JC Master Legal News Issue 1023

Key Takeaways for This Issue

“Application volume” surged 457% month-over-month, as the STAR Market IPOs enter a peak period for acceptance.
As June began, the STAR Market IPO review process reached a peak in applications received. According to statistics, since the start of June, the Shanghai Stock Exchange has accepted listing applications from 39 companies, a figure that exceeds the total number of applications filed from January to May this year and represents a 457% increase compared with May.
Another listed company is expanding into the lithium‑battery sector, and the second half of the year may usher in a period of intensive capacity expansion across the industry.
Another listed company has crossed into the lithium hexafluorophosphate sector. On June 30, Bayi Shikong announced that it plans to invest a total of RMB 280 million in a lithium hexafluorophosphate project. The project will be developed and constructed by Zhejiang Bayi Shikong, a wholly owned subsidiary of Bayi Shikong, with funding drawn from the company’s own capital and self‑raised funds.
The Stamp Tax Law of the People’s Republic of China
The Stamp Tax Law of the People’s Republic of China was adopted at the 29th Meeting of the Standing Committee of the 13th National People’s Congress on June 10, 2021. It is hereby promulgated and shall come into force on July 1, 2022.
White Paper on Environmental and Resource Adjudication in Jiangsu Province (2019–2022)
Jiangsu is among the first provinces nationwide to explore a judicial mechanism for environmental and resource cases. As early as 2008, it embarked on efforts to specialize environmental and resource adjudication. Since the 18th National Congress of the Communist Party of China, Jiangsu’s courts have taken the lead across the country in implementing a reform to establish a “three-in-one” centralized jurisdiction system for environmental and resource trials. As this practice has advanced, certain institutional and systemic issues that hinder the full exercise of the functions of environmental and resource adjudication have gradually come to light. Guided by the goal of addressing these salient problems, Jiangsu’s courts have launched a new round of reforms to the environmental and resource adjudication mechanism.

Finance & Capital Markets
“Application volume” surged 457% month-over-month, as the STAR Market IPOs enter a peak period for acceptance.
As June begins, the STAR Market IPO “examination hall” is experiencing a surge in applications. According to statistics, since the start of June, the Shanghai Stock Exchange has received listing applications from 39 companies, a figure that exceeds the total number of STAR Market filings from January to May this year and represents a 457% increase compared with May.
On the evening of June 23, trading volume surged on the STAR Market, with IPO applications from nine companies being accepted in a single day.
Regarding the phenomenon of a surge in hard‑tech companies rushing to list on the STAR Market, investment bankers note that June typically marks a peak period for IPO filings. This is largely because the financial statements in an IPO prospectus remain valid for six months after the end of the most recent reporting period. To avoid having to supplement or update financial data later, issuers and underwriters tend to accelerate their IPO preparations in June, thereby securing a longer validity period for the financials and facilitating a smoother subsequent listing process.
Meanwhile, several central and state-owned enterprises have listed their hard‑tech subsidiaries on the STAR Market, a trend that has become a notable feature of recent STAR Market IPOs.
In June, IPO applications on the STAR Market increased 4.57-fold month over month.
On the evening of June 23, the Shanghai Stock Exchange simultaneously accepted listing applications from nine companies, including Beijing Institute of Aeronautical Materials Co., Ltd. and Changzhou Shichuang Energy Co., Ltd., for the STAR Market. As of this date, the number of companies whose applications have been accepted on the STAR Market since the beginning of June has reached 39, bringing the total number of accepted applicants to 768.
According to the data, the number of applications accepted by 39 offices has already surpassed the total number of STAR Market IPO filings for the first five months of this year. Affected by factors such as pandemic-related volatility and the broader market environment, the total number of STAR Market IPO applications from January to May stood at 20. Since June, enthusiasm for IPO filings has been steadily picking up, with monthly filings exceeding ten for the first time this year.
Upon review, it was found that among these 39 companies, 15 belong to the next-generation information technology sector, 11 to the high-end equipment manufacturing sector, and 8 to the biotechnology sector—three major science-and‑technology‑driven industries. Meanwhile, 5 companies are classified under the new materials, new energy, and energy‑conservation and environmental protection sectors.
The next-generation information technology sector, centered on semiconductors and integrated circuits, remains the primary source of companies listed on the STAR Market. Among the 15 newly accepted applicants, a cohort of cutting-edge “chip‑focused” offices and “little giants” in niche segments of the IC industry has emerged. On June 23, Hangzhou Xinzhongda Technology Co., Ltd. (referred to as “Xinzhongda”) had its IPO application approved. Xinzhongda is an IT‑driven enterprise in the construction engineering sector, with research, development, and sales of project management platforms and cloud‑based software at its core. It provides in-depth services to major construction groups—including China Aneng, Chinalco International, MCC Group, China State Construction Engineering Corporation, and ChemChina—as well as their subsidiaries. According to the “China Engineering Construction Project Management Software Market Research (2020)” published by CCID Consulting, among a sample of 447 top‑tier general contractors surveyed in 2020, Xinzhongda captured a 34% market share for project management software, ranking first. In this bid to list on the STAR Market, the company plans to raise RMB 557 million.
Shanghai Nanxin Semiconductor Technology Co., Ltd. (hereinafter referred to as “Nanxin Technology”) is one of China’s leading companies in analog and embedded chip design. Its products have been widely recognized by numerous manufacturers across consumer electronics—including smartphones—industrial applications, and the automotive sector. The company’s offerings have been integrated into the supply chains of well-known smartphone brands such as Honor, OPPO Communications, Xiaomi, vivo, and Moto, and it has successfully obtained direct supplier certification.
In 2021, Southchip Technology reported revenue of RMB 984 million and a net profit of RMB 244 million. Through this IPO, the company plans to raise RMB 1.658 billion, which will be allocated to projects including the research and development and industrialization of high-performance charging‑management and battery‑management chips, as well as the R&D and commercialization of highly integrated AC‑DC chipsets.
Hefei Eco Optoelectronics Technology Co., Ltd. is a domestically developed, innovation-driven enterprise in China’s machine vision sector, with its products widely supporting the production and manufacturing processes of renowned domestic and international brands such as Shennan Circuit, BOE, and CATL. In this IPO, the company plans to raise RMB 1.119 billion.
According to statistics, in June, 39 newly accepted science and technology innovation companies plan to raise a total of RMB 46.909 billion through IPOs.
State-owned enterprises are accelerating the listing of their subsidiaries on the STAR Market.
Although still newcomers to the capital markets, this cohort of science-and‑technology‑focused companies applying for IPOs boasts impressive credentials. Among them, several are subsidiaries of central state-owned enterprises or local state-owned enterprises.
For example, Beijing Tianma Intelligent Control Technology Co., Ltd. (referred to as “Tianma Intelligent Control”) specializes in the research, development, production, sales, and service of unmanned, intelligent mining control technologies and equipment for coal mines. Its primary end customers are large and medium-sized coal‑producing enterprises. The company’s controlling shareholder is the listed entity Tiandi Technology. The State-owned Assets Supervision and Administration Commission of the State Council (SASAC) holds a 55.54% stake in Tiandi Technology through its subsidiary, China Coal Science and Technology Group Co., Ltd., and an additional 4.99% through Beijing Chengtong Jinkong Investment Co., Ltd., a subsidiary of China Chengtong Holding Group Co., Ltd. Together, SASAC holds a total of 60.53% of Tiandi Technology’s shares. As such, SASAC is the de facto controller of Tianma Intelligent Control.
Nanjing Les Information Technology Co., Ltd. (hereinafter referred to as “Les Information”) is a provider of comprehensive solutions for civilian command information systems. The reporter noted that Electro‑Technology Les, a wholly owned subsidiary of China Electronics Technology Group Corporation (CETC), holds 80.42% of Les Information’s shares, making it the controlling shareholder, while CETC itself is a company wholly owned by the State-owned Assets Supervision and Administration Commission of the State Council.
China Shipbuilding (Handan) Pairui Specialty Gases Co., Ltd. (hereinafter referred to as “Pairui Special Gases”) is a supplier of electronic specialty gases and trifluoromethanesulfonic acid‑based products. Its offerings are widely used in industries such as integrated circuits, display panels, lithium‑ion batteries and new energy, pharmaceuticals, and optical fibers, serving as indispensable key materials for the development of these sectors. Pairui Technology holds an 81.38% stake in Pairui Special Gases, while China State Shipbuilding Corporation, through Pairui Technology and China Shipbuilding Investment, indirectly controls a combined 85.43% of the company’s equity. As a result, China State Shipbuilding Corporation is the de facto controlling shareholder of Pairui Special Gases.
Beijing Institute of Aeronautical Materials Co., Ltd. (referred to as “Aeronautical Materials Co.”) is ultimately controlled by the Aeroengine Corporation of China. According to reports, the Aeroengine Corporation of China is one of the state‑approved institutions authorized to invest state‑owned assets, with the State-owned Assets Supervision and Administration Commission of the State Council holding a 70% stake in the company. Aeronautical Materials Co. is a high‑tech enterprise primarily engaged in the research, development, production, and sales of components and materials for aviation and aerospace applications; its products are widely used in sectors such as shipbuilding, ordnance, electronics, and the nuclear industry.
Prior to the launch of the STAR Market in July 2019, Peng Huagang, Secretary-General of the State-owned Assets Supervision and Administration Commission of the State Council, stated: “The SASAC will work together with central enterprises, advancing one company at a time as it matures, with the aim of attracting more enterprises that boast strong R&D capabilities, solid development foundations, and significant growth potential to list on the STAR Market.” According to statistics, as of June 24, there were 16 STAR Market‑listed companies under central state‑owned enterprises and 12 under local state‑owned assets.
Investment banking sources indicate that the coming week will remain a peak period for IPO filings, and the STAR Market’s “examination hall” is likely to continue experiencing a surge in applications.
First Securities: Further advancing the issuance of asset-backed securities will bolster the development of the securities industry’s business.
On the evening of June 30, the Shanghai Stock Exchange issued the “Notice on Further Leveraging the Functions of the Asset Securitization Market to Support Enterprises in Revitalizing Existing Assets” (hereinafter referred to as the “Notice”), aiming to help enterprises unlock the value of their existing assets and foster a healthy cycle of investment and financing.
The business team of the Structured Products Department at First Securities believes that, in the process of using asset securitization to enhance the quality and effectiveness of serving the real economy, securities offices can play a role across the entire value chain—ranging from client development and product design to project execution and sales, as well as investor protection. Specifically, this involves four key areas:
First, as a program manager issuing asset-backed securities, we leverage the professional expertise of our team to actively serve real‑economy clients, tailoring customized asset‑backed financing solutions to meet their specific needs. By gaining an in-depth understanding of each enterprise’s operational characteristics and financing requirements, we identify internally sourced assets that comply with regulatory standards, helping companies unlock the value of their existing holdings and use the proceeds to prudently expand their investments.
Second, we will vigorously promote asset‑securitization activities by focusing on eligible priority sectors, key regions, and leading enterprises, as well as areas supported by national policies, to proactively expand our business. For companies that are not yet familiar with asset securitization, we will actively organize industry forums and training sessions, leveraging these platforms to introduce the financing advantages of asset securitization in the context of their operations, thereby enhancing their understanding of this financial instrument. In doing so, we aim to position asset securitization as an efficient financing tool that serves a broader range of real‑economy enterprises.
Third, by leveraging channel resources and sales strengths, and taking into account the characteristics of the enterprise and its asset types, as well as the investment preferences and styles of market investors, we serve as an effective communication and matchmaking platform between enterprises and investors. This enables us to tailor capital solutions to each company, thereby further reducing financing costs and alleviating the financial burden on businesses.
Fourth, leverage professional expertise to rigorously manage business and asset risk factors, strengthen internal control systems, and exercise due diligence and accountability throughout the entire lifecycle—from due diligence to ongoing management—thus fulfilling the role of a vigilant gatekeeper in the capital markets, upholding market order, and providing safe, efficient services to the real economy.
Some market analysts believe that the issuance of the aforementioned “Notice” is positive for securities offices.
The aforementioned team believes that China’s asset‑securitization market has reached a relatively mature stage, with growth having slowed since 2021. In particular, during the first half of this year, the overall issuance volume of asset‑securitization products declined year over year. The Notice will help enterprises unlock the value of their existing assets by further promoting the issuance of asset‑securitization products, thereby supporting the development of securities offices’ asset‑securitization businesses.
The team stated that, for securities offices, it is essential to proactively respond to the requirements of the Notice. On the one hand, they should focus on priority areas, supporting and guiding key sectors, regions, and enterprises in undertaking asset-securitization activities to unlock the value of existing corporate assets. At the same time, they should continuously innovate approaches to leveraging asset securitization, expanding both the depth and breadth of market services through leading, integrated products such as quasi-REITs, CMBS, and intellectual‑property‑backed ABS.
When it comes to further leveraging the asset-securitization market to help enterprises unlock the value of their existing assets, what other areas can securities offices focus on?
