issues Concerning the Application of the Value-Added Tax End-of-Period Credit Refund Policy under the “Regulations on Accounting Treatment for Value-Added Tax”
Recently, the Ministry of Finance and the State Taxation Administration have successively issued the following announcements: “Announcement on Further Intensifying the Implementation of the Value-Added Tax End-of-Period Credit Refund Policy” (Ministry of Finance and State Taxation Administration Announcement No. 14 of 2022), “Announcement on Further Accelerating the Implementation Progress of the Value-Added Tax End-of-Period Credit Refund Policy” (Ministry of Finance and State Taxation Administration Announcement No. 17 of 2022), “Announcement on Further Sustaining the Acceleration of the Implementation Progress of the Value-Added Tax End-of-Period Credit Refund Policy” (Ministry of Finance and State Taxation Administration Announcement No. 19 of 2022), and “Announcement on Expanding the Scope of Industries Eligible for Full Refund of Value-Added Tax Credit Balances” (Ministry of Finance and State Taxation Administration Announcement No. 21 of 2022). These measures have further strengthened the implementation of the value-added tax end-of-period credit refund policy and continued to accelerate its progress. In light of this, the following clarifications are provided regarding the application of the “Provisions on Accounting Treatment for Value-Added Tax” (Caihui [2016] No. 22) to these policies:
General VAT taxpayers shall account for the aforementioned end-of-period VAT credit refund transactions in accordance with the relevant provisions of the “Regulations on Accounting Treatment of Value-Added Tax.” The end-of-period VAT credit amounts approved by the tax authorities for refund, as well as the refunded credit amounts that have already been returned, shall be accounted for through the sub‑account “Taxes Payable — VAT Credit.” When the tax authorities approve a VAT credit refund, the taxpayer shall debit the “Taxes Payable — VAT Credit” account and credit the “Taxes Payable — VAT (Transfer of Input Tax)” account by the amount of the credit approved for refund. Upon actual receipt of the refund, the taxpayer shall debit the “Bank Deposits” account and credit the “Taxes Payable — VAT Credit” account by the amount received. When the taxpayer remits the previously refunded credit amount and continues to deduct input tax in accordance with applicable regulations, the taxpayer shall debit the “Taxes Payable — VAT (Input Tax)” account and credit the “Taxes Payable — VAT Credit” account by the amount remitted, while simultaneously debiting the “Taxes Payable — VAT Credit” account and crediting the “Bank Deposits” account.

Linking Industrial and Supply Chains: Tax Big Data Helps Enterprises Optimize Procurement and Sales
The smooth and stable operation of industrial and supply chains is the foundation for steady and sound economic development. Tax‑related big data, particularly VAT invoice data, boasts broad coverage and high timeliness, enabling a comprehensive reflection of economic dynamics.
To help stabilize industrial and supply chains and maintain overall economic stability, the State Taxation Administration has directed tax authorities across the country to make full use of tax data, including VAT invoices, to identify enterprises facing shortages of raw materials or sluggish sales. These authorities have engaged with each enterprise individually to understand their procurement and sales challenges and specific needs, and have leveraged the “National Taxpayer Supply Chain Inquiry” system to match companies with potential suppliers or buyers, thereby facilitating voluntary, market‑based transactions that effectively align supply and demand.
According to the State Taxation Administration, since May this year, tax authorities nationwide have helped a total of 1,564 enterprises secure procurement contracts, involving a total amount of RMB 5.57 billion. Among them, 1,209 manufacturing enterprises were assisted in securing procurement, with a total value of RMB 4.02 billion.
At present, regions across the country affected by the pandemic are gradually resuming work, production, business operations, and market activity, and corporate order volumes are steadily picking up. However, constraints on raw materials have become a major challenge for businesses.
“Orders have increased, but our inventory of the key raw material—hot-rolled round steel—is insufficient,” said Ren Haifeng, head of procurement at Jiangxi Suqiangge Hydraulic Co., Ltd. The reporter learned that, due to the shortage of raw materials, the company not only faces capacity constraints but also risks breaching contracts.
The production‑and‑sales chain is the lifeblood of an enterprise. By leveraging the advantages of big data, tax authorities are strengthening data sharing and expanding the scope of data applications, thereby effectively helping businesses bridge supply gaps and ensure the smooth functioning of industrial and supply chains.
