JC Master Legal News Issue 1032

Key Takeaways for This Issue

Performance divergence among listed securities offices is accelerating, with proprietary trading emerging as a key differentiator.
Amid the highly volatile market conditions in the first half of the year, performance among securities offices has become increasingly divergent, largely driven by proprietary trading activities. Among the 27 listed securities offices that have already released their interim reports, only two reported year-on-year growth in both revenue and net profit.
Listed companies delivered a strong performance in the “mid-year exam”: The combined revenue of 4,825 companies totaled RMB 34.54 trillion, up 9.24% year on year.
According to data from the China Association of Public Companies, as of August 31, 4,825 listed companies on the Shanghai, Shenzhen, and Beijing stock exchanges had disclosed their 2022 interim reports (based on companies that were listed as of June 30, 2022). In the first half of the year, these 4,825 companies reported total operating revenue of RMB 34.54 trillion and net profit of RMB 3.25 trillion, up 9.24% and 3.19%, respectively, year over year.
Refund of outstanding tax credits: A timely lifeline for market entities.
The large-scale value-added tax credit refund policy implemented since last year has been a key measure to address downward pressure on China’s economy and stabilize the overall macroeconomic landscape. According to data recently released by the State Taxation Administration, as of August 15, more than 2.1 trillion yuan in tax refunds had been credited to taxpayers’ accounts this year. With the accelerated implementation of related policies, the task of centrally refunding the outstanding VAT credit balances has been successfully completed, providing robust support to a broad range of market entities.
Zhou Qiang presented a report to the Standing Committee of the National People’s Congress on the pilot program for reforming the functional positioning of the four-level court system.
On the morning of August 30, the 36th session of the Standing Committee of the 13th National People’s Congress held its first plenary meeting, during which Chief Justice of the Supreme People’s Court Zhou Qiang delivered the “Interim Report of the Supreme People’s Court on the Pilot Program for Reforming the Functional Positioning of the Four-Tier Court System.”
Finance & Capital Markets
Performance divergence among listed securities offices is accelerating, with proprietary trading emerging as a key differentiator.
With the release of performance results from Citic Securities, the “leading brokerage office,” the first-half 2022 financials of A-share‑listed securities offices have become increasingly clear. Amid the highly volatile market conditions of the first half, brokerage earnings have shown growing divergence, largely driven by proprietary trading activities. Among the 27 listed securities offices that have already disclosed their interim reports, only two reported year-on-year growth in both revenue and net profit.
CITIC Securities in the first half of the year
Net profit decreased by 8.21% year over year.
On the evening of August 29, CITIC Securities, the leading brokerage office, disclosed its first-half 2022 results, reporting operating revenue of RMB 34.885 billion, down 7.52% year over year, and net profit of RMB 11.196 billion, down 8.21% year over year.
In terms of core businesses, in the first half of the year, CITIC Securities’ brokerage segment generated revenue of RMB 8.274 billion, down 10.54% year over year; its asset management segment reported RMB 6.091 billion, a 4.24% decline from the same period last year; its securities investment business recorded RMB 10.412 billion, up 6.6% year over year; and its securities underwriting segment posted RMB 3.41 billion, an increase of 30.36% compared with the prior year.
Among the 27 A-share‑listed securities offices that have disclosed their first-half 2022 results, only seven—Shanxi Securities, Guolian Securities, Pacific Securities, Hua’an Securities, Guoyuan Securities, Dongwu Securities, and Zhejiang Commercial Securities—reported year-on-year growth in operating revenue. In addition, three offices—Hua’an Securities, Guolian Securities, and Founder Securities—recorded year-on-year increases in net profit.
As such, to date, only two securities offices—HuAn Securities and Guolian Securities—have posted year-on-year growth in both revenue and net profit. Specifically, HuAn Securities reported operating income of RMB 1.648 billion, up 9.89% year over year, and net profit of RMB 724 million, up 17.87% year over year. Meanwhile, Guolian Securities recorded operating income of RMB 1.274 billion, a 12.71% increase year over year, and net profit of RMB 437 million, up 15.37% year over year.
It is worth noting that, despite a year-on-year decline in both revenue and net profit in the first half of the year, CITIC Securities remains the only listed securities office with net profits exceeding RMB 10 billion.
Actively explore diversification.
Non-directional investment model
In the first half of the year, listed securities offices exhibited divergent performance in their core businesses, driven by varying levels of professional expertise. Amid market conditions, directional proprietary trading weighed on the results of most offices; however, many others bolstered non‑directional investment strategies and leveraged derivatives to smooth market volatility, thereby enhancing earnings stability.
After assessing the proprietary trading capabilities of securities offices using the “net investment income plus net gains from changes in fair value” approach, it was found that among the aforementioned 27 offices, the four leading players—CITIC Securities, Guotai Junan, China Merchants Securities, and Guoxin Securities—each reported proprietary‑trading revenues exceeding RMB 3 billion. In addition, four offices posted negative proprietary‑trading revenues.
In terms of growth rate, in the first half of the year, Bank of China Securities’ proprietary trading revenue posted the highest year-on-year increase, at 78.37%; Founder Securities ranked second, with a year-on-year rise of 56.19%; Pacific Securities and Guolian Securities followed closely, up 20.27% and 12.93%, respectively. Meanwhile, Hua’an Securities saw its proprietary trading revenue decline slightly by 2.14% year over year, while the remaining listed securities offices all recorded year-on-year declines exceeding 20%.
Against this backdrop, securities offices’ investment activities are currently shifting toward non-directional and diversified trading. Notably, Bank of China Securities has seen a substantial increase in its proprietary‑trading revenue, primarily driven by higher investment income from trading‑type financial assets. In the first half of the year, the office continued to strengthen its equity‑investment research and development framework while actively exploring low‑volatility profit models, steadily advancing its transition to a diversified investment management approach and enhancing the development and application of non‑directional investment strategies. At the same time, the company has been proactively preparing for over-the-counter financial derivatives business; on the exchange‑traded front, it has focused on bolstering its technological capabilities and elevating its quantitative‑strategy expertise to further advance equity‑based quantitative‑strategy trading.