The aforementioned team recommends actively developing the public‑offering infrastructure REITs business. According to incomplete statistics, China holds over RMB 100 trillion in high‑quality, existing infrastructure assets, creating an urgent need for asset revitalization, vast market potential, and broad business opportunities. The infrastructure public‑offering REITs value chain is comprehensive, with multi‑dimensional participation scenarios; securities offices should leverage both vertical and horizontal synergies across the REITs industry chain to achieve breakthrough growth in the core IPO‑related business of public REITs, while fostering coordinated development of ancillary and derivative services, including investment, trading, research, and diversified support offerings.
The second brokerage office this year has received approval for its IPO; AMC‑affiliated listed brokerages are poised to expand.
This is the second brokerage office to receive approval for its IPO this year.
On the evening of June 30, the China Securities Regulatory Commission announced that the 74th meeting of the 18th Issuance Review Committee in 2022 had approved the initial public offering (IPO) of Cinda Securities. With this decision, following Dongguan Securities, A‑share markets are set to welcome their 43rd listed securities office. At the same time, Cinda Securities is poised to become the second AMC‑affiliated brokerage to go public, after Dongxing Securities.
Public information indicates that Cinda Securities was established in September 2007 as a joint-stock company jointly initiated by China Cinda, China Ocean Trust, and China National Materials Group Corporation. It is the first securities office in China affiliated with an AMC. Moreover, Cinda Securities enjoys the advantage of a full‑license operating structure. Regarding its shareholding structure, according to Cinda Securities’ 2021 annual report, the company has eight shareholders, with China Cinda holding 87.42% of the shares, making it the controlling shareholder.
Unlike Dongguan Securities, which took seven years to prepare for its IPO, Cinda Securities completed the process—from filing its prospectus to receiving regulatory approval—in just one and a half years. In August 2020, China Cinda announced that it was considering spinning off Cinda Securities and its subsidiaries for an independent public listing. Subsequently, on December 23, 2020, the China Securities Regulatory Commission accepted Cinda Securities’ IPO application. According to the prospectus, the company plans to issue no more than 973 million shares, representing no more than 25% of its total share capital after the offering, with CITIC Securities as the sponsor (lead underwriter).
Based on the intended use of proceeds from the IPO, all funds will be allocated to replenish capital, increase working capital, and expand the company’s core business.
From an industry‑ranking perspective, in the 2021 performance rankings for securities offices, Cinda Securities ranked 39th in total assets, 68th in net assets, and 50th in net capital. It placed 42nd in operating revenue and 37th in net profit, while its return on equity ranked 17th. In terms of the securities office classification, it was rated A in 2020 and BBB in 2021.
Last year, Cinda Securities delivered commendable performance. In 2021, the company reported operating revenue of RMB 3.803 billion, up 20.27% year over year, and net profit attributable to shareholders of RMB 1.172 billion, a year-on-year increase of 42.95%. Notably, brokerage—the office’s largest revenue driver—generated RMB 1.685 billion in revenue, up 2.75% from the previous year.
At present, a large number of small and medium-sized securities offices are seeking to go public. Among those awaiting listing are Shouchuang Securities, Bohai Securities, and Caixin Securities; meanwhile, the IPO applications submitted by Kaiyuan Securities and Huabao Securities have both been accepted by the China Securities Regulatory Commission.
Shenwan Hongyuan Summer Strategy Conference: In the third quarter, A-shares are expected to trade in a range at elevated levels, with focus on sectors showing marginal shifts.
On June 28, Shenwan Hongyuan Securities hosted its 2022 Summer Strategy Month series of events via an online platform, under the theme “Margin of Safety and the Vast Horizon.” This year’s program seamlessly integrated theoretical insights with practical applications. During the strategy month, more than 300 listed companies were invited to participate, with dedicated sessions covering topics such as macroeconomics, carbon neutrality, the digital economy, specialized, refined, distinctive, and innovative enterprises, REITs, cybersecurity, stable growth, new consumption, greater health, and advanced manufacturing.
On the macro front, Qin Tai, Chief Macro Analyst at SW Securities Research, delivered a speech titled “Seeking the Anchor of Potential Growth.” He noted that the Federal Reserve’s all‑in stance in tackling inflation suggests that monetary tightening in the second half of the year is unlikely to exceed current market expectations. Consequently, he anticipates a heightened probability of a slowdown in U.S. economic growth, with long‑term U.S. Treasury yields and the U.S. dollar index trending lower in the second half. As a result, the spillover effects of overseas monetary tightening are expected to ease, while the pace of domestic supply‑and‑demand recovery and the identification of the medium‑to‑long‑term potential growth trajectory have become increasingly critical.
Qin Tai believes that, even without substantial fiscal stimulus, industrial production is already showing signs of a robust recovery, and the resilience of China’s industrial supply chain has once again withstood the severe test of the pandemic. At present, other emerging economies outside China still lack the capacity to effectively substitute for or displace China’s supply chains; following the temporary shock of the pandemic, summer is expected to mark a strong tailwind from external demand, driving a notable acceleration in China’s net exports. For the full year, exports are forecast to grow by 11% year on year, with net exports contributing more than 0.7 percentage points to real GDP growth. However, after August, a cooling of external demand could weigh on export growth, leading to a synchronized global slowdown; the phase of robust net‑export‑driven growth is likely drawing to a close, while domestic demand‑favoring structural adjustments gradually begin to take effect.
On the monetary front, Qin Tai believes that the five rounds of liquidity injections in the first five months, coupled with the close coordination between fiscal and monetary policies, will ensure ample liquidity for the year. In the second half, the focus of monetary policy will be on easing credit conditions, with very low probabilities of RRR cuts or interest-rate reductions. Over the past two years, the renminbi exchange rate has been primarily driven by current‑account flows rather than capital‑account flows, and it is expected to resume its appreciation trend in the second half of the year.
On the A-share front, Fu Jingtao, Chief Strategist at SWHY Research, delivered a speech titled “Dawn Breaks, Yet Rain Lingers.” He argued that now is the optimal moment: external demand remains resilient, and domestic demand is experiencing a recovery-driven rebound, making it easy to project forward in a linear fashion. With expectations of a moderate U.S. recovery and a weaker domestic outlook gradually taking hold, A-shares are likely to trade in a high‑range consolidation during the third quarter, with investors advised to focus on sectors showing marginal improvements and seize opportunities while they last. Meanwhile, A-shares may once again face downward pressure in the fourth quarter.
Fu Jingtao stated that currently, popular sectors—such as baijiu, medical aesthetics, defense, and semiconductors—are far from scarce; what’s truly lacking are industries that can significantly shape China’s international competitiveness. Only such sectors can serve as the foundation for a bull market and guide the broader market toward sustained upward momentum. The tech cycle is where investor sentiment is heading; the 2022 debate over the STAR Market closely mirrors the 2012 discussion surrounding the ChiNext, underscoring the market’s strong appetite for a tech-driven rally. However, external headwinds remain real, making us more bullish on both the traditional and emerging energy cycles. At this stage, China’s cost advantage in electricity—driven by a high share of coal-fired power and the fact that Chinese utilities have yet to achieve market‑based profitability (in practice, they subsidize households and businesses)—is unlikely to endure indefinitely. Over the long term, though, the transition to new energy could solidify China’s competitive edge in power costs. Affordable electricity will make China’s energy‑intensive industries—chemicals, nonferrous metals, and building materials—highly competitive. In a sense, investments in new energy can translate into tradable finished goods through manufacturing, effectively turning them into export‑oriented products. Moreover, economically viable infrastructure projects can be scaled up when needed, which explains why expectations for new‑energy investment remain robust while still leaving ample room for further growth.
In terms of portfolio allocation, our preferred structure for the third quarter is: “Overseas recession, domestic recovery.” We are particularly focused on advanced manufacturing—photovoltaic silicon wafers and power batteries—and utilities—thermal power and natural gas—both of which stand to benefit most from easing cost pressures. At the same time, we are keeping an eye on consumer sectors with structural improvement prospects: among property‑related industries, automobiles are our top pick; baijiu and medical aesthetics are key areas poised for post‑pandemic recovery; and we are also monitoring consumption subsectors in expansion, such as baked goods, pre‑processed foods, and branded cosmetics.

Commercial & Corporate
Another listed company is expanding into the lithium‑battery sector, and the second half of the year may usher in a period of intensive capacity expansion across the industry.
Another listed company has crossed into the lithium hexafluorophosphate sector. On June 30, Bayi Shikong announced that it plans to invest a total of RMB 280 million in a lithium hexafluorophosphate project. The project will be developed and constructed by Zhejiang Bayi Shikong, a wholly owned subsidiary of Bayi Shikong, with funding drawn from the company’s own capital and self‑raised funds.
The new‑energy vehicle industry is booming, with an increasing number of listed companies venturing into the lithium‑battery value chain. As key components of lithium batteries, lithium iron phosphate and lithium hexafluorophosphate are areas of close attention for many listed offices. “In recent years, numerous companies in the phosphate‑chemical sector and other industries have been actively launching projects related to lithium‑battery materials. As these projects progress, we may see large‑scale, concentrated production ramp‑ups from the second half of this year through next year,” said Wang Juan, a lithium‑iron‑phosphate analyst at Longzhong Information.
Bally Space Seeks New Profit Growth Drivers
Lithium hexafluorophosphate prices may be on an upward trend.
Baiyi Shikong operates in the display panel industry, with its core business focused on the R&D, production, and sales of liquid crystal display materials. The company has now achieved mass production of high‑performance mixed‑phase liquid crystal materials for TFT displays, breaking the international monopoly. For many years, the core technologies and patents underlying these high‑performance mixed‑phase liquid crystals were monopolized by foreign offices from Germany, Japan, and other countries. Today, the global market for TFT liquid crystal materials is essentially dominated by three major players: Germany’s MERCK, and Japan’s JNC and DIC, with MERCK holding a leading position in the high‑performance TFT liquid crystal segment.
In recent years, the company has posted strong financial performance. From 2019 to 2021, Bayi Shikong’s revenue grew from RMB 430 million to RMB 887 million, with year-on-year growth rates of 9.23%, 50.71%, and 36.71%, respectively; net profit attributable to shareholders reached RMB 110 million, RMB 170 million, and RMB 207 million, respectively. “Since going public, the company has maintained solid annual growth, with a highly stable core business and a steadily expanding domestic market share. At the same time, we have been actively expanding into international markets, and our core operations continue to generate reliable cash flow. However, looking ahead, we are exploring what additional lines of business could be pursued once our core operations have achieved sustained stability,” said representatives from Bayi Shikong. They added that the company is currently in a transitional phase, moving from its existing foundational businesses toward future growth, and that, while ensuring steady expansion of its core operations, it must promptly launch new ventures.
Regarding the company’s decision to enter the lithium hexafluorophosphate sector, the source stated that the company’s foray into new energy is grounded in its expertise in chemical synthesis, rather than a leap into an entirely unrelated field. New‑energy vehicles represent the trend of the future, and the company aims to establish a foothold in the upstream materials segment of the value chain. Lithium hexafluorophosphate is a core component of electrolytes, accounting for 40%–50% of production costs, while electrolytes are among the most fundamental raw materials used in lithium‑ion batteries—widely applied and characterized by relatively low barriers to industrialization. Leveraging the specific conditions at its Shangyu plant, the company seeks to identify a product that allows it to gain stronger market access while generating new growth drivers. Lithium hexafluorophosphate serves as an initial entry point; going forward, the company plans to expand its portfolio based on materials science, aligned with market dynamics, and will also bring in fresh teams and technical talent.
Speaking about the outlook for lithium hexafluorophosphate, “As of the close on June 30, 2022, the mainstream price stood at RMB 200,000–280,000 per ton, down 57.52% year-to-date—nearly 60% below its recent peak—and effectively halved,” said Shao Jian, a lithium hexafluorophosphate analyst at Longzhong Information. However, market sentiment is gradually picking up, and with upstream raw materials—battery-grade lithium carbonate and lithium fluoride—remaining office at elevated levels, the domestic lithium hexafluorophosphate market may see upward pressure going forward. The extent of any price increase will depend closely on supply‑demand dynamics and the degree to which suppliers are managing their inventories.
The second half of the year may see
A period of intensive capacity expansion in the lithium-ion battery industry chain
According to sales data released by the China Passenger Car Association for the fourth week of June (June 20–26), retail sales of passenger cars reached 487,000 units, up 33% year on year, while wholesale sales totaled 561,000 units, an increase of nearly 50% compared with the same period last year. In addition, the association noted that major automakers’ new‑energy vehicle segment continued to post exceptionally rapid growth, with retail sales expected to approach 500,000 units in June—potentially setting a new all‑time high.
Faced with the booming new‑energy vehicle sector, listed companies are springing into action. Whether it’s lithium hexafluorophosphate or lithium iron phosphate, the “lithium” theme is everywhere. According to Tonghuashun data, there are currently 13 concept stocks related to lithium hexafluorophosphate and 43 linked to lithium iron phosphate, including several listed offices—such as China National Nuclear Titanium Dioxide, Longbai Group, and Chaopin San—that have crossed over into this space.