“Using the ‘National Taxpayer Supply Chain Inquiry’ feature, we searched for the product code of ‘hot-rolled round steel’ and leveraged tax‑related big data to help enterprises precisely identify potential suppliers,” said a responsible official from the Yichun Municipal Tax Service Bureau of the State Taxation Administration. Through the cloud platform, they accurately matched Hunan Valin Xiangtan Iron & Steel Co., Ltd., a steel producer, and actively coordinated with the tax authorities in the supplier’s jurisdiction, enabling these upstream and downstream companies to align production and sales and resolve the challenge of tight raw‑material supply.
With the support of tax‑related big data, these two companies have reached a long‑term purchase‑and‑sale agreement. “Recently, we placed another order with Hualing Steel for 1,035 tons of steel. With raw material supplies now in place, our production capacity has also increased,” said Ren Haifeng.
The “National Taxpayer Supply Chain Query” feature has been leveraged to support the resumption of work and production by enterprises—not only in Jiangxi Province. Recently, the General Office of the State Taxation Administration issued a special notice, instructing all provinces to establish dedicated task forces within their provincial (autonomous region or municipality) tax authorities to utilize this feature in supporting businesses’ restarts. Relevant officials have been appointed as team leaders to oversee and coordinate resources across the tax system and between departments, optimize the functionality of the “National Taxpayer Supply Chain Query,” set clear disciplinary guidelines to prevent data leaks and misuse, and ensure targeted assistance is provided.
Tax authorities across the country are leveraging the “National Taxpayer Supply Chain Inquiry” feature to help businesses navigate challenging times and regain vitality.
Since May, the Yangtze River Delta has seen a steadily improving epidemic‑control situation, prompting various market entities to accelerate production schedules and boost growth by restocking raw materials, stepping up output, and expanding sales channels. However, affected by the earlier wave of the pandemic, Yixing Leqi Textile Group Co., Ltd. has experienced volatile sales and severe inventory buildup.
After learning during field visits about the enterprise’s challenges in product sales, the tax authorities promptly addressed its concerns. Leveraging the “National Taxpayer Supply Chain Inquiry” feature, they swiftly identified 199 potential partner companies with needs for printing, dyeing, and denim fabrics, and proactively coordinated with the tax authorities in those companies’ locations to facilitate effective supply‑demand matching. As a result, the enterprise reached preliminary cooperation agreements with six such offices, with total contract value exceeding RMB 32.3 million.
“The tax authorities’ matchmaking not only helped us precisely identify potential customers but also accelerated the collaboration between supply and demand,” said Xu Ling, Deputy Director of Finance at Leqi Textile.
“At the beginning of this year, affected by the pandemic, our long-term downstream construction‑industry clients struggled to resume operations, and with severe logistical bottlenecks, order volumes plummeted, leaving our production lines running at only 50% capacity,” said Song Wenjun, Finance Manager at Shandong Jiayu Runsheng Wood Industry Co., Ltd.
Upon learning of Jia Yu Run Sheng Wood Industry Co., Ltd.’s situation, the tax authorities in the Lin’gang District of Linyi, Shandong Province promptly activated the “National Taxpayer Supply Chain Inquiry” system, identifying and matching the company with multiple timber‑demanding enterprises and establishing contact through various channels.
“We have successfully established partnerships with more than ten enterprises,” said Song Wenjun. “Tax‑related big data has opened up new avenues for our sales. Our operations have now returned to normal, with all 14 production lines operating at full capacity. In May, our sales reached RMB 16.54 million, and we are very confident about the company’s future development.”
In the Altay Prefecture of Xinjiang, the Guangming Flour Mill in Jimunai County primarily engages in the production, processing, and sale of flour. Affected by the pandemic, the company has encountered challenges in both raw material procurement and product sales. As its business continues to expand, it is also facing a growing shortage of funds.
“The county tax bureau helped us identify companies with purchasing needs. Based on this information, we connected with the acquiring offices and quickly reached a supply-and‑sales agreement, successfully signing a contract worth over 30,000 yuan,” said Zhao Erjing, the financial officer at the Guangming Flour Mill in Jimunai County.
The tax authorities’ proactive efforts to strengthen industrial chains and support enterprises have yielded positive results. According to a responsible official at the State Taxation Administration, going forward, the tax authorities will further leverage tax‑related big data, continue to refine the “National Taxpayer Supply Chain Inquiry” feature, enhance guidance to tax authorities across the country, and ensure close, practical coordination between tax authorities and businesses. They will strive to facilitate more concrete transactions, help enterprises accelerate the resumption of work and production, and make a meaningful contribution to stabilizing the overall macroeconomic landscape.