Meanwhile, Founder Securities posted year‑on‑year growth in the first half of the year, largely driven by outperformance relative to the industry average in its traditional proprietary investment business. At the earnings briefing, Cui Xiao, a member of the Executive Committee and Vice President of Founder Securities, stated: “In recent years, the company has prioritized a diversified business strategy across multiple asset classes, strategies, and models to ensure revenue stability. We have steadfastly pursued a strategic focus on developing derivatives, neutral‑strategy products, and non‑directional sales‑and‑trading businesses. In the first half of the year, the outstanding notional amount of over-the-counter options increased by 109.05% year over year, the outstanding notional amount of total return swaps surged by 1,486.07%, and revenue from non‑directional activities rose by 214%.”
Meanwhile, in the first half of the year, Guolian Securities reported proprietary trading revenue of RMB 576 million, up 12.93% year over year, largely driven by an increase in unrealized gains on derivative financial instruments. Specifically, gains from changes in fair value totaled RMB 597 million, a substantial year-over-year surge of 437.1%. In 2021, the office’s revenue from over-the-counter and institutional client counterparty trading surged by 5,802.73% year over year. Looking ahead to the second half, Guolian Securities stated that its equity investment business will focus on deploying capital across medium- and long-term opportunities, further selecting high‑growth individual stocks and employing strategic investment vehicles such as private placements and convertible bonds. At the same time, the company will flexibly leverage position adjustments and futures hedging to strike a balance between risk and return, ensuring a prudent approach to its equity investment activities.
Zheng Jisha, Chief Analyst for the Non-Bank Financials sector at China Merchants Securities, stated, “In the derivatives business, Guolian Securities has maintained robust trading activity and expanded its product offerings, which has positively mitigated earnings volatility. In the 2022 securities office classification assessment, the company was rated A, a two-tier improvement from last year, and is steadily advancing toward obtaining primary dealer status.”
The top 10 leading offices account for nearly 60% of industry profits, with brokerage‑affiliated public funds leading the entire sector.
With the release of their interim reports now complete, public fund management companies have officially unveiled their first-half performance results.
Overall, a total of 64 public mutual funds across the industry disclosed their first-half operating results, with combined net profits of approximately RMB 19.471 billion. Among them, securities‑office‑affiliated funds delivered the strongest performance, leading the sector: five top-tier offices—including E Fund Management, Fullgoal Fund Management, and China Asset Management—each reported first-half net profits exceeding RMB 1 billion, while smaller and mid-sized securities‑office‑affiliated fund managers such as CICC Fund, Zhejiang Commercial Fund, and Western Asset Management saw their net profits double year over year.
Overall, amid the market’s pronounced volatility in the first half of the year, fund companies’ net profits were broadly under pressure. While some small and mid-sized public‑fund managers posted rapid growth, the bulk of earnings remained concentrated among the industry’s leading offices, further intensifying the “Matthew effect” in the fund sector.
Securities‑office‑affiliated public funds take the lead.
Among fund companies across various factions, securities‑office‑affiliated public funds have generally posted exceptionally strong performance. Not only do industry leaders such as E Fund Management, Fullgoal Fund Management, and China Asset Management maintain a commanding lead, but five securities‑office‑backed public funds all reported first‑half net profits exceeding RMB 1 billion. Meanwhile, smaller and midsize offices like CICC Fund, Zhejiang Commercial Fund, and Western Asset Management have also surged ahead, with net profits doubling year over year.
Specifically, among the top ten fund companies by net profit in the first half of the year, eight are public funds affiliated with securities offices, including E Fund Management—participated in by GF Securities and controlled by GF Fund Management; Fullgoal Fund, in which Haitong Securities holds a stake; China Asset Management, controlled by CITIC Securities; Huitianfu Fund, in which Orient Securities has an equity interest; and Xingzheng Global Fund, controlled by Industrial Securities, among others.
For example, E Fund Management, in which GF Securities holds a 22.65% stake, reported operating revenue of RMB 6.831 billion and net profit of RMB 1.726 billion in the first half of this year, ranking first in the industry for both metrics. Meanwhile, GF Fund, a subsidiary controlled by GF Securities, posted operating revenue of RMB 3.932 billion and net profit of RMB 1.002 billion in the same period; its operating revenue was second only to E Fund, while its net profit placed it sixth in the industry.
China Securities’ wholly owned subsidiary, China Asset Management Co., Ltd., posted solid financial results in the first half of the year. Its operating revenue reached RMB 3.633 billion, down slightly by 0.52% year on year, while net profit stood at RMB 1.058 billion, up 0.86% compared with the same period last year, ranking fifth across the industry. In its interim report, China Securities also devoted considerable space to expressing its strong endorsement of China Asset Management.
In addition to the top-ranked leading public fund managers, several smaller brokerage‑affiliated public funds also stood out in the first half of this year, posting strong growth in both revenue and net profit.
For example, CICC Fund, a wholly owned subsidiary of CICC, reported operating revenue of RMB 142 million in the first half of this year, up 30.93% year over year; its net profit reached RMB 29.27 million, a substantial year-on-year increase of 218.85%, making it the company with the fastest growth in net profit across the entire industry.
The Matthew effect in the industry is intensifying.
It is worth noting that, amid significant market volatility in the first half of the year, fund companies’ net profits were broadly under pressure.
According to Wind data, among the 64 fund companies that have disclosed their first-half operating results, 29 reported negative year-on-year growth in net profit, accounting for nearly half. Small and mid-sized fund offices were hit particularly hard: Hongta Hongtu Fund, Dongwu Fund, Guojin Fund, Xinyuan Fund, and others all saw their net profits plunge by more than 50 percent. Hongta Hongtu Fund’s net profit for the first half of the year was approximately RMB 212,300, a 97.33% drop from RMB 7.95 million in the same period last year.
Against the backdrop of a widespread decline in net profits, several fund management offices—including Jiangxin Fund, Donghai Fund, Nanhua Fund, Fuan Da Fund, and Jiutai Fund—reported losses. Notably, Jiangxin Fund posted a net loss of RMB 24.96 million in the first half of the year, ranking last among all fund companies that have disclosed their financial results.
Some smaller and mid-sized fund companies, such as Fuan Da Fund and Jiutai Fund, have also seen their net profits turn from positive to negative. In the first half of this year, Fuan Da Fund and Jiutai Fund posted losses of RMB 14.4 million and RMB 17.48 million, respectively, whereas in the same period last year, their respective net profits stood at RMB 47.65 million and RMB 24.87 million.