Correspondingly, the production capacity of lithium hexafluorophosphate and lithium iron phosphate is also steadily expanding. According to Shao Jian, China’s current lithium hexafluorophosphate capacity stands at 125,000 tons, with output hovering around 87,000 tons. Listed companies are continuously scaling up production: by 2025, Tianci Materials plans 287,000 tons, Duofluoride aims for 225,000 tons, Tianji Shares targets 40,000 tons, and Yan’an Bikang projects 60,000 tons. At present, supply already exceeds demand; looking ahead, as end‑use companies embark on large‑scale capacity expansions and driven by robust demand—coupled with supportive government policies—the outlook for the lithium hexafluorophosphate industry is exceptionally bright. As for lithium iron phosphate, according to incomplete data from Zhuochuang Information, domestic planned production capacity in 2022 exceeds 1.5 million tons, with most companies scheduling commissioning in the second half of 2022.
Regarding the issue of overcapacity, financial commentator Wang Chikun stated that lithium‑ion batteries, fueled by heavy capital investment, are experiencing overheating. Drawing on past experience, any sector that attracts intense speculative interest typically undergoes a correction—a process of deflating the bubble. However, the electric‑vehicle industry is still in its early stages of rapid growth, and the power‑battery and lithium‑ion raw‑material sectors that support it are likewise expanding as the industry matures, with both market size and consumer demand growing swiftly. “Although the lithium‑ion battery sector may currently be overheated, given the projected future demand for new‑energy technologies, there are no signs of oversupply,” Wang Chikun noted.
Xiaokang Shares’ June sales of new-energy vehicles surged by 185.41%.
On July 1, Sokon Industrial Group Co., Ltd. (601127.SH; hereinafter referred to as “Sokon Shares”) released its June 2022 production and sales flash report. Sales of new-energy vehicles reached another all-time high, with 12,418 units sold in June, up 185.41% year over year. Among them, Seres vehicle sales totaled 7,658 units, a year-on-year increase of 524.12%, further underscoring the tangible results of the company’s transformation toward the new‑energy business.
Data show that as of June 30, Xiaokang Shares’ new-energy vehicles recorded cumulative production and sales volumes of 47,714 units and 45,622 units, respectively, up 255.12% and 204.51% year over year. Among them, Seres vehicles posted steady growth, with cumulative production and sales reaching 22,629 units and 21,581 units, respectively, representing year-over-year increases of 1,302.91% and 884.98%.
According to reports, Seres’ all-new model, the AITO M7, will be officially unveiled on July 4. Positioned as a luxury, intelligent, large‑size electric SUV, it features Huawei’s HarmonyOS in‑vehicle system—the most advanced infotainment platform available—and an even more luxurious, comfortable interior, delivering an unparalleled smart‑interaction experience. As Seres continues to expand and refine its product lineup and sales steadily climb, Sokon Group’s new‑energy brand is steadily gaining momentum, poised to win further favor from the market in the future.
Luzhou Laojiao’s General Manager: The market will gradually recover, and we will expand the baijiu segment in the 1,000-yuan price range.
As July approaches, 18 listed baijiu companies have already held their 2021 annual general meetings. With the tail end of June drawing to a close, Luzhou Laojiao (000568) finally concluded its final meeting on June 29.
After many years, Luzhou Laojiao has finally reclaimed a place among the top three in the baijiu industry. At this year’s shareholders’ meeting, General Manager Lin Feng provided detailed responses to investors’ key concerns, including the current state of the baijiu market, the intense competition in the thousand-yuan price segment, and the company’s strategic plans following the release of the new national baijiu standard.
The market will gradually recover.
Investors are concerned about the impact of the current wave of COVID-19 on Luzhou Laojiao. At the shareholders’ meeting, General Manager Lin Feng stated that the effects of this outbreak are even more severe than those experienced when the pandemic first emerged in 2020. He added that, with Beijing achieving zero-COVID and the Ministry of Industry and Information Technology removing the asterisk from travel‑history codes, he is optimistic that consumer demand will rebound swiftly.
In 2021, Luzhou Laojiao reported operating revenue of RMB 20.642 billion, up 23.96% year over year, and net profit of RMB 7.956 billion, up 32.47% year over year. The company also plans to distribute a cash dividend of RMB 32.44 per 10 shares (including tax). During January–March 2022, Luzhou Laojiao posted operating revenue of RMB 6.312 billion, up 26.15% year over year, and net profit of RMB 2.876 billion, up 32.72% year over year.
Lin Feng stated that, in his 2021 forecast, the economy was expected to undergo some adjustments from February through June; in retrospect, this assessment proved largely accurate. Looking ahead, with the pandemic and shifting global conditions now largely behind us—having largely passed between February and June—and with national economic policies being fine-tuned and regions steadily resuming normalcy, Lin Feng believes the baijiu industry will gradually recover from June through next year’s Spring Festival.
Expand the baijiu segment in the thousand-yuan price range
In 2017, Guojiao 1573 and Crystal Wuliangye raised their prices into the thousand-yuan price bracket, followed closely by Jiannanchun’s 52° Dongfanghong 1949 and Gujing Gong’s Nianfen Yuanjiang·Gongxun Chi Jiu, all seeking to break through the thousand-yuan threshold. This year, Moutai has launched its new product, 1935, while Fenjiu and other brands are also developing offerings in the thousand-yuan segment. How does Luzhou Laojiao view the competitive landscape in this price range, and what are its medium- and long-term expectations for sales volume and pricing? Furthermore, how is Luzhou Laojiao responding to the challenges posed by these emerging brands?
Lin Feng stated that, based on the current situation, Moutai’s 1935 has enjoyed solid sales performance. However, judging from the trends at Wuliangye and Luzhou Laojiao, he does not believe the market has been significantly impacted. In fact, expanding the overall price segment is a positive development. In the short term, this has not yet posed any issues; in the medium term, capturing the benefits of the thousand-yuan price bracket will require each company to formulate its own strategies; and in the long term, Luzhou Laojiao’s growth should extend beyond the thousand-yuan range to encompass the ten-thousand-yuan segment as well—companies must continue to innovate and evolve.
Lin Feng pointed out that Luzhou Laojiao is accelerating the rollout of its products in the thousand-yuan price segment. With a glorious history spanning more than 400 years, the brand is working to re‑establish its prestigious reputation and reclaim its position at the high end. Specifically, Guojiao 1573 aims to secure a strong foothold in the premium segment, while Tequ should occupy the mid‑range price bracket. Since 2015, Guojiao 1573 has seen a steady increase in its share of net profits and a rise in gross margin, second only to Moutai. High‑end offerings, led by 1573, are steadily gaining market weight within Luzhou Laojiao, with sales revenue from the 38° version also expanding. Young consumers particularly favor the 38° variant, and sales volumes are growing, especially in East China.
From a product‑structure perspective, Luzhou Laojiao’s main product categories are mid‑to‑high‑end baijiu and other types of liquor. Among these, products with a tax‑inclusive selling price of RMB 150 per bottle or higher are classified as mid‑to‑high‑end baijiu; flagship offerings include Guojiao 1573, Luzhou Laojiao Tequ, and Bai Nian Luzhou Laojiao Jiaoling Liquor. Last year, sales volume reached 31,800 tonnes, up 25.42% year over year, generating revenue of RMB 18.397 billion. The gross profit margin stood at 90.34%, and the revenue share of this segment increased from 85.49% to 89.12%.
Lin Feng revealed that both 1573 and Wuliangye are selling to consumers at prices exceeding RMB 1,000, with only a few regions seeing retail prices below that threshold. Wholesale prices do not reflect consumer transaction prices; the bulk of wholesale supply consists of inventory from six months to a year ago. Recently, due to the pandemic, baijiu consumption has been uneven across the country—Shanghai was under lockdown for more than a month, and supplies were largely concentrated ahead of the Spring Festival. As consumption picks up, baijiu sales should rebound quickly. Luzhou Laojiao and Wuliangye are likely to advance together in the RMB 1,000 price segment, and neither Wuliangye nor 1573 should fall below that level.
Targeting the young consumer market
Effective June 1, 2022, the newly revised national standards “Terminology for Baijiu Industry” and “Terminology and Classification of Beverage Alcoholic Beverages” officially came into force. Following the promulgation of these new national standards, they immediately drew close attention from numerous liquor producers.
As a result, the Chinese baijiu industry has entered an era of comprehensive standardization in both quality and branding. With the implementation of the new national standard, higher requirements will be imposed on plain‑bottle baijiu in the market. Capitalizing on this trend, Luzhou Laojiao has launched its “Big Plain Bottle” strategy, and on June 21, it introduced the Black Cap edition to the market.
Regarding the “Da Guangping” strategy, Lin Feng noted that Luzhou Laojiao is itself a flagship brand of traditional strong‑aroma baijiu. The company’s total production capacity stands at 170,000 tons, yet its mid‑to‑high‑end baijiu output is only a few tens of thousands of tons, with most of its capacity still devoted to products like Touqu and Erqu. Compared with quality and cost, Luzhou Laojiao’s Erqu lacks a competitive edge in the mass‑market bottled‑bottle segment. However, two decades ago, Erqu commanded the highest price among bottled‑bottle offerings; subsequently, the brand neglected consumer‑oriented service. This time, through a product refresh, Luzhou Laojiao has introduced specific standards for Erqu. With the black‑cap version of Erqu only recently launched and production volumes still quite limited, the company is cautious about accelerating promotion and has not yet moved to a large‑scale market rollout.
In addition, new products such as Luzhou Laojiao 1952 and Gaoguang are also key offerings that Luzhou Laojiao is actively promoting. Notably, 1952 was the year when Luzhou Laojiao, alongside Moutai, Fenjiu, and Xifeng, first earned the prestigious “Famous Liquor” designation—this year marks the 70th anniversary.
Lin Feng believes that, first and foremost, this is a tribute to 1952—year that, in essence, embodies Luzhou Laojiao’s signature rich‑aroma style and symbolizes the brand’s storied legacy. Today, Luzhou Laojiao aims to reintroduce consumers to the flavors of its past, targeting the post‑1950s, 1960s, and 1970s generations. By reviving its historical roots, the brand will focus on expanding its presence primarily in major metropolitan areas.
Meanwhile, Lin Feng stated that if a company fails to target young consumers in its development strategy, it has no future.
Gao Guang is a brand aimed at younger consumers and follows a different set of standards, eschewing traditional Chinese baijiu benchmarks. Drawing on the preferences of young drinkers, it conducted taste tests with consumers in cities like Chengdu and Changsha. Gao Guang represents Luzhou Laojiao’s innovative effort to capture the younger demographic. Moving forward, its marketing efforts will focus on East and South China—concentrating in Shanghai, Suzhou, and Hangzhou in the East, and in Shenzhen in the South—to win over new consumers and deliver an enjoyable drinking experience.
“Intra‑industry competition is shrinking, not intensifying. Luzhou Laojiao recently hosted the China Baijiu T8 Summit, and among the eight leading companies in the sector, coordination remains strong, with communication steadily improving,” said Lin Feng. He added that there is no significant cutthroat rivalry among the industry’s top players; while some segments are facing challenges and being targeted by competitors, the overall outlook for the liquor industry remains positive, with continued progress.
Furthermore, regarding the current sauce‑aroma baijiu market, Lin Feng believes that this category is only at the very beginning of its first phase of development, with both peaks and troughs along the way. He does not agree with some investors’ claim that sauce‑aroma baijiu is rapidly losing momentum. Consumer preferences vary across age groups and regions, so it’s unrealistic to treat any single aroma style as an eternal standard. As long as consumers are well served, there is no such thing as one aroma style being inherently superior to another.
“Zero‑Fault Wind Farm” Achieves Remarkable Milestones; Longyuan Power Builds Momentum and Empowers High‑Quality Development of Wind Power
On June 29, Longyuan Power held a summary meeting on the phased achievements of constructing fault-free wind farms. Reportedly, this event—the industry’s first of its kind—will further advance new directions in equipment management and technological development within the wind power sector.
Tang Jian, General Manager of Longyuan Power, stated: “Guided by the national goals of peaking carbon emissions by 2030 and achieving carbon neutrality by 2060, renewable energy sources—primarily wind and solar—are transitioning from auxiliary to mainstream power generation. Longyuan Power aims to collaborate with all stakeholders to jointly address challenges and enhance governance, thereby further improving equipment reliability across the wind power sector through the development of fault-free wind farms and long‑term operational units.”
Propose the concept of a “fault-free wind farm”
The project has achieved significant phased results.
At a time when onshore wind turbines of 3 MW and above are increasingly prevalent, and amid mounting internal pressures in equipment management as well as external challenges such as grid parity and competitive bidding, unlocking the full potential of existing assets has become the primary issue that wind power operators must confront and resolve.
In February 2021, Longyuan Power took the lead in the industry by introducing the concept of a “trouble-free wind farm”—a wind farm that remains in optimal condition and delivers its full rated output. The company collaborated with eight wind turbine manufacturers to establish a series of demonstration wind farms that operate without any failures throughout the year, using this initiative as a lever to enhance equipment reliability and power generation capacity.
Qi Haishen, President of Beijing Teyi Sunshine New Energy, stated: “Wind power projects typically operate in remote, rugged environments—such as desolate areas and offshore sites—under challenging and harsh natural conditions. Fundamentally, the operation of wind turbine generators involves mechanical motion, which places extremely high demands on equipment reliability and durability.”
After more than a year of sustained efforts, Longyuan Power has achieved significant interim results: the frequency of outage incidents across its 58 participating projects has dropped sharply, the number of units operating continuously has doubled, and utilization hours have increased markedly.