How can film enterprises benefit from the carryforward VAT refund policy?
Recently, a series of measures have been issued, including the “Comprehensive Package of Policies and Measures to Solidly Stabilize the Economy” and the “Announcement by the Ministry of Finance and the State Taxation Administration on Expanding the Scope of Industries Eligible for Full Refund of Outstanding Value-Added Tax Credits.” These documents clarify that “the力度 of the policy on refunding outstanding VAT credits will be further increased,” and specify that enterprises in seven sectors—including culture, sports, and entertainment—will be brought within the scope of the relevant policy. Which film‑industry enterprises are eligible for a full refund of outstanding VAT credits? And what are the concrete relief effects of this policy? In response to these questions, officials from the Film Bureau of the Publicity Department of the CPC Central Committee and the Department of Goods and Services Tax of the State Taxation Administration provided detailed explanations.
Which film enterprises are eligible for the full value-added tax credit refund policy? According to a responsible official from the Goods and Services Tax Department of the State Taxation Administration, under the relevant provisions of the small and micro‑enterprise VAT credit refund policy issued on March 21 this year, small and micro‑enterprises in the film industry can benefit from a full‑amount VAT credit refund. Specifically, starting April 1, such enterprises may apply monthly for a refund of their incremental VAT credit; micro‑enterprises may also apply, in a single lump sum, for a refund of their existing VAT credit; and small enterprises may do the same, beginning May 1. Furthermore, to strengthen policy support for businesses in the cultural sector and other industries and to help stabilize market entities and employment, since July 2022, taxpayers in sectors including “culture, sports, and entertainment”—regardless of whether they are small and micro‑enterprises or medium‑ and large‑sized offices—have been entitled to the aforementioned full‑amount refund. Film enterprises fall within the cultural industry category; those that meet the eligibility criteria may, on a voluntary basis, submit an application to their competent tax authority for a VAT credit refund in accordance with the applicable regulations.
What are the key considerations for film companies applying for a refund of outstanding input VAT credits? According to a responsible official from the Goods and Services Tax Department of the State Taxation Administration, under the provisions of the “Announcement by the Ministry of Finance and the State Taxation Administration on Expanding the Scope of Industries Eligible for Full Refund of Input VAT Credit,” following this expansion, any enterprise whose combined VAT‑liable sales from 13 industries—including “Culture, Sports, and Entertainment” and “Manufacturing” as classified in the National Economic Industry Classification—account for more than 50% of its total VAT‑liable sales is eligible for the full‑amount refund of input VAT credits. If a film company meets these criteria and also satisfies the basic requirements for such refunds, it may apply for the full refund in accordance with the relevant regulations. For taxpayers who pass review, are found to be compliant, and pose no risks, tax authorities will expedite the refund process, ensuring that law‑abiding businesses can promptly benefit from this policy.
On the question of how effective the carryforward VAT refund policy has been in supporting film enterprises, a relevant official from the Film Bureau of the Publicity Department of the CPC Central Committee stated that this policy has played a particularly significant role in bolstering film exhibition companies, especially those that have opened new theaters in recent years. For example, Hengdian Cinema Chain in Zhejiang has already received 75 million yuan in refunds for its own theaters, while cinemas invested in and controlled by China Film Group Corporation have benefited from 42 million yuan in refunds. Meanwhile, Jiangsu Happiness Blue Ocean Cinema Chain’s owned theaters are expected to receive approximately 33 million yuan in refunds. The carryforward VAT refund has truly served as a timely lifeline, helping to boost cash flow and ease operational pressures for film companies. The official further explained that film authorities at all levels will strengthen communication and coordination with tax authorities, ensuring rigorous implementation of the principle that market entities are fully informed and fully entitled to the benefits. Through national cinema chains, major film investment offices, and film industry associations, key aspects of the carryforward VAT refund policy will be disseminated across the entire film exhibition sector, guaranteeing that no cinema misses out on these policy incentives due to information gaps. At the same time, efforts will be made to work closely with tax authorities to refine and tailor measures, providing streamlined procedures and greater convenience for film enterprises seeking to process their refund claims.

Litigation & Arbitration
A case of paperless, end-to-end case handling by the Jilin courts has been included in the “China Court Informationization Blue Book.”
On June 14, 2022, the Institute of Law of the Chinese Academy of Social Sciences and the Social Sciences Academic Press jointly hosted the launch of the “Rule of Law Blue Book: Report on the Development of Judicial Informatization in China No. 6 (2022)” (hereinafter referred to as the “China Judicial Informatization Blue Book”) and the 2022 Symposium on Judicial Informatization in China, held in Beijing. A case study on Jilin courts’ end-to-end paperless case-handling practices was selected for inclusion in the China Judicial Informatization Blue Book.