An industry insider at a fund management office noted that the first half of the year saw significant market volatility and a sluggish fundraising environment, leading to a contraction in the assets under management (AUM) of many funds and, consequently, a decline in management fee income. In addition, equity funds held on the offices’ own balance sheets experienced substantial net‑asset‑value declines, further weighing on their bottom-line profits.
Although some small and medium-sized offices have achieved rapid growth, it must be acknowledged that the bulk of public‑fund industry profits remains concentrated among the leading players, with the sector’s “Matthew effect” growing ever more pronounced.
According to Wind data, the 64 fund management companies that have disclosed their first-half operating results reported combined net profits of RMB 19.471 billion. Among them, the top ten offices accounted for RMB 11.056 billion in net profit, representing roughly 57% of the total and more than half of the industry’s earnings.
“Leading offices exhibit stronger risk resilience because they boast more diversified product lines and a broader range of revenue streams, whereas many smaller and mid-sized fund managers rely on relatively narrow product offerings, making them more vulnerable to market volatility,” the aforementioned source analyzed.
Several funds have emerged as performance “dark horses.”
In the first half of the year, when fund companies’ net profits were under widespread pressure, some managed to capitalize on structural market trends and posted substantial gains in net profit. These “dark-horse” offices either focused on fixed-income products or saw their equity‑oriented offerings align with prevailing market themes and deliver outperformance, driving significant growth in assets under management.
For example, among fund companies with net profits exceeding RMB 800 million, China Merchants Fund led the pack with a 21.68% growth rate in net profit, delivering exceptionally strong performance. Industry insiders attribute this to the company’s heavy reliance on fixed-income products. Reportedly, over the past year, China Merchants Fund has significantly ramped up its efforts in the fixed-income space, resulting in a substantial expansion of related product assets and a major boost to the office’s profitability.
Among fund companies with net profits exceeding RMB 100 million, SDIC‑UBS Fund, Caitong Fund, and Dacheng Fund all posted first-half net profit growth rates of more than 50%.
Among them, SDIC UBS Fund reported consolidated net profit of RMB 190 million in the first half of 2022, up 71% year over year. Revenue from public‑fund management fees reached RMB 492 million, a 51% increase compared with the same period last year. This performance may be linked to the office’s strategic positioning in equity‑focused products, which aligns with this year’s prevailing market trends. In its interim report, SDIC UBS Fund’s shareholder, SDIC Capital, highlighted that new energy and defense industries constitute the fund’s core competency areas, with thematic products targeting growth sectors such as new energy, defense, and advanced manufacturing now totaling over RMB 27 billion in assets under management. For example, the SDIC UBS New Energy Fund, managed by Shi Cheng, stood at RMB 9.093 billion at the end of the second quarter—more than tenfold higher than a year earlier—and his personal AUM surged from RMB 3.852 billion at the end of the first half of last year to RMB 24.716 billion at the end of the first half of this year.
Additionally, according to Everbright Securities’ semi-annual report, as of June 30, 2022, Dacheng Fund posted a net profit of RMB 271 million for the first half of 2022, up 53.55% year over year. Over the past two years, equity fund managers under Dacheng Fund have also delivered notably strong performance; take Han Chuang, who finished third in the equity category in 2021, as an example: his AUM stood just above RMB 10 billion at the end of June last year, but by the end of the second quarter this year, it had surged to nearly RMB 30 billion.
Investment banking net revenues edged down, with six securities offices capturing nearly 60% of the market share.
In the first half of this year, 41 listed securities offices collectively generated net underwriting and sponsorship fees totaling RMB 25.909 billion, a 2.5% year-on-year decline. The “Matthew effect” in the investment banking sector has further intensified: amid an overall industry revenue contraction, three of the top five offices posted year-on-year growth in the first half. Among the 41 offices, six reported net investment banking revenues exceeding RMB 1 billion, accounting for a combined RMB 15.165 billion and capturing a market share of 58.53%.
Leading securities offices remain officely at the top.
Based on net revenue from investment banking, CITIC Securities, CSC Financial, and CICC ranked first, second, and third, respectively, generating RMB 3.453 billion, RMB 2.832 billion, and RMB 2.681 billion in the first half of the year. Haitong Securities, Guotai Junan, and Huatai Securities took fourth through sixth place, with RMB 2.435 billion, RMB 2.074 billion, and RMB 1.691 billion, respectively. Orient Securities rounded out the top seven with RMB 859 million.
In terms of growth rate, the leading securities offices in the industry generally posted increases in their investment banking net revenues, with CITIC Securities reporting a year-on-year rise of 44.5% and Guotai Junan recording a 22.53% year-on-year gain. Among the top ten offices, Everbright Securities and China Merchants Securities experienced more pronounced declines, both falling by over 15% year on year.
Tianfeng and Guolian posted relatively high growth rates.
Among securities offices ranked outside the top ten in investment banking revenue, Tianfeng Securities, Guolian Securities, and Dongxing Securities posted robust growth in their investment banking net revenues during the first half of the year, reporting RMB 562 million, RMB 245 million, and RMB 570 million, respectively, with year-on-year increases of 53.79%, 44.55%, and 41.55%.
The substantial increase in IPO underwriting and sponsorship fees is the primary driver behind the sharp growth in investment banking revenues at these mid- and small-sized securities offices. In March this year, Tengyuan Cobalt, sponsored by Dongxing Securities, launched its IPO on the ChiNext board, raising RMB 5.478 billion—the largest IPO fundraising deal on the ChiNext market in the first half of the year. Meanwhile, Guolian Securities conducts its investment banking business through its wholly owned subsidiary, Huaying Securities; in the first half, Huaying completed one IPO, with an underwriting value of RMB 1.038 billion, ranking 29th across the industry.
Tianfeng Securities has delivered strong performance in its bond‑underwriting business. According to data, in the first half of the year, the office underwrote bonds totaling RMB 17.46 billion, up 116.63% year over year, and handled 30 bond issues, a 66.67% increase from the same period last year. Both the total underwriting value and the number of issues underwritten ranked first in the industry.
Fifty percent of securities offices reported a decline in investment banking revenue.
In the first half of the year, the securities industry recorded net revenue of RMB 26.771 billion from securities underwriting and sponsorship, essentially unchanged from the same period last year. Among the 41 listed securities offices, more than half saw a decline in their investment banking net revenue, with 11 offices experiencing drops exceeding 40%.