According to Tang Jian, following the introduction and implementation of the “fault-free wind farm” concept, Longyuan Power saw a 31% year-on-year reduction in the total number of outage events and a 45% year-on-year decrease in total annual outage duration in 2021. The proportions of units achieving 100-day, 200-day, and 300-day continuous fault-free operation reached 82%, 39%, and 17%, respectively.
As one of the earliest and largest specialized new‑energy companies in China, Longyuan Power has achieved notable results and accumulated valuable experience in its efforts to establish fault‑free wind farms over the past year and more.
Xia Hui, Deputy General Manager of Longyuan Power, stated: “To build ‘trouble-free wind farms,’ Longyuan Power has deployed a comprehensive set of measures to drive high-quality development in the wind power industry. First, we leverage digital tools to transform equipment operation and maintenance practices—shifting from a ‘reactive’ to a ‘proactive’ approach, and from ‘alarms’ to ‘early warnings’—to implement predictive maintenance. Second, we promote targeted remediation of equipment risks by conducting vertical and horizontal benchmarking analyses on a digital platform, identifying issues, and carrying out tailored corrective actions. Third, we optimize and restructure our organizational framework, breaking down barriers between sites, advancing regional maintenance services, and concentrating resources to mount decisive ‘annihilation‑style’ interventions that resolve persistent, complex equipment challenges. Fourth, we apply standardized maintenance work permits and checklists, strengthening standardized procedures and operational protocols, while harnessing a production‑digitalization platform to enhance both efficiency and performance.”
Launch an industry benchmarking initiative
Promote high-quality development of the wind power industry.
After more than a year of fault-free wind farm construction, Longyuan Power found that the primary cause of long‑term operational interruptions in turbine units was electrical control‑related failures, concentrated in the pitch, variable‑frequency drive, and main control systems. Following systematic corrective measures, the reliability of turbine operations improved markedly.
“To this end, the company has launched an initiative to benchmark the long‑cycle operation of wind turbine generators within the industry,” said Tang Jian. “First, turbine manufacturers should rigorously oversee the quality‑acceptance process for component suppliers and place particular emphasis on assembly quality to ensure maximum power‑generation efficiency. Second, component manufacturers must raise manufacturing standards for electrical control products and use high‑quality terminal blocks to guarantee product compliance. Third, equipment management should be strengthened with a focus on key areas: for new‑build assets, preventive measures should be implemented earlier by having owners engage proactively during the turbine installation, commissioning, and 240‑hour trial‑run acceptance phases; for existing assets, priority should be given to fundamental environmental‑related safeguards, such as protection against salt spray, moisture, dust, and overheating.”
Qi Haishen stated: “Technological innovation in fault-free wind farms requires more precise efforts to pioneer new approaches and achieve breakthroughs in areas such as weather forecasting, data monitoring, fault early warning, and dynamic management. Only through in-depth exploration and practical application in routine maintenance and operations can we ensure the long-term, highly reliable, and fault-free operation of wind turbines, thereby minimizing the impact of unpredictable risk factors. Longyuan Power’s recent call to action for the industry is expected to further advance the high-quality development of the wind power sector.”
“To consolidate our achievements, Longyuan Power has promptly summarized its experience and will now adopt a multi‑pronged approach. First, we will focus on targeted equipment management, setting specific requirements for environmental control, wiring techniques, installation standards, and maintenance protocols, with the aim of achieving precise interventions that effectively resolve underlying issues. Second, we will strengthen benchmarking management by fully leveraging the roles of our headquarters and provincial monitoring centers, harnessing big‑data analytics to enhance the analysis of benchmarking indicators and closely track key performance metrics. Third, we will continuously fortify our data foundation, ensuring that all relevant data—covering equipment, video surveillance, personnel, vehicles, and vessels—for commissioned projects are seamlessly integrated, enabling comprehensive data collection and providing robust support for real‑time equipment monitoring. Fourth, we will vigorously pursue technological innovation, maximizing the contributions of our talent pool, promoting intelligent solutions such as drone‑based inspections, and exploring advanced technologies to address industry‑specific challenges like blade anti‑icing,” said Xia Hui.
Longyuan Power stated that, after years of development, China has taken the global lead in wind power installed capacity, making high-quality development an urgent priority. Moving forward, the company will collaborate with wind turbine manufacturers and component suppliers to launch a demonstration project for the long‑cycle operation of wind turbines, thereby spearheading a new direction for the wind energy sector and accelerating its transition to high‑quality growth.

Taxation
The Stamp Tax Law of the People’s Republic of China

The Stamp Tax Law of the People’s Republic of China was adopted at the 29th Meeting of the Standing Committee of the 13th National People’s Congress on June 10, 2021. It is hereby promulgated and shall come into force on July 1, 2022.
Article 1 Units and individuals who execute taxable instruments or engage in securities transactions within the territory of the People’s Republic of China shall be taxpayers of the stamp tax and shall pay such tax in accordance with the provisions of this Law.
Units and individuals that execute taxable instruments outside the territory of the People’s Republic of China but which are used within its territory shall pay stamp tax in accordance with the provisions of this Law.
Article 2: For the purposes of this Law, “taxable documents” refer to the contracts, instruments for the transfer of property rights, and business account books listed in the “Schedule of Stamp Duty Rates” attached to this Law.
Article 3: For the purposes of this Law, “securities trading” refers to the transfer of shares and stock‑based depositary receipts traded on legally established securities exchanges and other nationwide securities trading venues approved by the State Council.
The securities transaction stamp tax is levied on the transferor of a securities transaction, but not on the transferee.
Article 4 The tax items and tax rates for stamp duty shall be implemented in accordance with the “Schedule of Tax Items and Rates for Stamp Duty” attached to this Law.
Article 5 The tax base for stamp duty shall be as follows:
(1) The tax base for taxable contracts shall be the amount stated in the contract, excluding any value-added tax specified therein.
(2) The tax base for taxable instruments of property rights transfer shall be the amount stated on such instruments, excluding any value-added tax specified therein.
(3) The tax base for taxable business account books shall be the aggregate amount of paid-in capital (share capital) and capital reserves as recorded in the books.
(4) The tax base for securities transactions shall be the transaction amount.
Article 6: Where the amount is not specified in a taxable contract or a document evidencing the transfer of property rights, the tax base for stamp duty shall be determined on the basis of the actual settlement amount.
If the tax base still cannot be determined in accordance with the provisions of the preceding paragraph, it shall be determined based on the market price prevailing at the time the contract is executed or the instrument of transfer of property rights is drawn up; where government pricing or government-guided pricing is required by law, it shall be determined in accordance with the relevant state regulations.
Article 7: Where a security transaction lacks a transfer price, the tax base shall be determined by reference to the closing price of that security on the preceding trading day at the time of registration for the transfer; if no closing price is available, the tax base shall be determined based on the security’s par value.
Article 8 The amount of stamp tax payable shall be calculated by multiplying the tax base by the applicable tax rate.
Article 9: Where a single taxable document contains two or more taxable items, each with its amount separately stated, the tax payable shall be calculated separately according to the tax rate applicable to each item; if the amounts are not separately stated, the higher tax rate shall apply.
Article 10: Where a single taxable document is executed by two or more parties, the tax payable shall be calculated separately for each party based on the amount involved.
Article 11: For business account books on which stamp duty has already been paid, if the combined amount of paid-in capital (share capital) and capital reserves recorded in subsequent years exceeds the combined amount of such items as previously taxed, the tax payable shall be calculated based on the increase.
Article 12 The following documents are exempt from stamp duty:
(1) Copies or transcripts of taxable instruments;
(2) Taxable instruments executed by foreign embassies, consulates, and representative offices of international organizations in China that are entitled to tax exemption pursuant to the provisions of law.
(3) Taxable instruments executed by the Chinese People’s Liberation Army and the Chinese People’s Armed Police Force;
(4) Sales contracts and agricultural insurance contracts entered into by farmers, family farms, specialized farmer cooperatives, rural collective economic organizations, and village committees for the purchase of agricultural production materials or the sale of agricultural products;
(5) Interest-free or subsidized-interest loan contracts, as well as loan contracts executed by international financial institutions for the provision of concessional loans to China;
(6) Deeds of transfer of property rights executed by the owner of the property when donating such property to the government, schools, social welfare institutions, or charitable organizations;
(7) Sales contracts for the procurement of pharmaceuticals or medical supplies entered into by non-profit medical and health institutions;
(8) Electronic orders concluded between individuals and e-commerce operators.
In accordance with the needs of national economic and social development, the State Council may prescribe reductions or exemptions from stamp duty for such circumstances as ensuring housing needs of residents, enterprise restructuring and reorganization, bankruptcy, and support for the development of small and micro enterprises, and shall file such measures with the Standing Committee of the National People’s Congress for record.
Article 13: Where the taxpayer is an entity, it shall declare and pay the stamp tax to the competent tax authority at the location of its institution; where the taxpayer is an individual, it shall declare and pay the stamp tax to the competent tax authority at the place where the taxable instrument is executed or at the taxpayer’s place of residence.
Where there is a transfer of real estate ownership, the taxpayer shall file and pay the stamp tax with the competent tax authority at the location of the real estate.
Article 14: Where a taxpayer is a foreign entity or individual and has an agent within the territory of China, such agent shall be the withholding agent. If no agent exists within the territory of China, the taxpayer shall independently file and pay the stamp tax; the specific procedures shall be prescribed by the tax authority under the State Council.
Securities registration and clearing institutions, as withholding agents for the securities transaction stamp tax, shall file and remit the tax liability, together with interest on bank settlements, to the competent tax authority at the location of their institution.
Article 15: The time when the tax liability for stamp duty arises shall be the date on which the taxpayer executes a taxable instrument or completes a securities transaction.
The time when the obligation to withhold stamp duty on securities transactions arises is the day on which the securities transaction is completed.
Article 16: Stamp tax shall be levied on a quarterly, annual, or per‑transaction basis. Where levied quarterly or annually, the taxpayer shall file and pay the tax within fifteen days from the end of the relevant quarter or year; where levied on a per‑transaction basis, the taxpayer shall file and pay the tax within fifteen days from the date the tax liability arises.
Securities transaction stamp tax is remitted on a weekly basis. The withholding agent for securities transaction stamp tax shall, within five days from the end of each week, file and remit the tax liability together with any interest accrued on bank settlements.
Article 17: Stamp tax may be paid by affixing stamp tax stamps or by obtaining other tax payment certificates duly issued by the tax authorities in accordance with the law.
Where stamp duty stamps are affixed to taxable documents, the taxpayer shall cancel each stamp by affixing a seal across its perforated edge or by marking it in some other manner.
Stamp duty stamps are supervised and issued by the tax authority under the State Council.
Article 18: Stamp tax shall be collected and administered by the tax authorities in accordance with this Law and the provisions of the Law of the People’s Republic of China on the Administration of Tax Collection.
Article 19: Taxpayers, withholding agents, and tax authorities and their staff members who violate the provisions of this Law shall be held legally liable in accordance with the provisions of the Tax Collection and Administration Law of the People’s Republic of China and relevant laws and administrative regulations.
Article 20 This Law shall come into force on July 1, 2022. The Provisional Regulations of the People’s Republic of China on Stamp Tax, promulgated by the State Council on August 6, 1988, shall be repealed simultaneously.
Interpretation of the “Announcement of the State Taxation Administration on Matters Relating to the Implementation of the Stamp Duty Law of the People’s Republic of China”
To implement the Stamp Tax Law of the People’s Republic of China (hereinafter referred to as the Stamp Tax Law), further standardize the administration of stamp tax collection, enhance taxpayer services for stamp tax, and advance the “delegation, regulation, and service” reform within the tax system, in accordance with the State Taxation Administration’s arrangements for launching the “Doing Practical Things for Taxpayers and Payers and the Spring Breeze Action for Convenient Tax Services,” the State Taxation Administration has issued the “Announcement of the State Taxation Administration on Matters Relating to the Implementation of the Stamp Tax Law of the People’s Republic of China” (hereinafter referred to as the “Announcement”). The following is an interpretation:
I. Why was the “Notice” issued?
On June 10, 2021, the Stamp Tax Law was adopted by a vote at the 29th Meeting of the Standing Committee of the 13th National People’s Congress and will enter into force on July 1, 2022. To ensure the smooth implementation of the Stamp Tax Law, standardize stamp tax collection and administration, and enhance taxpayer services, the State Taxation Administration has issued a public notice. In addition, in order to implement the “Opinions on Further Deepening the Reform of Tax Collection and Administration” jointly issued by the CPC Central Committee and the State Council, and to advance the “delegation, regulation, and service” reform in the tax sector, the notice also clarifies measures to streamline the procedures for handling preferential policies related to the land value-added tax, thereby further reducing the administrative burden on taxpayers.
II. What are the main contents of the Announcement?
The Notice comprises two parts and eight provisions, clarifying the following matters related to tax administration and taxpayer services: First, it specifies requirements for the administration of stamp tax collection and taxpayer services, including the obligation to file accurate declarations, procedures for filing in special circumstances, principles for determining the tax payment deadline, the obligations of agents of foreign entities or individuals to withhold stamp tax and the requirements for such agents to file and pay the tax themselves, the procedures for claiming stamp tax preferential policies, and measures to enhance taxpayer services for stamp tax. Second, it streamlines the processing of land value-added tax preferential treatments, specifying, among other things, the procedures for handling previously filed‑type preferential measures.