The China Judicial Informatization Blue Book notes that, in recent years, the Jilin courts have set “strengthening application, filling gaps, addressing shortcomings, and deepening integration” as their objectives for building smart courts. Grounded in the simultaneous electronic generation and advanced utilization of case files, they have standardized and centralized the management of routine judicial support tasks, thereby achieving paperless case handling across the entire process and unleashing the new momentum of technological innovation to enhance the quality and efficiency of adjudication.
Paperless case handling across the entire process has yielded remarkable results throughout the Jilin courts. In 2021, Jilin courts ranked first nationwide in both the overall case closure rate and the case closure-to-case intake ratio; moreover, their case closure rate has remained consistently among the top five nationwide for 28 consecutive months since September 2019. The average duration of litigation proceedings has been reduced from 46.7 days in 2018 to 32.8 days, placing Jilin second nationally. All 22 quality‑and‑efficiency indicators for enforcement work rank within the national top nine, while litigation service quality and efficiency stand at fourth place nationwide. These achievements have propelled Jilin courts toward new breakthroughs in high‑quality development, essentially fulfilling the three‑year goals for such development.
Driven by a “whole‑system approach,” new momentum is being unleashed in systematic management. The Jilin High People’s Court has coordinated and mobilized administrative departments across the province—covering case filing, adjudication, enforcement, archives, personnel, and equipment—to foster a new, end‑to‑end paperless litigation model characterized by interdepartmental collaboration, cross‑disciplinary integration, and multi‑faceted practical application. At four levels—leadership, implementation, research, and advancement—a hierarchical organizational framework has been established; three phased objectives have been set—namely, the simultaneous generation and in‑depth utilization of electronic case files, the full‑process deployment of paperless litigation, and the centralized management of court clerks; an intelligent infrastructure has been refined through two key pillars: the construction of smart facilities and the upgrading of digital platforms; and institutional mechanisms and supporting measures have been put in place, covering three dimensions—work goals, workflows, and operational requirements—for paperless litigation. Daily oversight and management are conducted across four domains: statistical reporting, performance evaluation, guidance and feedback, and summarization and improvement. A comprehensive evaluation system has been developed, assessing outcomes from three perspectives: trial quality and efficiency, managerial effectiveness, and overall work performance. Finally, by advancing reforms to the judicial accountability system and redefining the roles of judicial support staff, the court seeks to comprehensively enhance the efficiency of smart adjudication, optimize the allocation of judicial support resources, and accelerate the modernization of the judicial system and its capacity.
Full coverage of case types unlocks new momentum in adjudication and enforcement. Jilin courts have integrated all categories of cases—civil, criminal, administrative, and enforcement—into a paperless, end-to-end litigation process. In the adjudication of civil, commercial, and administrative cases, six well‑established, stable core procedural scenarios have been developed and implemented. Under the leadership of the Party Committee’s Political and Legal Affairs Commission, and in collaboration with public security organs and procuratorial bodies, criminal cases are processed through a coordinated political‑legal case‑handling system that ensures seamless workflow and full digital traceability. For enforcement cases, the Enforcement Command Center serves as the central hub, automatically generating electronic case files for every stage of the proceedings and converting them into electronic archives upon closure. By the end of 2021, courts across the province had achieved paperless processing for all civil and administrative cases within their jurisdictions; paper case files are no longer transferred for appellate proceedings, and the overall transfer cycle for appellate cases in Jilin courts was further shortened by 9.75 days in 2021. Moreover, seventeen functions—including review of first-instance public prosecution cases, appellate reviews, and second-instance protest reviews, as well as notifications for access to case files, pre‑trial conferences, and court hearing schedules—have been officially launched on the criminal‑case coordination platform. Additionally, a paperless enforcement model has been formulated under the framework of the information security system, and provincial courts have been organized to implement and upgrade this approach in accordance with the technical plan.