In the first half of the year, on the equity‑financing front, A‑share IPOs raised a cumulative RMB 311.922 billion, up 45.78% year over year; equity secondary offerings (excluding exchangeable bonds) totaled RMB 398.117 billion, down 28.04% from the same period last year. In the debt‑financing arena, bond issuance slowed compared with previous years, with credit‑bond issuance slightly lower than in the same period last year. Cumulative issuance of corporate and enterprise bonds reached RMB 1.73 trillion, a year‑on‑year decline of 8.41%, as issuance of lower‑rated bonds decelerated markedly.
An investment banking professional at a brokerage office in East China noted that while the scale of IPO issuances surged in the first half of the year, the number of offerings declined, with leading investment banks enjoying a distinct advantage in handling large‑scale deals. Meanwhile, competition in the bond market remains fierce, and as issuance activity has slowed, market concentration has continued to rise.
According to a research report by CITIC Securities, as brokerage offices have been releasing their interim reports one after another, negative factors affecting earnings have largely been priced in. The report expects that the primary sources of growth in the second half will be brokerage and investment banking businesses. In the investment banking segment, with the ongoing advancement of the registration-based IPO system, IPOs and secondary financings have become routine, and the pace of issuance has accelerated significantly. Meanwhile, the momentum of the new economy is providing room for an upturn in investment banking activity.
Performance among listed securities offices is diverging, with proprietary trading revenue emerging as the decisive factor.
As the revenue mix of securities offices continues to improve, investment capability has become a key metric for assessing their overall strength. In the first half of the year, heightened volatility in equity markets significantly weighed on proprietary trading; offices that effectively leveraged derivatives to manage risk delivered stronger performance in this area. Among listed securities offices and their parent companies with comparable data, only seven reported growth in proprietary‑trading revenues, with the most substantial gains coming from mid- and small‑cap players. China Securities, Founder Securities, and East Money Information ranked first, second, and third, with year‑to‑date increases of 78.37%, 69.91%, and 56.55%, respectively.
The 2022 interim reports of listed securities offices have been fully disclosed, revealing stark performance disparities among companies, with proprietary trading emerging as a key determinant of results.
According to the semi-annual report, securities offices’ proprietary trading businesses performed poorly overall in the first half of the year, with only seven offices posting positive revenue growth. Among them, Bank of China Securities, Founder Securities, and East Money Information recorded year-on-year gains of 78.37%, 69.91%, and 56.55%, respectively, ranking in the top three. For those offices that delivered relatively strong proprietary‑trading results in the first half, a key trend has been a shift toward de‑directionalization and diversified trading strategies.
In addition, the stocks heavily held by securities offices’ proprietary trading desks have come to light. Overall, during the second-quarter rotation of individual stocks, these proprietary accounts favored shares in sectors such as information technology, pharmaceuticals and biotechnology, and agriculture, forestry, animal husbandry, and fisheries.
BOC Securities posted the largest increase in proprietary trading revenue.
As the revenue mix of securities offices continues to improve, investment capability has become a key metric for assessing their overall strength. Overall, in the first half of the year, proprietary trading revenues declined sharply year over year. According to data from the China Securities Industry Association, among securities offices’ main business revenues in the first half, investment‑related income—including gains and losses arising from changes in fair value—fell markedly, with a decline of 38.41%.
Using the formula “Investment income – Investment income from associates and joint ventures + Net gain from changes in fair value,” we calculated the proprietary‑trading revenues of each brokerage office. In the first half of the year, the top three were CITIC Securities, CICC, and SW China Securities. Among them, CITIC Securities led the industry with proprietary‑trading revenue of RMB 9.462 billion, down 17.21% year over year; CICC and SW China Securities reported RMB 5.045 billion and RMB 4.381 billion, respectively, representing year‑on‑year declines of 38.21% and 5.48%.
In terms of growth, among listed securities offices or their parent companies with comparable data, only seven reported positive year-on-year growth in proprietary trading revenue. The strongest gains were led by mid- and small-sized offices, with Bank of China Securities, Founder Securities, and East Money Information posting increases of 78.37%, 69.91%, and 56.55%, respectively, ranking first, second, and third.
The proprietary trading business is shifting toward diversified trading.
As evidenced by proprietary‑trading data, securities offices have posted varying returns, reflecting their differing market outlooks and proprietary investment strategies.
In the first half of the year, heightened volatility in equity markets significantly weighed on securities offices’ proprietary trading businesses; those that effectively leveraged derivatives to manage risk delivered stronger performance. For instance, China Securities’ proprietary‑trading revenue surged largely due to higher investment gains from trading‑type financial assets. The office noted that during the first half, it continued to strengthen its investment‑research framework, actively explored low‑volatility profit‑generation models, steadily advanced its transition to a diversified investment‑management approach, and intensified the development and deployment of non‑directional investment strategies.
In the first half of the year, Guolian Securities achieved counter‑trend growth in its proprietary trading business, primarily driven by an increase in unrealized gains on derivative financial instruments. The company stated that in the second half, its equity investment operations will focus on deploying capital across medium- and long-term opportunities, further selecting high‑growth individual stocks and complementing this with strategic investment vehicles such as private placements and convertible bonds. At the same time, it will flexibly employ position‑adjustment measures and futures hedging to strike a balance between risk and return, thereby pursuing a prudent approach to equity investing.
Liu Jiawei, chief analyst for the non‑bank financial sector at Dongxing Securities, stated that securities offices’ proprietary capital investments continue to expand, and proprietary investment income—covering areas such as active investment exposure, co‑investment in investment banking projects, market‑making activities, and derivatives—has become a key driver of their performance. For leading securities offices that have achieved more balanced asset allocation, deepened their presence in the OTC derivatives market, and boast top‑tier investment teams along with robust risk‑hedging capabilities, their investment outcomes are particularly promising.
In the second quarter, securities offices newly invested in 290 individual stocks.
Recent data from Choice show that in the second quarter of this year, brokerage offices newly established positions in 290 individual stocks. Among them, Gree Electric Appliances topped the list in terms of the market value of brokerage holdings, with a total of RMB 1.46 billion, and CITIC Securities became one of its top ten circulating shareholders through a new entry.