III. How should the “Detailed Statement of Stamp Tax Sources” be completed for filing?
Taxpayers shall, based on the taxable contracts, instruments for transfer of property rights, and business account books they have executed, complete the “Detailed Tax Source Schedule for Stamp Duty” and file a consolidated return for property‑related taxes. Where the number of contracts is large and they fall under the same tax category, they may be combined and reported collectively on the “Detailed Tax Source Schedule for Stamp Duty.”
Example 1: Taxpayer A files and pays stamp tax on a quarterly basis. In the third quarter of 2022, the taxpayer executed five sales contracts with a total contract price (excluding the stated VAT) of RMB 1 million; one construction project contract with a total contract price (excluding the stated VAT) of RMB 10 million; and one instrument for transfer of property rights with a total contract price (excluding the stated VAT) of RMB 5 million. At the time of executing these taxable contracts and instruments for transfer of property rights, the taxpayer shall complete the “Stamp Tax Source Details Form” and, during the October 2022 tax filing period, file a comprehensive return for property‑related taxes, as follows:

Taxpayer A’s stamp tax liability for the October 2022 tax filing period is:
1,000,000 yuan × 0.3‰ + 10,000,000 yuan × 0.3‰ + 5,000,000 yuan × 0.5‰ = 5,800 yuan
Example 2: Taxpayer B files and pays stamp tax on a quarterly basis. In the third quarter of 2022, it executed 1 million property insurance contracts, with total insurance premiums (excluding the VAT amount specified therein) totaling RMB 100,000,000. Upon executing each taxable contract, this taxpayer shall complete the “Stamp Tax Source Details Form” and, during the October 2022 tax filing period, submit a consolidated return for property‑related taxes, as follows:
Taxpayer B’s stamp tax liability for the October 2022 tax filing period is:
100,000 million yuan × 1‰ = 1 million yuan
IV. If the amount is not specified in a taxable contract or instrument for the transfer of property rights and is determined at a later stage upon actual settlement, how should the taxpayer file the stamp tax return?
In economic activities, it is quite common for taxpayers to execute contracts or instruments of transfer of property rights without specifying the amount, with the actual amount only determinable upon subsequent settlement. In such cases, taxpayers shall declare the execution of taxable contracts and instruments of transfer of property rights during the first tax return period following their execution. Thereafter, in the next tax return period after the actual settlement, they shall calculate and remit the stamp tax based on the settled amount.
Example 3: Taxpayer C files and pays stamp tax on a quarterly basis. On August 25, 2022, it executed one steel purchase and sale contract, which specified the quantity of steel to be bought and sold and stipulated that, upon actual delivery of the steel, the transaction price would be determined based on the prevailing market quotation on the date of delivery for settlement purposes. On October 12, 2022, it settled the purchase‑sale price of RMB 1 million as per the contract; on March 7, 2023, it settled the purchase‑sale price of RMB 3 million as per the contract. In accordance with the law, this taxpayer is required to complete the “Stamp Tax Source Details Form” both when executing the taxable contract and at the time of actual settlement, and to file a comprehensive property‑related tax return during the respective tax filing periods in October 2022, January 2023, and April 2023, as follows:

Taxpayer C is required to pay the stamp tax for the October 2022 tax filing period:
0 yuan × 0.3‰ = 0 yuan
Taxpayer C is required to pay the following stamp tax for the January 2023 tax filing period:
1,000,000 yuan × 0.3‰ = 300 yuan
Taxpayer C shall pay the following stamp tax for the April 2023 tax filing period:
3,000,000 yuan × 0.3‰ = 900 yuan
V. What are the specific tax payment deadlines for stamp duty?
Stamp duty is levied on a quarterly, annual, or per‑transaction basis. For taxable contracts and instruments for the transfer of property rights, stamp duty may be declared and paid either quarterly or on a per‑transaction basis; for taxable business account books, it may be declared and paid either annually or on a per‑transaction basis. The specific tax payment deadlines shall be determined by the tax authorities of each province, autonomous region, municipality directly under the central government, and separately listed city, taking into account local administration and collection practices.
To facilitate the payment of stamp tax by overseas entities and individuals, stamp tax on taxable instruments issued to or by such entities may be declared and paid on a quarterly, annual, or per‑transaction basis. The specific filing and payment deadlines shall be determined by the tax authorities of each province, autonomous region, municipality directly under the central government, and separately listed city, taking into account local administrative and collection practices.
VI. How do overseas entities or individuals pay stamp duty?
Where the taxpayer is a foreign entity or individual and has an agent within China, such domestic agent shall be deemed the withholding agent. The domestic agent of a foreign entity or individual shall withhold stamp tax in accordance with the relevant provisions and report the withholding situation to the competent tax authority.
Where the taxpayer is a foreign entity or individual without an agent within China, the taxpayer shall file and pay the stamp tax on its own. To facilitate taxpayers, depending on the subject matter of the taxable instrument, foreign entities or individuals may file and pay with the tax authority having jurisdiction over the place where the asset is delivered, the location (residence) of the domestic service provider or recipient, or the location (residence) of the domestic party that executed the taxable instrument. In cases involving the transfer of real estate ownership, payment shall be made to the tax authority having jurisdiction over the location of the real estate.
VII. How do taxpayers apply for stamp tax relief?
The procedures for taxpayers to avail themselves of stamp tax incentives remain consistent with the current regulations, adopting a “self-assessment, declaration-based enjoyment, and retention of relevant documentation for record‑keeping” approach to ensure that taxpayers can promptly benefit from the stamp tax policy. At the same time, the Announcement clarifies that taxpayers bear legal responsibility for the authenticity, completeness, and legality of the supporting documentation retained for stamp tax preferential treatments.
VIII. What new provisions does the Announcement introduce regarding the streamlined procedures for handling land value-added tax preferential treatments?
Following the implementation of the Notice, the procedures for handling land value-added tax preferential treatments have been further streamlined. The previously required filing‑based preferential measures have been replaced by a system in which taxpayers “self‑determine eligibility, file a return to claim the benefit, and retain relevant documentation for record‑keeping.” When applying for formerly filing‑based preferential treatments, taxpayers are no longer required to submit copies of real estate ownership documents, copies of real estate transfer contracts (agreements), or supporting materials related to deductible items—such as appraisal reports and invoices. Instead, these documents are now retained for inspection upon request, and taxpayers need only complete the corresponding tax‑exemption or reduction sections on their tax returns to avail themselves of the applicable benefits.
At the same time, the Announcement clarifies that taxpayers shall bear legal liability for the authenticity, completeness, and legality of the supporting documentation retained for record‑keeping purposes.
IX. When does the Announcement take effect?
The Announcement shall take effect as of July 1, 2022.
State Taxation Administration: It is estimated that in the first half of the year, new tax and fee reductions, exemptions, deferrals, and cuts will total approximately RMB 2.86 trillion.
The State Taxation Administration recently announced that this year’s new package of tax and fee support policies is diverse in type, substantial in scale, and broad in coverage. The tax authorities have fully and faithfully implemented the decisions and arrangements of the CPC Central Committee and the State Council, ensuring that the benefits of these policies are delivered precisely to market entities. As of June 25, the nationwide cumulative total of additional tax refunds, tax reductions, fee cuts, and deferrals has reached approximately RMB 2.58 trillion. It is estimated that, in the first half of the year, the new package of tax and fee support measures will generate an additional RMB 2.86 trillion in tax refunds, reductions, cuts, and deferrals.
According to Cai Zili, Executive Deputy Director of the Tax Refund and Tax Reduction Office of the State Taxation Administration and Director-General of the Revenue Planning and Accounting Department, the newly introduced tax refunds, tax reductions, fee cuts, and deferrals of taxes and fees comprise three main components:
First, VAT credit refunds totaled RMB 1.8266 trillion, 2.8 times the level of the entire previous year. From April 1 to June 25, RMB 1.7033 trillion in VAT credit refunds was disbursed to taxpayers’ accounts. Adding this to the RMB 123.3 billion refunded under the earlier, pre‑existing credit‑refund policy implemented in the first quarter, the total amount of refunds paid to taxpayers reached RMB 1.8266 trillion—2.8 times last year’s full‑year refund volume.
In terms of scale, small and micro enterprises are the primary beneficiaries. Since April, among taxpayers who have received tax refunds, small and micro enterprises account for 94.5% of the total, with cumulative refunds totaling RMB 756.3 billion, representing 44.4% of the overall amount. Medium-sized enterprises received RMB 378.3 billion in refunds, while large enterprises received RMB 568.7 billion, accounting for 22.2% and 33.4%, respectively.
From an industry perspective, six sectors—including manufacturing—have benefited significantly. The large-scale value-added tax credit refund policy is focused on key and foundational industries such as manufacturing, precisely targeting critical links in the national economy and in industrial and supply chains, thereby fully reflecting a policy orientation aimed at stabilizing growth, safeguarding employment, and improving people’s livelihoods. From April 1 to June 25, the six industries—covering both existing and newly generated tax credits—received refunds totaling RMB 991.2 billion, with manufacturing accounting for RMB 441.1 billion, the transportation sector RMB 285.0 billion, and the electricity, heat, gas, and water production and supply sector RMB 172.5 billion. Meanwhile, the research and technical services, software and technical services, and ecological protection and environmental governance sectors together received RMB 92.7 billion in refunds.
Second, an additional 285.9 billion yuan in tax and fee reductions was introduced, significantly easing the tax and fee burden on enterprises. By policy category: implementing the policy of halving the tax rate on the portion of taxable income between 1 million and 3 million yuan for small and low-profit enterprises resulted in an additional 16.4 billion yuan in tax cuts; building on the reduction of the VAT collection rate for small-scale taxpayers from 3% to 1%, a full exemption of VAT was introduced effective April 1 this year, yielding an additional 34.4 billion yuan in tax relief; the policy of halving the “six taxes and two fees” for small-scale taxpayers was further extended to include small and low-profit enterprises and individual business households, generating an additional 62.9 billion yuan in tax reductions; the value-added tax additional deduction policy for production- and lifestyle‑related service industries provided an extra 30.6 billion yuan in tax relief; policies granting property tax and urban land use tax exemptions or reductions to struggling enterprises resulted in an additional 8.7 billion yuan in tax savings; and the continued implementation of the temporary reduction in workers’ compensation and unemployment insurance rates led to an additional 67.3 billion yuan in cost savings.
Third, tax and fee deferrals totaling RMB 463.2 billion were granted, effectively boosting corporate cash flow. In particular, the policy of temporarily suspending tax and fee payments for small, medium, and micro manufacturing enterprises was continued, resulting in deferred tax and fee liabilities of RMB 455 billion and covering all such enterprises that file and pay taxes. For sectors severely affected by the pandemic—such as catering, retail, tourism, civil aviation, and road, waterway, and railway transportation—as well as all small, medium, and micro enterprises, a temporary deferral scheme was implemented for employer contributions to the three social insurance schemes—pension, unemployment, and work-related injury insurance—leading to RMB 8.2 billion in deferred payments during April and May.
Recently, the State Taxation Administration conducted a questionnaire survey among 15,000 representative enterprises nationwide. The results show that 39% of the refunded input VAT credits were used to increase purchases of raw materials, ensuring the normal operation and production needs of enterprises; 24% were allocated to investment and R&D expenditures, supporting enterprise upgrades and expansions in investment scale; 10% covered routine operating expenses such as rent, utilities, and other daily costs, thereby alleviating financial constraints; and the remaining refund amounts were used to settle accounts payable and pay wages and salaries.

Litigation & Arbitration
White Paper on Environmental and Resource Adjudication in Jiangsu Province (2019–2022)
Jiangsu is among the first provinces nationwide to explore a judicial mechanism for environmental and resource cases. As early as 2008, it embarked on efforts to specialize environmental and resource adjudication. Since the 18th National Congress of the Communist Party of China, Jiangsu’s courts have taken the lead across the country in implementing a reform to establish a “three-in-one” centralized jurisdiction system for environmental and resource trials. As this practice has advanced, certain institutional and systemic issues that hinder the full exercise of the functions of environmental and resource adjudication have gradually come to light. Guided by the goal of addressing these salient problems, Jiangsu’s courts have launched a new round of reforms to the environmental and resource adjudication mechanism.