Full coverage of all procedural milestones has unleashed new momentum for judicial transparency. Jilin courts have made comprehensive use of information technology to achieve paperless, intelligent case handling across the entire process. At the filing stage, newly received paper documents are scanned, cataloged, and uploaded into the system, while electronic case files from previous proceedings are automatically linked. During the trial phase, electronic case files are fully leveraged to support online access to case materials, smart courtroom proceedings, intelligent reception, and automated deliberations, as well as smart judge meetings and intelligent adjudication committee sessions. At the conclusion of a case, intelligent drafting tools generate judgments, which are then served electronically through a centralized delivery platform. In the review and evaluation stage, intelligent monitoring and inspections ensure the quality of case information, electronic files, and judicial documents. Finally, during archiving, electronic and paper case files undergo intelligent comparison, with electronic records automatically converted and filed. Publicly available information generated throughout the case-handling process—such as electronic case files and court transcripts—is promptly accessible to parties via an internet-based public platform. In 2020, Jilin courts ranked among the nation’s leaders in judicial transparency for the sixth consecutive year. In 2021, the court’s rate of disclosure of trial‑process information reached 99.99%, placing it second nationwide; the rate of public access to judgments and transcripts stood at 55.49%, ranking third; and electronic service was carried out in 306,100 cases, second highest in the country. Furthermore, in 2021, the time required to archive civil cases in Jilin was 26.44 days, a reduction of 3.35 days compared with the previous year, while the archiving period for administrative cases was 26.80 days, down 1.78 days year over year.
Clerk management has been centralized, unleashing new momentum in judicial support. Jilin courts have actively explored a new model of streamlined administrative management: functional units such as the Intelligent Judicial Assistance Center, the Service Center, and the Enforcement Command Center have reorganized court‑related support tasks, consolidating previously dispersed functions—such as scanning, service of process, and courtroom recording—into a unified framework. This approach ensures standardized implementation of work assignments, management practices, and performance evaluation and oversight. To complement this centralized handling of routine judicial tasks, court clerks have also been restructured, with personnel reallocated, roles and responsibilities clearly defined, and operating procedures revised, thereby fully instituting centralized clerk management. In 2021, all 93 courts in Jilin achieved centralized electronic case file management, reducing clerks’ routine workload by nearly 70% and laying the groundwork for more efficient staffing. Additionally, 78 courts implemented centralized service of process, bringing 60% of civil case service‑of‑process documentation under this unified system, effectively easing the administrative burden on judges and judicial assistants by approximately 30% and boosting overall efficiency. Furthermore, 74 courts adopted centralized courtroom management, adopting an on‑site “one document, one hearing” model: court scheduling is handled by the adjudicating division, while clerks record proceedings according to the scheduled hearings, cutting the original clerical workforce by nearly two‑thirds.
The China Court Informationization Blue Book points out that end-to-end paperless case handling is a concrete manifestation of further consolidating the achievements of informationization in the people’s courts. The Jilin courts, closely attuned to the judicial needs of the public and the practical requirements of frontline judges, have continuously advanced the development of smart court facilities, integrated the functions of existing intelligent application platforms, and comprehensively enhanced both the foundational infrastructure and the practical applications of information technology. By innovatively establishing an end-to-end paperless case‑handling system—centered on the deep utilization of electronic case files, the seamless integration of electronic litigation, and the centralized management of routine judicial support tasks—the courts are accelerating their transformation and upgrade toward Smart Court 4.0, building an internet‑based judicial model with Chinese characteristics and world‑leading standards, and undertaking a significant practical endeavor to deliver a higher level of digital justice.

The Jia County People’s Court has issued its first “Family Education Guidance Order.”
Recently, the Family Affairs Collegial Panel of Jia County People’s Court heard the first divorce case involving family education filed after the implementation of the Law of the People’s Republic of China on Promoting Family Education.
Xie and Zhang married in 2000. In the early years of their marriage, their relationship was reasonably good; however, since the birth of their two children, Zhang has frequently failed to return home, citing work commitments, and has also neglected to provide any financial support for the family. Over the past three years, in particular, Zhang has completely disregarded both the family’s needs and the children’s upbringing and education. Left with no other option, Xie filed a petition with the court seeking divorce from Zhang.
After the case was filed, the presiding judge found through investigation that, during the duration of the marriage between Xie and Zhang, Zhang had failed to adequately fulfill his obligations to provide support and assume guardianship responsibilities. To strengthen the protection of the minor child, the judge contacted Zhang, who was residing out of town, by phone and WeChat, providing a detailed explanation of the Law of the People’s Republic of China on the Protection of Minors and the Family Education Promotion Law of the People’s Republic of China. Ultimately, Zhang acknowledged his mistakes and pledged to return home within three days to reunite with Xie and their child, thereby assuming his responsibilities as a father.