The top three stocks seeing the largest increases in holdings by brokerage offices were Shanghai RAAS, Guangzhou Port, and Huaxia Happiness. In the second quarter, CITIC Securities increased its stake in Shanghai RAAS by 111 million shares, even as the stock’s price fell 1%; Anxin Securities boosted its position in Guangzhou Port by 60.98 million shares, with the stock rising 15.58% during the quarter, thereby bolstering Anxin’s second-quarter investment gains; meanwhile, CITIC Securities added 54.42 million shares of Huaxia Happiness, though the stock declined 16.45% over the same period.
According to Choice data, excluding stocks that have gone public since July of this year, the top-performing stock among brokerage offices is Hechuan Technology, which posted a second-quarter gain of 118.09%. Both CITIC Securities and Huatai Securities slightly increased their holdings in Hechuan Technology during the second quarter.
Commercial & Corporate
Listed companies delivered a strong performance in the “mid-year exam”: The combined revenue of 4,825 companies totaled RMB 34.54 trillion, up 9.24% year on year.
In the face of severe and volatile domestic and international challenges, listed companies posted counter‑trend growth in their overall operating performance during the first half of this year, with steadily improving quality of development, thereby officely anchoring the economy’s fundamentals and underscoring the capital market’s robust resilience and dynamism.
According to data from the China Association of Public Companies, as of August 31, 4,825 listed companies on the Shanghai, Shenzhen, and Beijing stock exchanges had disclosed their 2022 interim reports (based on companies that were listed as of June 30, 2022). In the first half of the year, these 4,825 companies reported total operating revenue of RMB 34.54 trillion and net profit of RMB 3.25 trillion, up 9.24% and 3.19%, respectively, year over year.
“Overall, in the first half of the year, listed companies’ performance mirrored GDP growth, with both operating revenue and net profit expanding at rates significantly outpacing the corresponding GDP growth rate, underscoring the robust momentum of high-quality development among listed offices,” said Zhang Ping, a member of the Academic Advisory Committee of the China Association for Public Companies and Director of the Listed Companies Research Center at the Chinese Academy of Social Sciences.
The growth rate of real-sector enterprises has accelerated significantly.
Demonstrating a positive trend of shifting from the virtual to the real economy.
Market analysts believe that second-quarter earnings broadly exceeded market expectations, underscoring the strong competitive edge and robust growth resilience of listed companies as industry leaders.
“In the first half of 2022, listed companies continued to post revenue growth and increased capital expenditures, laying a solid foundation for their future development. At the same time, absolute measures of profitability kept rising, net cash flow from operating activities improved somewhat, while certain relative indicators experienced a slight pullback due to the pandemic,” said Cheng Fengchao, a member of the Academic Advisory Committee of the China Association of Public Companies and President of the Zhongguancun Guorui Financial and Industrial Research Association.
Specifically, non-financial listed companies reported total operating revenue and net profit of RMB 29.23 trillion and RMB 1.95 trillion, up 10.89% and 4.55% year on year, respectively. Since the first quarter of 2021, the revenue growth rate of real‑economy enterprises has consistently outpaced that of financial institutions, reflecting a favorable trend of China’s economy shifting from the virtual to the real sector.
“In the first half of the year, overall market leverage continued to decline. Based on data from 2020 through mid-2022, the aggregate debt-to-asset ratio of non-financial listed companies has fallen year over year, reflecting a pronounced deleveraging effect,” said Cheng Fengchao. However, he noted that short-term debt-servicing pressures have risen slightly, with industries closely tied to household consumption—such as real estate, accommodation and catering, and agriculture, forestry, animal husbandry, and fisheries—generally facing liquidity constraints and heightened repayment risks.
By sector, disparities are pronounced. Listed companies in coal, oil and gas, basic chemicals, battery‑material, and photovoltaic‑new‑energy industries have posted robust earnings growth, while offices in aviation, catering, and tourism remain mired in difficulty, weighed down by recurring COVID‑19 outbreaks and persistently high raw‑material prices.
Benefiting from the State Council’s comprehensive package of policies and measures to stabilize the economy, listed companies received tax and fee refunds totaling RMB 468.9 billion in the first half of the year, a year-on-year increase of 162%. Under these favorable policy measures, the cash flow of listed companies has improved, which is expected to have a positive impact on their performance in the second half of the year.
The registration-based system has boosted sector vitality.
The market’s “technology content” has increased significantly.
By sector, main‑board listed companies on the Shanghai and Shenzhen stock exchanges have seen steady growth in revenue, cash flow, and other key metrics, with further improvements in earnings quality and a pronounced “leading‑office” effect. According to data from the China Association of Public Companies, the top 200 main‑board offices account for 72% of total revenue and 85% of total net profit. To date, 102 listed companies have announced interim cash‑dividend plans, with total cash payouts exceeding RMB 170 billion, reflecting a growing market consensus on actively rewarding investors.
“The performance of main‑board listed companies in Shanghai and Shenzhen is showing a steady, improving trend. Particularly amid a slowdown in the real economy, these companies have demonstrated strong resilience, robust growth momentum, ample cash flow, and stable leverage ratios, thereby providing solid support to the broader economy,” said Xie Chenyang, Deputy General Manager and Chief Legal Officer of Foxconn Industrial Internet.
Under the registration-based system, the ChiNext, the STAR Market, and the Beijing Stock Exchange have attracted a large number of innovative and entrepreneurial companies, significantly boosting the markets’ “tech content” and “innovation content.”
According to data from the China Association of Public Companies, in the first half of this year, the ChiNext, STAR Market, and Beijing Stock Exchange together added 139 new listed companies, accounting for 82% of the total number of new listings in the period. On average, listed companies’ R&D expenditures represented 1.69% of their revenue, with R&D intensity standing at 8.62%, 4.82%, and 4.58% for the STAR Market, ChiNext, and Beijing Stock Exchange, respectively. The computer, biotechnology, and high-end equipment manufacturing sectors led in R&D intensity, at 10.29%, 10.10%, and 6.84%, respectively.
Zhang Ping believes that, in the first half of this year, listed companies broadly increased their R&D spending, thereby fostering technological innovation. At the same time, they strengthened their disclosure of sustainability-related information, with a growing number of ESG reports, and accelerated their transition toward green development—features that underscore the high‑quality growth trajectory of listed offices.