Under the strong guidance of the Supreme People’s Court and the resolute leadership of the Jiangsu Provincial Party Committee, the Jiangsu High People’s Court, in light of the province’s ecological characteristics—its proximity to rivers and the sea, its abundance of rivers and lakes, and its dense water network—and its practical needs for judicial protection, has established nine environmental resource tribunals at the primary-level court level, organized by ecological functional zones, including those covering the Yangtze River Basin and the Taihu Lake Basin. These tribunals exercise centralized jurisdiction across prefecture-level cities over environmental cases handled by primary-level courts throughout the province. On June 28, 2019, the Supreme People’s Court approved the establishment of the Nanjing Environmental Resource Tribunal within the Nanjing Intermediate People’s Court, which assumes centralized jurisdiction over appellate cases from the nine primary-level environmental resource tribunals and first-instance environmental resource cases from all intermediate people’s courts in the province, thereby forming a “9+1” framework for environmental resource adjudication in Jiangsu. The “9+1” mechanism officially commenced operation on July 1, 2019. This new system implements centralized jurisdiction based on ecological functional zones, addressing the fragmentation of judicial protection and promoting both systematic and holistic conservation of the ecological environment; it adopts cross-administrative‑district centralized jurisdiction, resolving the issue of litigation “home‑court vs. away‑court” dynamics and fostering a favorable green business environment; and it employs an integrated criminal–civil–administrative adjudication model, mitigating the one-sidedness of accountability and enhancing the professionalism of judicial proceedings.
Over the past three years, Jiangsu’s courts have remained guided by Xi Jinping Thought on Ecological Civilization and Xi Jinping Thought on the Rule of Law, and, in accordance with the directives of the CPC Central Committee, the Supreme People’s Court, and the provincial Party committee, have vigorously advanced the reform of the “9+1” environmental and resource adjudication mechanism, achieving notable results.
First, the court maintains a high political stance. It earnestly implements the “Two Mountains” philosophy, deeply understands the principles governing environmental and resource adjudication, and takes into full account the specific characteristics of Jiangsu’s ecological functional zones. From the perspective of supporting green development and pioneering a Chinese model for judicial protection of the ecological environment, it has strategically planned and deployed reforms to the environmental and resource adjudication system, thereby providing robust judicial services and safeguards for advancing the modernization of harmonious coexistence between humanity and nature.
Second, the reform demonstrates a high degree of innovation. Addressing issues such as fragmented judicial protection, one-sided environmental restoration, and the “home‑court versus away‑court” imbalance in litigation, the “9+1” mechanism establishes environmental and resource adjudication bodies—severed to an appropriate extent from administrative boundaries—on the basis of ecological functional zones. It has pioneered, among courts nationwide, a relatively comprehensive system for adjudicating environmental and resource cases, thereby substantially enhancing the capacity of environmental justice to support and safeguard ecological civilization. The “9+1” reform model was awarded the Special Prize for Outstanding Innovative Achievements in Jiangsu’s political and legal work. The Central Commission for Deepening Overall Reform subsequently circulated and promoted this reform experience to the principal Party and government leaders of all provinces, autonomous regions, and municipalities directly under the central government. At the World Environmental Justice Conference, the Jiangsu High People’s Court presented it as the “Jiangsu Experience.”
Third, the reform has yielded significant results. The “9+1” mechanism follows a scientifically sound approach to the integrated protection of mountains, rivers, forests, farmland, lakes, grasslands, and deserts, promoting holistic ecological conservation, systematic restoration, coordinated regional planning, and comprehensive governance, thereby enhancing the scientific rigor and effectiveness of judicial protection for the environment. Since the new mechanism was put into operation, it has adjudicated a number of high-profile cases with national impact, including the “illegal fishing of Yangtze eel fry case,” the “massive electrofishing case,” and the “large-scale ivory smuggling case,” all of which have received full recognition from the Supreme People’s Court and the then‑leading officials of the Jiangsu Provincial Party Committee.
Fourth, the supporting mechanisms are comprehensive. Jiangsu’s courts have successively established cross‑regional collaboration and coordination‑liaison mechanisms for environmental and resource cases, while local courts have actively explored the development of coordinated, joint‑action frameworks, ensuring the orderly operation of the “9+1” mechanism. By refining adjudicative rules and innovating enforcement methods, they have provided replicable, reference‑worthy experience for the adjudication of similar cases, thereby advancing a post‑judgment enforcement model that integrates restorative justice with socialized, comprehensive governance. The restorative justice principles thus developed were incorporated into the Kunming Declaration adopted at the World Environmental Justice Conference.
I. Exercising Judicial Functions and Properly Adjudicating Environmental Protection Cases in Accordance with the Law
Over the past three years, Jiangsu courts have accepted a total of 7,116 environmental and resource-related cases and concluded 5,578. In 2020, they handled 2,909 cases and closed 2,498; in 2021, they accepted 3,293 cases and concluded 2,861, with both the number of cases filed and those closed increasing substantially year by year. Two cases resulted in acquittals, and the procuratorial organs withdrew prosecution in 14 cases.
Criminal cases involving ecological and environmental protection are adjudicated in accordance with the law. Adhering to the principle of legality in criminal law and implementing a criminal policy that balances severity with leniency, courts have strengthened punishment for crimes of environmental pollution and destruction of ecological resources by imposing actual prison sentences where warranted, exercising caution in granting suspended sentences, and reinforcing the application of fines. By fully leveraging the deterrent and educational functions of criminal adjudication in environmental and resource matters, the courts safeguard the security of the ecological environment and natural resources. Over the past three years, 4,158 criminal cases have been heard, resulting in convictions and sentencing of 8,734 defendants (including legal persons). Among them, 454 individuals were sentenced to fixed-term imprisonment of three years or more, with the longest sentence reaching 15 years; total fines imposed amounted to RMB 501 million.
Environmental civil public interest litigation cases are adjudicated in accordance with the law. The principles of liability for harm and full compensation are strictly applied, and the civil liabilities of those who pollute the environment or damage ecosystems are pursued in accordance with the law. Environmental and resource-related civil adjudication fully fulfills its functions of redress and ecological restoration, safeguarding the personal and property rights as well as environmental interests of the public, and promoting the improvement of the ecological environment and the rational development and utilization of resources. Over the past three years, 535 environmental civil public interest litigation cases have been heard, resulting in judgments ordering liable parties to pay more than RMB 620 million in funds for ecological and environmental restoration, thereby using economic measures to deter environmental pollution and ecological degradation.
Administrative cases involving ecological and environmental protection are adjudicated in accordance with the law. The administrative adjudication of environmental and resource matters plays a crucial role in preventing environmental pollution and ecological damage, and enforcement agencies are duly supported in fulfilling their duties. Unlawful or unreasonable administrative penalties are revoked or amended as prescribed by law, while instances of administrative inaction are ruled unlawful and ordered to be rectified within a specified time frame, thereby plugging regulatory loopholes. Over the past three years, 1,301 administrative cases concerning environmental and resource issues have been heard.
Ecological and environmental damage compensation cases are adjudicated in accordance with the law. The nature of such litigation is accurately understood, and the institutional advantages of pre-litigation consultations and judicial conofficeation are fully leveraged. In line with the law, defendants are ordered to assume legal liabilities, including ceasing the infringement, restoring the ecological environment, and compensating for losses, thereby ensuring that accountability, compensation, and restoration are effectively implemented in these cases. A total of 13 ecological and environmental damage compensation lawsuits have been accepted, along with 6 cases seeking judicial conofficeation of ecological and environmental damage compensation agreements.
II. Innovate Judicial Principles and Promote the Coordinated Development of Pollution Prevention and Control with Economic Development
Over the past three years, Jiangsu’s courts have actively promoted the coordinated development of the economy and society with environmental protection, adhering to the principle of “comprehensive governance.” While implementing the strictest system for ecological and environmental protection, they have accurately grasped the dialectical relationship between development and conservation as mutually reinforcing and symbiotic—using environmental protection to foster economic growth, and in turn, leveraging economic development to drive improvements in the ecological environment. By innovating methods of adjudication and enforcement, they have both rigorously punished polluting activities by enterprises and safeguarded the ecological environment, while also taking into account the legitimate needs of businesses for sustainable development.
Adhering to the principle of “the strictest systems and the most rigorous rule of law for protecting the ecological environment,” we have innovated adjudicatory rules that raise the legal costs of environmental pollution and ecological damage. We have explored the application of punitive damages, whereby, for enterprises that persist in clandestine illegal discharges despite repeated penalties, we have adopted presumptive rules to calculate discharge volumes at higher levels and analogical rules to determine compensation amounts at elevated rates, thereby holding such entities accountable for their polluting conduct. In the civil public-interest litigation concerning water pollution brought by Xuzhou Hongshun Paper Company, the volume of pollutants discharged and the costs of environmental restoration were calculated at four times the amount seized, effectively deterring unlawful discharges by enterprises. We have also established a comprehensive, end-to‑to‑end liability regime: in a landmark public-interest case involving large-scale illegal capture of eel fry, the court ruled for the first time nationwide that purchasers, sellers, and fishermen responsible for ecological harm all bear joint and several liability, thus providing robust protection for the Yangtze River ecosystem. This case was featured on the United Nations Environment Programme’s website and selected as a guiding case by the Supreme People’s Court. Furthermore, we have developed holistic standards for assessing ecological and environmental losses, requiring violators not only to compensate for direct damages but also to cover a range of indirect losses. In a civil public-interest lawsuit over illegal sand extraction, in addition to quantifying the depletion of sand and gravel resources caused by the activity, the court comprehensively evaluated factors such as the extent of harm to aquatic habitats, the safety of embankments, and navigational safety, using these considerations to determine the final amount of compensation for ecological restoration.
Adhering to the principles of “ecological priority and green development,” innovative approaches have been adopted in the adjudication and enforcement of environmental and resource-related cases. A “technology‑upgrade offset” mechanism has been explored, whereby funds allocated for technological upgrades are used to offset a portion of compensation payments, thereby encouraging and supporting enterprises in adopting advanced production processes and equipment, effectively reducing and preventing environmental pollution. In the criminal case with an accompanying public‑interest civil action involving illegal discharge brought by Nanjing Xuanwu Court against Nanjing Shengke Company, it was clarified that technology‑upgrade expenditures incurred by enterprises may, within certain limits, be credited against remediation costs, thus addressing environmental risks at their source. An “installment payment” scheme has also been piloted, effectively resolving the dilemma of “difficulties in maintaining business operations during enforcement and challenges in carrying out environmental restoration when enforcement is stalled.” In the Shengke case, the Nanjing Xuanwu Court facilitated a settlement under which the polluting enterprise compensated RMB 470 million through a combination of cash and alternative remediation measures, while permitting Shengke to pay the ecological‑environmental restoration costs in installments—thereby ensuring accountability while alleviating the financial burden of a lump‑sum payment. Furthermore, a system of environmental protection injunctions has been developed to provide the most direct and effective intervention and correction of ongoing environmental harm, enabling damaged ecosystems to return to their original state and preventing or mitigating further losses.
Guided by the principle of “harmonious coexistence between humanity and nature,” we have refined a mechanism that integrates “restorative justice practices” with “socialized, comprehensive governance.” In accordance with the requirements of the Environmental Protection Law for establishing and improving restoration systems, we adhere to approaches tailored to local conditions and case‑specific strategies, accurately apply a judicial policy that balances leniency and severity, and flexibly employ diverse forms of liability, thereby encouraging polluters to proactively restore the environment. We pioneered out‑of‑jurisdiction reforestation and labor‑based compensation, promoted stock enhancement and release programs, and incorporated restoration actions and outcomes as key considerations in case adjudication. For situations where on‑site ecological restoration is impossible, we order off‑site greening and afforestation; when financial capacity to pay damages is limited, we mandate environmental protection labor services as a form of compensation; and for harm inflicted on aquatic ecosystems, we require the release of fish and shrimp fry. We emphasize systematic and holistic conservation. By systematically understanding the roles and mutual influences of ecological components, we advance restoration efforts across entire river basins. The “March 7 Yangtze River mega‑illegal sand‑extraction case,” concluded by the Dongtai People’s Court in Yancheng, was an illegal sand‑extraction matter investigated and prosecuted in another jurisdiction under the inter‑provincial designation of the Ministry of Public Security. In line with the requirements of the Yangtze River Delta Environmental and Resource Judicial Cooperation Framework Agreement, Jiangsu courts plan to transfer confiscated illicit proceeds and civil public‑interest litigation compensation that has been fully enforced to Anhui, where Anhui will organize ecological restoration projects. From investigation and trial through enforcement to subsequent ecological restoration, this case fully embodies the Yangtze River Protection Law’s call to break down sectoral and fragmented approaches and achieve system‑wide, integrated protection across the entire basin. We continue to refine the restoration mechanism. By improving the execution framework for restorative justice outcomes—integrating “restorative judicial practice” with “socialized, comprehensive governance”—we have established more than 30 judicial restoration bases, including the Nanjing Yangtze New Jizhou Base, the Lianyungang Marine Ranch, and the Yancheng Yellow Sea Wetland, thus facilitating the implementation of restorative judicial rulings. The Nanjing Yangtze New Jizhou Judicial Research and Restoration Base was included in the Jiangsu Provincial Party Committee’s Political and Legal Affairs Commission’s 2020 list of practical projects for the people.
III. Uphold the overarching national interest and promote the coordinated development of pollution prevention and control with economic development.
Jiangsu courts uphold the legal bottom line, officely embrace the principle that ecological red lines must never be crossed, and adjudicate all types of environmental and resource cases in accordance with the law. They fully leverage the effectiveness of institutional reforms to foster a sound rule-of-law environment for green development. They safeguard ecological security, biosafety, and public health security in compliance with the law, impose strict penalties on crimes that damage the ecosystem, strengthen punishment in criminal cases involving wildlife, and ensure the resolute implementation of the Kunming Declaration.