Based on the statements made by Xie and Zhang during the divorce proceedings, the Jia County Court ruled against granting their divorce. Furthermore, in accordance with the provisions of the Law of the People’s Republic of China on the Protection of Minors and the Family Education Promotion Law of the People’s Republic of China, the court issued a “Family Education Guidance Order” to the guardian, Zhang, requiring him, as the father, to pay greater attention to his child’s psychological well-being and emotional needs. Specifically, he is required to maintain frequent communication with the child’s school teachers—ensuring at least biweekly contact—to gain a thorough understanding of the child’s daily life and to assume responsibility for the child’s living and educational expenses. Should the obligor, Zhang, fail to comply with this order, the court will, depending on the severity of the circumstances, impose admonishment, impose fines, or impose detention; if his conduct constitutes a crime, criminal liability shall be pursued in accordance with the law.
After receiving the “Family Education Guidance Order,” Zhang stated that he would carefully study the Family Education Promotion Law of the People’s Republic of China and earnestly fulfill his obligations to raise his child.
The judge explained: “The Family Education Guidance Order” is a specific measure introduced under the Law of the People’s Republic of China on Promoting Family Education, which came into effect on January 1, 2022. Its primary purpose is to ensure that parents properly fulfill their duties in raising their children and to foster a positive social environment conducive to the healthy growth of minors.
Changzhou Arbitration’s “Two Increases and One Decrease” Initiative Helps Businesses Overcome Difficulties
Affected by the COVID‑19 pandemic and other factors, commercial and civil arbitration disputes involving enterprises have increased significantly. Taking the reform pilot as an opportunity, the Changzhou Arbitration Commission has proactively aligned itself with market needs, introduced a series of measures to support and benefit businesses, and leveraged the advantages of arbitration within a diversified dispute‑resolution framework to help enterprises navigate these challenging times.
First, we have expanded the scope of our services to increase the preference for arbitration. To gain a thorough understanding of the pain points, challenges, and bottlenecks that enterprises encounter in their production, operations, and development, we have solicited their feedback and suggestions on arbitration practices. Since March, we have visited 30 key enterprises and law offices in the city, assessed their legal service needs, and actively promoted the confidentiality, professionalism, and efficiency of arbitration, encouraging businesses to resolve commercial disputes through this mechanism and thereby boosting the adoption rate of arbitration. We have also strengthened the legal professional community by organizing five practical legal seminars, engaging in proactive dialogue with government investment platforms, industry associations, and financial institutions to broaden the reach of arbitration services. In addition, we have held more than ten joint meetings and professional exchange sessions with relevant court departments, working collaboratively to enhance the seamless integration between arbitration and litigation, thus fostering a favorable rule-of-law business environment for enterprises.
Second, we have innovated our service methods to enhance our support for businesses. To effectively address the challenges posed by COVID‑19‑related restrictions on personnel mobility, we have made full use of digital case‑handling platforms, enabling online filing, online court hearings, and online case management, thereby ensuring “round‑the‑clock services,” minimizing in-person visits for the public, and limiting court appearances to a single session. Since the beginning of the year, online filing applications have accounted for 20% of all filings, with over 50% of out-of‑town parties filing electronically, and the preference for online hearings has risen markedly. For tendering processes and companies awaiting an IPO that require consultation or clarification, we have implemented a one‑stop information‑provision system, conducted document verification via electronic files, and provided free mailing of supporting documents to enterprises. We have also leveraged the critical roles of the Financial Dispute Mediation Center and the Property Management Dispute Mediation Center in diversified dispute resolution, further expanding cooperation with grassroots courts and financial institutions to broaden our service scope. In the first half of the year, these two centers collectively handled 1,336 cases involving a total value of RMB 15 million, safeguarding the legitimate rights and interests of financial institutions, property management companies, and the broader consumer base.
Third, measures to benefit businesses were introduced to reduce the costs of rights protection. The “Measures of the Changzhou Arbitration Commission Office on Deferring, Reducing, or Exempting Arbitration Fees” was promulgated, specifying the circumstances under which parties may apply for deferral, reduction, or exemption of arbitration fees. It also stipulated that for 11 categories of disputes involving financial institutions and quasi‑financial institutions, arbitration fees would be charged at half rate. Since the policy’s implementation, a total of over RMB 1.83 million in arbitration fees has been reduced or waived for various types of enterprises. In June 2022, the fee structure was reclassified from an administrative‑public service charge to a business‑service charge, with the fee rates remaining unchanged; VAT invoices are now issued instead of unified non‑tax revenue receipts, thereby helping enterprises significantly cut their rights‑protection expenses.

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