In addition, during the first half of this year, the number of delisted companies reached a new historical high, accelerating the development of an orderly market ecosystem characterized by both entry and exit. Stock pledge risks were significantly alleviated, and troubled offices were handled in a prudent and well‑managed manner. Refinancing channels have become more accessible, while mergers and acquisitions and restructuring have helped companies enhance their competitiveness and strengthen their fundamentals. The number of companies implementing equity incentives, employee stock ownership plans, and share buybacks has risen markedly. A sound securities market environment—underpinned by respect for the law, integrity, regulatory transparency, and openness and inclusiveness—is steadily taking shape.
Vanke’s first-half revenue rose 23.82% year over year, with improved performance attributed to its focus on delivering high-quality profits.
On the morning of August 31, Vanke held its 2022 interim results conference.
Amid the industry’s challenging times, Vanke Chairman Yu Liang has remained unfazed. At the earnings call, he shared his views on the market and the recent hot‑button issue of “ensuring project delivery,” while also outlining Vanke’s strategies for navigating the sector’s volatility.
Yu Liang stated that after a market contraction, spontaneous momentum for recovery will build up. Vanke places safety above all else; at this juncture, the industry’s top priority is to find ways to generate heat and sustain operations—without doing so, survival during the winter will be jeopardized.
Believe in the market’s self‑healing capacity.
Based on Vanke’s first-half operating results, the company reported revenue of RMB 206.916 billion, up 23.82% year over year, and net profit attributable to shareholders of RMB 12.223 billion, a 10.64% increase compared with the same period last year. Compared with its previously set targets for the first half, Vanke’s outlook on the future market has drawn particular attention from outside observers.
At the earnings call, Yu Liang reiterated his assessment, first voiced at Vanke’s 2021 Annual General Meeting on June 28, that the market is currently in a bottoming-out phase. He noted that current transaction volumes remain subdued but are unlikely to stay at this level indefinitely. Core housing demand remains robust, and the real estate market continues to be a trillion‑yuan‑scale industry. “Housing inherently requires replacement; at the current rate of natural turnover, the existing housing stock would need to shed 1 billion to 1.1 billion square meters annually, with first- and second-tier cities accounting for roughly 300 million square meters. Given the current decline in new construction starts, this year’s supply of newly built homes still falls short of what’s needed to meet that natural replacement demand—this figure does not even factor in improvements in living standards or population agglomeration.”
Yu Liang believes that when the market contracts excessively, it can in turn build up momentum for spontaneous recovery, and we should trust in residents’ drive to pursue a better life and improve their living conditions.
Regarding the second-half market, Zhu Jiusheng, President and CEO of Vanke Group, stated that he is confident the company’s sales performance in the second half will outpace that of the first half. “There are four main reasons: first, we believe the market will see an overall recovery; second, the company will adjust its sales incentive policies; third, we are currently consolidating our internal sales resources; and fourth, we will strengthen efforts to enhance and train our sales capabilities.”
We are confident that the market will halt its decline and stabilize going forward.
Amid a downturn in the real estate market and the frequent emergence of financially troubled developers, safety has undoubtedly become one of the market’s primary concerns.
“Vanke has always placed great emphasis on cash flow and financial soundness, consistently prioritizing safety—this is a principle we have steadfastly upheld,” said Yu Liang.
The semi-annual report shows that in the first half of the year, Vanke generated net cash flow from operating activities of RMB 8.288 billion, up 22.21% year over year. As of the end of June, the company’s outstanding borrowings had a weighted average financing cost of 4.08%, with new financing issued in the first half of the year carrying a cost of 3.59%.
Speaking on the recent hot topic of “ensuring project delivery,” Yu Liang revealed that in the first half of the year, Vanke smoothly delivered 115,000 residential units. To date, 70% of prospective homeowners have visited the construction site at least once to inspect their units before formal handover. Vanke is committed not only to delivering on time but also to delivering with quality.
“This year’s work objective is to halt the decline, stabilize the situation, and achieve steady improvement,” Yu Liang said when assessing the first-half results. He added that as long as the company delivers high‑quality products and services, it can weather even short‑term market headwinds.
Based on second-quarter results, Vanke reported net profit attributable to shareholders of RMB 10.794 billion, up 10.65% year over year, nearly matching the level of the same period in 2020 and signaling a recovery trend. On the operational services front, Vanke also delivered encouraging news: in the first half of this year, its property management platform, Wanwu Cloud, generated operating revenue of RMB 14.35 billion—including revenue from services provided to Vanke Group—up 38.2% year over year.
“Vanke’s improved performance is attributable to its strong execution, well-targeted strategies, and its commitment to generating high-quality profits,” said Chen Sheng, director of the China Real Estate Data Institute.
Yu Liang acknowledged that, amid the current external environment, Vanke faces pressure and some of its operational metrics have fallen short of expectations. Nevertheless, the company has remained committed to maintaining a fundamental balance and sound health in its operations, addressing challenges as they arise and strengthening its weaker areas. By staying on a steady course of progress, Vanke remains confident that it can reverse the downward trend, stabilize its performance, and achieve gradual improvement going forward.
China National Heavy Duty Truck Group has advanced against the trend, securing the top spot in both heavy-truck sales and market share for the first half of the year.
On August 31, China National Heavy Duty Truck Group Co., Ltd. (3808.HK) announced its results for the first half of 2022. During the reporting period, the company recorded revenue of RMB 29.03 billion, down 55% year over year, and net profit attributable to shareholders of RMB 1.28 billion, a 65% decline from the same period last year. Despite the overall weakness in China’s heavy-truck sector in the first half, the company achieved, for the first time in nearly a decade, the dual leadership in both heavy-truck sales volume and market share, successfully climbing higher amid industry headwinds.
Meanwhile, several of the company’s financial metrics have improved. The company’s debt-to-asset ratio stands at 58%, down 7.8 percentage points year over year, reflecting an increasingly optimized asset structure. Cash flow remains robust, with net cash inflow from operating activities in the first half up 524% compared with the same period last year. Gross margin expanded by 0.3 percentage points year over year, indicating enhanced product profitability.
In the first half of this year, the commercial vehicle sector faced significant external headwinds. According to data from the China Association of Automobile Manufacturers, heavy-duty truck sales totaled approximately 380,000 units in the first six months, down 63.6% year on year. However, Sinotruk delivered a standout performance, with cumulative heavy-duty truck sales reaching 88,700 units in the first half—placing it officely at the top of the industry. Its market share continued to expand, rising from 16.3% in 2019 to 23.3% in the first half of this year, an increase of 7 percentage points.