Safeguarding biodiversity through judicial services. In line with the requirements of the Kunming Declaration, efforts have been strengthened to provide judicial protection for species diversity, curb biodiversity loss, and uphold ecological security. The ivory-smuggling case adjudicated by the Nanjing Environmental Resources Tribunal is, to date, the largest in Jiangsu Province in terms of both the number of items involved and the value of the contraband, having been placed under direct supervision by the General Administration of Customs. The defendant, Dai, smuggled a total of 70 pieces of ivory weighing approximately 563 kilograms, with an estimated value of about RMB 23.47 million. The court sentenced Dai on the spot to eleven years and six months’ imprisonment and ordered the confiscation of personal property worth RMB 500,000; the case received commendation from Chief Justice Zhou Qiang of the Supreme People’s Court. In another case, heard by the Rugao People’s Court in Nantong, the defendant was convicted of illegally fishing Chinese sturgeon—a nationally protected wildlife species of Grade I, often referred to as the “panda of the water” or a “living fossil”—which serves as a flagship species of the Yangtze River’s rare and endemic fauna. The court sentenced the defendant, Li, to one year and four months’ imprisonment and imposed a fine of RMB 20,000. Chief Justice Zhou Qiang commended the case, noting its positive social impact and exemplary significance. These two cases underscore the Chinese government’s steadfast commitment to fulfilling its solemn obligations in biodiversity conservation. To effectively showcase Jiangsu Province’s achievements in judicial protection of biodiversity, the Nanjing Environmental Resources Tribunal, the Xuanwu District People’s Court of Nanjing, and the Nanjing Hongshan Forest Zoo jointly signed a framework agreement on biodiversity protection during Bird‑Loving Week. They also established the Nanjing Biodiversity Protection Judicial Practice Base, dedicated to rescuing wild animals, ensuring their welfare, and enhancing urban biodiversity. Furthermore, in collaboration with the Nanjing Hongshan Forest Zoo, they set up a biodiversity‑protection judicial exhibition hall, which has played an active role in promoting public awareness of wildlife conservation and integrating legal education with environmental stewardship.
Providing judicial support for the comprehensive protection of the Yangtze River. In accordance with the law, the courts have ensured the effective implementation of the ten-year fishing ban in the Yangtze River basin. The Jiangsu High People’s Court, together with the Provincial People’s Procuratorate, the Provincial Public Security Department, and the Provincial Department of Agriculture and Rural Affairs, jointly issued the “Opinions on Several Issues Concerning the Strict Prosecution of Criminal Offenses of Illegal Fishing in Key Waters of the Yangtze River Basin,” and formulated the “Guidelines for the Adjudication of Criminal Cases Involving Illegal Fishing in Key Waters of the Yangtze River Basin.” These measures provide clear guidance for the adjudication of such cases, ensuring the smooth advancement of the comprehensive fishing ban in key waters of the Yangtze River basin and the effective conservation of aquatic biological resources.
Actively implementing the Yangtze River Protection Law. The Jiangsu High People’s Court has formulated the “Specific Implementation Opinions on Fully Leveraging the Role of Judicial Functions to Effectively Implement the Yangtze River Protection Law,” setting forth concrete standards and requirements across four key areas: strengthening the sense of responsibility and mission in judicial protection; fully exercising the functions of environmental and resource adjudication; proactively exploring innovative mechanisms for judicial protection; and enhancing the capacity and level of judicial protection. On the day the Yangtze River Protection Law came into force, the Jiangsu High People’s Court, together with the Jiangsu Provincial Department of Agriculture and Rural Affairs and the Nanjing Environmental Resources Tribunal, organized a series of activities—including fish‑stocking releases, collective sentencing ceremonies, press conferences, and the joint establishment of restoration bases—in cities such as Nanjing, Suzhou, Nantong, and Taizhou. These efforts resulted in the release of over three million fry—species well‑suited to the Yangtze and Taihu lakes, including silver carp, bighead carp, longsnout catfish, and red‑scaled fish—along the lower reaches of the Yangtze and in key waterways, thereby bolstering public awareness of the rule of law and fostering a stronger sense of responsibility for safeguarding the river’s ecological environment. The Jiangsu High People’s Court also released ten landmark cases related to Yangtze River protection, further raising public awareness of the importance of comprehensive conservation. In 2020, the Publicity Department of the CPC Central Committee and the Supreme People’s Court convened deputies to the National People’s Congress from six provinces, among others, to conduct a concentrated research and publicity campaign titled “Judicial Support for a Beautiful Yangtze.” A press conference was held at the Nanjing Yangtze New Jizhou Judicial Research and Restoration Base, providing a vivid showcase of the Jiangsu courts’ achievements in protecting the Yangtze River.
Providing judicial support for the integrated development of the Yangtze River Delta. Efforts are being accelerated to establish a mechanism for judicial cooperation in case adjudication and enforcement, as well as a unified system of adjudicative standards, thereby further enhancing the effectiveness of judicial collaboration and underpinning the region’s eco‑friendly, green, and integrated development. The high people’s courts of Shanghai, Zhejiang, Anhui, and Jiangsu have signed the Framework Agreement on Judicial Cooperation in Environmental and Resource Cases among People’s Courts in the Yangtze River Delta. Meanwhile, the Nanjing Environmental and Resource Tribunal, together with the Third Intermediate People’s Court of Shanghai, the Hangzhou Intermediate People’s Court, the Jiaxing Intermediate People’s Court, the Huzhou Intermediate People’s Court, and the Xuancheng Intermediate People’s Court, has jointly adopted the Implementation Rules of the Framework Agreement on Judicial Cooperation in Environmental and Resource Matters in the Yangtze River Delta. In a case involving mercury‑contaminated wastewater discharged into the Yongjiang River system in Zhejiang, the Gusu District People’s Court of Suzhou proactively coordinated the timely transfer of remediation funds to Zhejiang, ensuring their use for emergency response and environmental restoration in the affected area, thus effectively addressing the challenges of cross‑provincial environmental remediation.
Providing judicial safeguards for the protection of the Grand Canal. In accordance with the law, unlawful and criminal acts that pollute the environment in relation to the Grand Canal are vigorously prosecuted, and guidance is strengthened on all types of environmental‑resource cases involving pollution control, ecological conservation, cultural heritage protection, and the preservation of historical sites and remains, thereby ensuring robust judicial support for the Canal’s protection. Five courts, including those in Gusu and Wujiang in Suzhou, have jointly signed the “Judicial Cooperation Agreement on the Protection of the Grand Canal (Suzhou Section),” laying a solid foundation for effectively safeguarding the Canal’s ecological environment and cultural heritage. In handling the case of environmental pollution brought by Chen et al., the Gusu District People’s Court of Suzhou, while imposing lawful criminal penalties on the defendant entity, also accorded high priority to the restoration of the damaged waterways of the Grand Canal, fully reflecting the principle of prioritizing protection.
IV. Continuously deepen the “9+1” reform and explore a Jiangsu model for environmental judicial protection.
The “9+1” mechanism reform is an important initiative by Jiangsu courts to implement Xi Jinping’s thought on ecological civilization and the central government’s requirements for comprehensively deepening reform. It also represents a concrete effort to undertake the Supreme People’s Court’s judicial reform and to pioneer and experiment with a “Chinese model” for environmental judicial protection. With its features of basin-wide systematic protection, centralized jurisdiction across administrative boundaries, and specialized “three-in-one” adjudication, the “9+1” environmental and resource adjudication mechanism has become a well‑known hallmark of Jiangsu courts’ drive to advance judicial reform.
Effectively ensure the uniform and correct application of the law. On the one hand, strengthen oversight and guidance at the lower levels, leveraging case remands and retrials to substantially enhance the adjudicative standards of grassroots courts. On the other hand, the Jiangsu High People’s Court has selected outstanding personnel from nine grassroots environmental and resource tribunals and dispatched them in batches to the environmental and resource adjudication divisions of higher-level courts for training. Through assisting in case handling, conducting research, drafting guiding documents, and participating in professional development activities, the court ensures the consistent and proper implementation of environmental and resource laws across the entire province.
Actively exploring specialized adjudication approaches. Environmental and resource-related litigation is highly specialized, characterized by the intersection of law and policy, the interplay of criminal, civil, and administrative liabilities, the overlap between private and public interests, and the integration of legal and scientific knowledge. In response, Jiangsu courts have continuously enhanced the professionalism of their adjudications by piloting mechanisms such as specialized lay judges, technical investigators, courtroom technical advisors, and expert assistants.
Exploring proactive integration into the modern environmental governance system. Adhering to a trial‑centered approach, we fully leverage the role of environmental and resource adjudication in evaluating law enforcement. First, we clarify the responsibilities of administrative agencies. In the administrative public interest litigation case involving the Suining County Environmental Protection Bureau, it was explicitly established that environmental authorities bear jurisdictional responsibility for addressing cross‑jurisdictional hazardous waste pollution. Second, we address gaps in administrative oversight. In handling environmental and resource cases, Jiangsu courts have actively extended their judicial functions and promptly issued judicial recommendations. For instance, the Nanjing Environmental and Resource Tribunal, in response to new circumstances and challenges arising from reforms to the environmental regulatory framework—particularly regarding administrative penalty procedures—sent a judicial recommendation to the Provincial Department of Ecology and Environment, helping to standardize ecological and environmental administrative penalty procedures; the department subsequently issued a province‑wide directive to implement these standards. Third, we guide scientifically sound and rational pollution control. Through case adjudication, Jiangsu courts have helped regulate government agencies’ pollution‑remediation practices; in the civil public interest litigation case concerning environmental pollution brought by Zuo, the court declined to uphold emergency response costs arising from an administrative agency’s disproportionate and excessive measures that violated the principle of proportionality.
Continuously strengthening the integrated framework for environmental and resource adjudication. First, a cross‑jurisdictional case filing cooperation mechanism has been established. Legal persons, natural persons, and social organizations within Jiangsu Province may file environmental and resource lawsuits at their local courts. If the local court lacks jurisdiction, plaintiffs may submit their applications through the online filing system, thereby minimizing in-person visits while maximizing data exchange. Second, a circuit‑trial cooperation mechanism has been put in place. Environmental and resource cases are typically heard on a circuit basis, with hearings held at the parties’ locations. For civil and administrative cases of significant public impact or involving large numbers of stakeholders, trials are conducted at the courts located where the polluting acts occurred, where the harm took place, or where the defendant is domiciled. Third, a case‑enforcement cooperation mechanism has been established. Efforts are underway to assign the enforcement of judgments—covering compensation, fines, confiscation of illegal gains, as well as restorative measures such as stock enhancement and release, off‑site ecological restoration, and labor‑based compensation—to the courts in the jurisdictions where the environmental pollution or ecological damage occurred, upon delegation by the competent court.
Continuously improving mechanisms for collaborative coordination. Emphasizing external linkages to ensure seamless integration between judicial protection of the environment and resources and environmental law enforcement. Strengthening judicial cooperation with public security and procuratorial organs, reinforcing coordinated operations, joint identification of conflicts, and joint resolution of disputes, thereby bolstering the collective effectiveness of environmental judicial protection. Enhancing the mechanism for linking environmental law enforcement and judicial processes, deepening collaboration with relevant agencies such as those responsible for natural resources, ecological environment, and marine fisheries, and further advancing the alignment of law enforcement and judicial practices to achieve synchronized action. At the shores of Gaoyou Lake, a landmark case involving large-scale electric fishing was adjudicated; the Ministry of Agriculture and Rural Affairs convened more than 200 heads of fishery authorities from 21 provinces to observe the trial and oversee the centralized destruction of illegal fishing gear, thus fostering effective interaction between environmental justice and law enforcement. Meanwhile, the Xuyi People’s Court spearheaded the establishment of the nation’s first collaborative protection mechanism for attapulgite clay, effectively safeguarding this “king of clays.”
Fully safeguarding public participation in environmental justice. In accordance with the “public participation” principle enshrined in the Environmental Protection Law, we have combined specialized adjudication with public engagement, enhanced public awareness of environmental protection, and, in line with the law, ensured the public’s rights to information, participation, and oversight in environmental judicial proceedings. Each year, we publish an Environmental Justice White Paper and highlight exemplary cases of ecological conservation. We have also implemented the Environmental Protection Law’s requirements for public legal education, vigorously promoting the Civil Code’s “green principles” and “green provisions,” and actively cultivating an “environmental rule-of-law classroom.” Regular circuit trials of environmental and resource‑related cases and live courtroom broadcasts are conducted, bringing environmental justice into villages, communities, and schools, so that green production and lifestyles become a conscious practice across society. The 10-millionth live court session nationwide—on the civil public interest litigation involving Wang Yulin’s illegal mining—received extensive coverage from mainstream media, including CCTV’s “News Broadcast.” We have promptly summarized our experience in environmental and resource‑related adjudication, compiling and publishing works such as “Jiangsu’s Practice in China’s Environmental Justice Reform” (in both Chinese and English) and “Explaining the Law Through Cases: A Comic Guide to Biodiversity Conservation.” Furthermore, we have provided guidance for the production of a television series on the reform of the “9+1” mechanism for environmental justice, which promotes Xi Jinping’s Thought on Ecological Civilization and Xi Jinping’s Thought on the Rule of Law, showcasing China’s achievements in prioritizing ecology, pursuing green development, and protecting the Yangtze River. This series has been included in Jiangsu Province’s 14th Five-Year Plan for Radio, Television, and Online Audiovisual Development and is now in production.
We are keenly aware that, compared with the new circumstances and tasks of advancing the construction of a beautiful Jiangsu Province, and with the public’s evolving needs and expectations, environmental and resource adjudication still has certain shortcomings and gaps. First, our capacity to serve the overall national interest requires further strengthening. A small number of judges lack sufficient expertise in employing judicial tools to address pressing ecological and environmental issues; their ability to handle major, difficult, and complex cases, as well as emerging types of cases, remains inadequate, and they have yet to fully achieve an organic integration of political, legal, social, and ecological outcomes. Second, challenges that constrain the quality and efficiency of adjudication need to be further addressed. Persistent problems—including difficulties in collecting and preserving evidence in environmental and resource cases, a limited number of institutions capable of conducting damage assessments, lengthy appraisal procedures, and challenges in enforcing restorative judgments—continue to undermine the quality and effectiveness of case adjudication. Third, greater efforts are needed to integrate into the modern environmental governance system. Mechanisms for diversified dispute resolution in environmental and resource cases require further refinement; mechanisms for coordination between law enforcement and the judiciary need to be improved; and standards for law enforcement and judicial practice must be further harmonized. In response, we will attach great importance to these issues and adopt concrete, effective measures to strive toward their resolution.
Prospects
As a major economic province and a significant consumer of resources and energy with substantial carbon emissions, Jiangsu is currently at a critical juncture, vigorously advancing the synergistic enhancement of pollution reduction and carbon mitigation while comprehensively promoting green and low‑carbon development. At the 14th Jiangsu Provincial Party Congress, Secretary Wu Zhenglong of the Jiangsu Provincial Party Committee emphasized that “the next five years will be a pivotal period for Jiangsu’s ecological civilization construction, marking a transition from quantitative change to qualitative transformation. We must fully implement Xi Jinping Thought on Ecological Civilization, deeply advance the strategy of sustainable development, integrate carbon peaking and carbon neutrality into the overall framework of economic and social development, accelerate the synergistic enhancement of pollution reduction and carbon mitigation, proactively establish national pilot zones for ecological civilization, and promote balanced and sustainable development among population, resources, and the environment… Let green become the most distinctive hallmark of Beautiful Jiangsu and the most vivid underlying tone of the new, modernized Jiangsu characterized by strength, prosperity, beauty, and high standards.” Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, we will earnestly put into practice both Xi Jinping Thought on Ecological Civilization and Xi Jinping Thought on the Rule of Law, fully and accurately implement the new development philosophy, officely anchor ourselves to the goal of building a Beautiful Jiangsu, and give full play to the adjudicative functions of the courts. With the care and support of all sectors of society, we will further advance environmental and resource adjudication at a high standard, thereby better serving and safeguarding the modernization of a new Jiangsu that is more beautiful, more livable, and more attractive—a Jiangsu that is strong, prosperous, beautiful, and advanced.
Closely aligned with the overarching national agenda, we will further enhance the contribution of environmental justice. Focusing on building a greener, low‑carbon, and more beautiful Jiangsu, we will raise the cost of environmental violations, support innovation in green technologies, ensure effective governance in key river basins and regions, and underpin green, low‑carbon, and circular development, thereby advancing a comprehensive green transformation of our development model. We will conduct specialized research on legal issues related to carbon emissions and carbon trading, adjudicate carbon‑emission‑allowance‑trading cases in accordance with the law, and harness market mechanisms to drive greenhouse‑gas reductions. We will impose lawful penalties for acts that infringe upon the public’s environmental rights, strengthen public participation in environmental judicial processes, and effectively meet the growing demand of the people for a high‑quality ecological environment. In implementing the green principles of the Civil Code, we will reinforce judicial guidance on resource conservation and circular utilization, improve resource‑use efficiency, foster green modes of production, and encourage the public to adopt simple, moderate, green, and low‑carbon lifestyles.
Deepen reform and further advance the modernization of environmental justice. Continuously liberate our minds and forge ahead, promoting exploratory, innovative, and pioneering development in environmental and resource adjudication, and cultivating more “Jiangsu models” in this field. Consolidate and deepen the “9+1” mechanism reform, and optimize the environmental and resource adjudication system. Innovate and refine adjudicative rules and procedures, improve and strengthen mechanisms for enforcing judicial outcomes, and further enhance the effectiveness of environmental justice. Establish and完善 a trial‑management information platform, steadily elevating the level of digitalization in environmental and resource adjudication. Strengthen coordination with public interest litigation initiated by social organizations, procuratorial public interest litigation, and litigation for compensation for ecological and environmental damage; refine the linkage between judicial and law‑enforcement responsibilities, ensuring that environmental justice serves as an interactive platform for environmental governance among government, enterprises, and the public.
Strengthen the team and further hone the robust capabilities of environmental justice. Accurately grasp the specialized, complex, and interdisciplinary nature of environmental and resource adjudication, and proactively plan and strategically advance the professionalization of this field. Intensify training efforts, refine talent‑development and reserve‑building strategies, and explore the establishment of a system for judges to undertake temporary postings across regions to hear environmental and resource cases, with a focus on cultivating a corps of expert judges who are both deeply versed in environmental law and well‑acquainted with relevant economic, social, and environmental sciences. Implement a strategy of high‑quality adjudication, develop more exemplary cases in environmental and resource matters, steer the evolution of environmental justice, tell the story of Jiangsu’s environmental judiciary, and contribute greater Jiangsu‑based insights to the refinement of environmental rule of law. Actively engage in global environmental governance, deepen international exchanges and cooperation in environmental justice, broaden judges’ global perspectives, and enhance our province’s international influence in shaping and improving the framework of sustainable‑development norms.
Optimizing the trial process to enhance case-handling efficiency.
— Research Report of the People’s Court of Mingshan District, Ya’an, Sichuan, on Small-Amount Loan Disputes in Internet Finance
Whether disputes over small‑amount internet‑finance loans can be resolved effectively bears on the sound development of the internet‑finance sector. To strengthen the resolution of such disputes and enhance case‑handling efficiency, the People’s Court of Mingshan District, Ya’an City, Sichuan Province, established a research team to conduct a focused study on the internet‑finance small‑loan disputes it had accepted between July 2020 and December 2021.
I. Basic Information
1. The plaintiffs demonstrate a strong willingness to resolve disputes, and the caseload is substantial. Since accepting such cases, over a period of just 18 months, the number of plaintiff entities has grown from three financial institutions to seven, plus one internet bank; more than 40,000 cases have been filed, involving nearly RMB 500 million in total. On average, the court handles over 2,000 cases per month—more than ten times the volume of typical civil cases.
2. The rate of default judgments is high, and enforcement outcomes are far from satisfactory. Defendants frequently fail to appear, resulting in a default judgment rate as high as 90 percent. Plaintiffs almost invariably seek asset preservation measures, with the total value of such applications approaching RMB 500 million—accounting for more than 90 percent of the total litigation value—yet only slightly over RMB 40 million has actually been secured. At the enforcement stage, these cases cannot be processed on a mass‑scale; the procedural workflow involves numerous steps and requires substantial manpower, leading to unsatisfactory enforcement results.
3. Jurisdictional agreements are arbitrary, leading to numerous jurisdictional objections. With defendants scattered across the country, the parties often agree on divergent jurisdictions—ranging from the court at the creditor’s domicile, to the court at the debtor’s domicile, or the court where the contract was executed. Some even stipulate that, in the event of an assignment of the claim, jurisdiction shall lie with the court at the assignee’s domicile; others designate a specific court to have jurisdiction over secured claims, yet fail to re‑specify the competent court when the secured claim is subsequently assigned. Such arbitrary and varied jurisdictional arrangements frequently give rise to jurisdictional challenges by the parties.
II. Cause Analysis
1. A lack of targeted dispute-resolution mechanisms. At present, online lending disputes are primarily resolved through litigation, with no dedicated multi-channel resolution framework in place. However, handling such disputes via conventional litigation is excessively costly, neither convenient nor economical, leading to a backlog of cases and the absence of an effective mechanism for reducing the existing caseload.
2. Many parties lack a strong sense of their obligation to respond to litigation. Although some borrowers, in order to avoid adverse legal consequences, proactively choose to settle with the creditor or reach a mediation agreement, the majority remain unaware of the seriousness of their default and often adopt a passive stance by failing to appear in court or participating in proceedings, thereby waiving their procedural rights.
3. This type of dispute is characterized by certain peculiarities. It transcends geographical boundaries, with similar cases brought by the same plaintiff scattered across the country, and the parties often agree on different jurisdictional arrangements. Applying traditional jurisdictional rules proves inefficient and may even give rise to new conflicts, thereby hindering the resolution of disputes. Moreover, given the nature of small‑amount internet‑finance lending, such agreements are typically executed online and take the form of standardized contracts, making it all too easy in practice for parties to challenge jurisdiction on the grounds that adequate notice was not provided regarding the jurisdiction clause.
III. Policy Recommendations
1. Establish a system of appropriately centralized jurisdiction. By adopting such a system for the adjudication of similar cases, specialized courts or adjudicatory bodies can form relatively stable teams dedicated to handling these matters. This approach enables the tailored design of organizational structures that align with the specific characteristics of the disputes, optimizes trial procedures, ensures efficient staffing, and enhances both hardware and software infrastructure, thereby improving judicial efficiency, ensuring uniform application of the law, and effectively resolving disputes. Leveraging the “Internet Plus Justice” model, it is possible to achieve centralized, large-scale processing, addressing the backlog of cases arising from litigation-related inconveniences.
2. Implement a modular, centralized adjudication model. In internet‑finance small‑loan cases, the transaction process follows standardized procedures, with clear facts and straightforward legal relationships; however, the sheer volume of such cases lends them a high degree of batch processing. Adopting a modular, centralized trial approach—where both parties complete litigation‑element forms to clearly delineate and refine the key points of contention and focus on resolving the disputed issues—helps to effectively manage the pace of proceedings, shorten court sessions, and enhance trial efficiency.
3. Establish a multi-tiered dispute resolution mechanism. Courts may take the lead in developing a diversified dispute‑resolution framework tailored to the characteristics of such cases, extending their adjudicatory and enforcement functions. This approach would seek to create a funnel‑shaped, multi‑level, time‑phased system that prioritizes intra‑industry settlement as the entry point, relies primarily on third‑party non‑litigious mediation, and reserves litigation as a safety net. In addition, an execution mechanism specific to these types of cases should be established to enable batch‑style enforcement.
[Year of Enhancing Case Quality] Hengshan People’s Court Achieves “Seamless” Coordination Between Litigation and Arbitration
To promote the establishment of a diversified dispute-resolution mechanism, enhance the quality and efficiency of the Hengshan People’s Court, and foster a favorable business environment under the rule of law, Wang Hongjun, He Bing, and two other officials from the Deputy Office of the Jixi Municipal Labor and Personnel Dispute Arbitration Commission recently paid an invited visit to the Hengshan People’s Court to convene a symposium on aligning litigation and arbitration procedures. Li Changgang, a member of the Party Leadership Group and Vice President of the Hengshan People’s Court, along with Li Ning, head of the Case Filing Division, attended the meeting as accompanying officials.
At the symposium, Li Changgang, Vice President of Hengshan People’s Court, reached a consensus on establishing a coordinated mechanism with the Municipal Labor and Personnel Dispute Arbitration Commission, designated a dedicated person to oversee the matter on the spot, and put forward new proposals for further enhancing the effective exercise of their respective functions.
First, it is essential to strengthen the substantive coordination between arbitration and adjudication, establish seamless links with arbitration institutions, conduct proactive research on emerging circumstances and issues in labor dispute cases, and jointly explore new rules and mechanisms for effectively aligning arbitration procedures with litigation procedures.
Second, we must elevate our political awareness and fully recognize the importance of seamless coordination between adjudication and arbitration. Courts and labor arbitration institutions should strengthen the integration of mediation, arbitration, and adjudication, upgrade supporting infrastructure, enhance the quality and efficiency of services, and draw on practical experience to deliver tangible benefits to the people.
Third, it is necessary to establish mechanisms for routine communication, joint meetings, information sharing, case briefings, study and exchange activities, and discussions on the application of law. Li Changgang, a member of the Party Leadership Group and Vice President of Hengshan People’s Court, emphasized that a dedicated office should be set up within the Litigation Service Center for the Municipal Arbitration Commission, to facilitate communication and coordination among cases. With regard to common, significant, or complex issues of legal application encountered in practice, specialized research studies and focused seminars should be conducted to promote joint deliberation and exchange, thereby ensuring uniformity in the application of law between litigation and arbitration.
Through this symposium, the Hengshan People’s Court and the Municipal Labor Dispute Arbitration Commission established close coordination, facilitating the swift resolution of arbitration‑related disputes and ensuring seamless linkage in labor dispute handling. This approach has enabled a multi‑tiered, comprehensive, and integrated framework for dispute resolution, thereby fostering harmonious and stable labor relations.

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