The company has achieved strong sales performance, thanks to its commitment to a development model that fosters mutual reinforcement between domestic and international dual circulation.
In the international market, the company has maintained its longstanding export leadership, consistently ranking first in industry export sales over the past 17 years—a position it has reafofficeed this year. In the first half of 2023, the company’s heavy‑truck exports reached 39,700 units, up 41.8% year on year, marking a new record for the same period and cementing its top spot in China’s heavy‑truck sector. According to the company, it has seized opportunities arising from economic recovery, strengthened its foothold in traditional key markets such as Africa and Southeast Asia, and accelerated expansion into premium markets in Europe and North America. At the same time, it has systematically upgraded its export product mix, with mid- to high‑end offerings experiencing a doubling in volume.
In the domestic market, the company has further optimized its product mix and achieved notable progress in key niche segments and in developing major accounts. In the truck segment, leveraging its differentiated product advantages, the company has deepened its presence in specialized markets such as green‑transport, cold‑chain, and express delivery, capturing a 15.5% market share—up 5.6 percentage points year over year. In the tractor‑truck segment, the company has continued to reduce fuel consumption and curb vehicle weight; its market share for models above 500 horsepower surged from 18% in 2021 to 31.7%, securing the top position in the industry. Notably, the Shandeka series of tractors is positioned as China’s premier high‑end brand in the logistics sector, consistently leading the premium segment on long‑haul trunk routes. The C9H diesel tractor has broken new ground in the 550‑horsepower‑and‑above segment, while the G7 AMT model ranks among the industry’s top sellers. In the special‑purpose vehicle market, the company has achieved full coverage across all model lines, with market shares rising in 12 out of 14 sub‑segments. In the concrete mixer truck segment, the company has continually expanded its product portfolio, strengthened strategic partnerships for mixer‑truck conversions, and maintained its industry‑leading position.
Looking ahead to the future trajectory of the heavy‑truck industry, China National Heavy Duty Truck Group expects demand to gradually recover in the second half of the year. The company believes that as the economic outlook stabilizes and improves, freight‑transport demand will grow steadily; front‑loaded infrastructure investment will boost demand for engineering‑type heavy trucks; rising consumption of major durable goods such as automobiles and home appliances will strengthen demand for logistics‑oriented heavy trucks; and increasingly stringent source‑level regulation—particularly on overloading and axle‑load limits—will drive greater demand for lightweighting solutions, generating replacement‑related incremental sales. Moreover, the introduction of the “dual carbon” strategy presents new opportunities for the sector: new‑energy vehicles and intelligent connected cars are poised to become hallmark, industry‑leading products of the next wave of technological and industrial transformation, with the penetration rate of new‑energy commercial vehicles continuing to rise.
The company stated that in the second half of the year, it will continue to strengthen its position in core markets, accelerate breakthroughs in underperforming segments, and seize opportunities arising from economic recovery and growing demand for infrastructure projects. It will consolidate its leadership in the dump truck and concrete mixer truck markets while further expanding into various niche segments. At the same time, the company will maintain robust R&D investment to drive breakthroughs in emerging technologies such as new energy, vehicle connectivity, and intelligent driving. Focusing on key application scenarios—including port operations, steel mills, construction waste transport, cement mixing, municipal sanitation, and urban delivery logistics—the company will develop tailored solutions, enhance the core competitiveness of its full‑range new‑energy vehicles, expedite commercialization, and unlock new growth drivers.
In the export business, the company will seize opportunities in overseas markets, focus on key national markets, and develop vehicle models tailored to niche segments such as cargo trucks, high-end dump trucks, and medium- to long-haul tractor units, thereby further increasing its market share in international markets.
Several listed companies’ directors, supervisors, and senior executives have declared in their interim reports that the information “may not be accurate,” leaving troubled offices unable to escape scrutiny.
Periodic reports are a crucial source of information for investors assessing the investment value of listed companies and serve as an important basis for making investment decisions. On August 31, as the concentrated disclosure of 2022 interim reports by listed companies drew to a close, directors, supervisors, and senior management at numerous offices successively issued statements indicating that they could not guarantee the truthfulness, accuracy, or completeness of the contents of the 2022 interim reports.
The reasons vary. In the 2021 annual report, non‑standard audit opinions were issued due to matters that had not yet been fully resolved; concerns about the reliability of the 2022 interim report; an inability to accurately assess the company’s operational and financial risks; pending conclusions from ongoing investigations; insufficient time allotted for reviewing the interim report; and the absence of certain directors and supervisors from board meetings at which the interim report was voted on—these are all factors cited by directors, supervisors, and senior management as reasons for their “no assurance” stance on the interim report.
“As regulatory scrutiny of listed companies continues to tighten, issuing a disclaimer regarding the reliability of periodic reports has become a risk‑mitigation strategy adopted by directors, supervisors, and senior executives,” said a relevant expert from the National Accounting Institute in Shanghai. “What needs to be assessed is whether the reasons cited by these officers for being unable to guarantee the truthfulness, accuracy, and completeness of the report’s contents are reasonable and justifiable.”
Legacy issues remain unresolved.
On August 31, in its 2022 semi-annual report, *ST Furen disclosed that Director Jiang Zhihua noted that, owing to the auditor’s disclaimer of opinion on the company’s 2021 annual report, the issues underlying that disclaimer remain unresolved and uncorrected, and the company’s financial data, which has remained unchanged since then, has not been adjusted accordingly. Furthermore, the auditor identified material weaknesses in the company’s 2021 internal control audit report, which have yet to be remedied, leaving the associated risks unabated. In addition, despite repeated efforts, the company has been unable to obtain sufficient and appropriate evidence to verify the authenticity, accuracy, and completeness of the financial data and accounts referenced in the relevant proposals. Consequently, the company cannot assure the truthfulness, accuracy, or completeness of the information contained in the report.
On August 29, *ST Shunli issued an announcement stating that its independent directors, Lü Wei and Zhang Qi, have learned that the matters underlying the non‑standard opinions cited in the company’s 2021 Annual Report, the “2021 Internal Control Self‑Assessment Report,” and the “2021 Internal Control Audit Report” prepared by Dixin Certified Public Accountants (Special General Partnership) remain unresolved. Consequently, they are unable to assure the truthfulness, accuracy, and completeness of the contents of the company’s 2022 interim report.
In addition, certain independent directors of the company have stated that, owing to the fact that the company is under investigation by the China Securities Regulatory Commission for alleged violations of laws and regulations in its information disclosure, and is also subject to economic investigations by the public security authorities, they cannot guarantee the truthfulness, accuracy, or completeness of the contents of the 2022 interim report.
The aforementioned expert at the National Accounting Institute in Shanghai argues that, first, when directors, supervisors, and senior management fail to ensure the accuracy of periodic reports, it draws the attention of regulatory authorities. Such a signal often triggers heightened oversight of the listed company—through inquiry letters or regulatory investigations—and can also affect its credit rating. Moreover, for investors, this situation undermines their ability to assess the company’s operational performance. As insiders, if even the board members and senior executives do not uphold accuracy, external investors have no basis for making informed judgments.
Xing Xing, Director of the Bosheng Securities Research Institute and Chief Investment Advisor, stated that the fact that directors, supervisors, and senior executives at numerous companies have disclaimed responsibility for the accuracy of periodic reports reflects a growing sense of caution among them. This trend is driven, on the one hand, by regulators’ stringent enforcement against violations by listed companies, and, on the other, by high-profile cases such as the joint liability imposed on independent directors at Kangmei Pharmaceutical. After all, diligent performance of duties by directors, supervisors, and senior executives is a fundamental requirement for enhancing the quality of listed companies and safeguarding the legitimate rights and interests of investors.
The internal control system and reporting procedures are inadequate.
On August 19, Hi‑Sight Technology issued an announcement stating that Director Sun Jiugang did not attend the board meeting and therefore could not certify that the company’s 2022 interim report and summary were true, accurate, and complete, nor could he conoffice that there were no false entries, misleading statements, or material omissions. Just four days after the announcement was released, on August 23, Sun Jiugang submitted his resignation from his positions as a director of Hi‑Sight Technology and other related roles, citing personal reasons.
In addition, Chen Datong, a supervisor of Beijing Junzheng Co., Ltd., likewise cited his absence from the supervisory board meeting as grounds for being unable to certify the truthfulness, accuracy, and completeness of the contents of the 2022 semi-annual report.
The aforementioned expert from the National Accounting Institute in Shanghai stated, “Claiming that absence from a meeting constitutes an untenable excuse for directors, supervisors, and senior executives to disclaim responsibility for the truthfulness, accuracy, and completeness of periodic reports is far-fetched. If one disagrees with a proposal, they may express their position by casting a dissenting or abstention vote, rather than citing absence as a justification.” Xing Xing similarly argued, “In accordance with relevant regulations, it is not permissible to avoid voting on the semi-annual report on procedural grounds such as failing to attend board or supervisory board meetings. A clear stance must be taken—whether in favor, against, or abstaining.”
In addition to recusing themselves from voting on periodic reports by abstaining from board and supervisory board meetings, some directors and supervisors have also refused to certify the accuracy of such reports due to concerns about day-to-day operations and internal controls.
On August 30, ST Sansheng issued an announcement stating that its director, Li Lin, and supervisor, Xiong Yan, do not participate in the company’s day-to-day operations and management, have raised concerns regarding the company’s receivables and provisions for asset impairments, and noted that the measures taken to address illegal guarantees were insufficient, making it impossible to accurately assess the risks associated with the company’s operational and financial management. Consequently, the company cannot guarantee the truthfulness, accuracy, or completeness of the contents of its 2022 semi-annual report.
On the same day, *ST Xifa announced that five individuals—Directors Zhou Wenkun and Feng Yongming, Supervisors Wang Qiang and Wang Xi, and Secretary of the Board Mou Lan—were unable to vouch for the truthfulness, accuracy, and completeness of the company’s 2022 interim report. Directors Zhou Wenkun and Supervisor Wang Qiang cited the failure of several receivables owed by the listed company’s subsidiary, Lhasa Beer, to be collected on schedule; they further noted that, despite prolonged oversight by regulatory authorities, the listed company’s internal control system remains inadequate. Directors Feng Yongming, Supervisor Wang Xi, and Secretary of the Board Mou Lan stated that, as of now, substantial receivables from Lhasa Beer have not been resolved in accordance with the progress outlined in the rectification report, and, in the absence of an opinion from a professional institution, they are unable to assess the impact of these circumstances on the collectability of the large receivables or the reasonableness of the current provision for bad debts.
“As China’s capital markets continue to mature and delisting efforts intensify, there is no longer any safe haven for illegal or unethical conduct. Consequently, listed companies suspected of financial fraud and other misconduct will be the first to be shunned by the market. When directors, supervisors, and senior executives themselves harbor doubts about their own reports, investors are bound to lose confidence in the company rapidly, triggering a capital outflow that sets off a vicious cycle of declining market capitalization,” said Xing Xing.
Taxation
Refund of Input VAT Credits: Bringing Timely Relief to Market Entities
The large-scale value-added tax credit refund policy implemented since the beginning of this year has been a key measure to address downward pressure on China’s economy and stabilize the overall macroeconomic landscape. According to data recently released by the State Taxation Administration, as of August 15, more than 2.1 trillion yuan in refunds had been credited to taxpayers’ accounts this year. With the accelerated implementation of related policies, the task of centrally refunding the accumulated VAT credit balances has been successfully completed, providing robust support to market entities.
From “on paper” to “in the ledger”
According to a responsible official from the State Taxation Administration, from the implementation of the large-scale value-added tax credit refund policy on April 1 this year through August 15, a total of RMB 2.0131 trillion in refunds has been credited to taxpayers’ accounts. Adding this to the RMB 123.3 billion refunded under the previously introduced credit‑refund policy that continued to be applied in the first quarter, the cumulative amount of refunds disbursed to taxpayers now stands at RMB 2.1364 trillion, marking the successful completion of the task of centrally refunding the outstanding VAT credit balances.
This year, the scale of VAT credit refunds has surpassed the total of the previous three years. The originally scheduled annual refund target was completed ahead of schedule in the second quarter, and in July, an additional seven industries were added to the scope of eligible sectors. These cash‑in‑hand VAT credit refunds have been delivered more swiftly to businesses, providing much‑needed relief to market entities. Meanwhile, tax authorities across the country have comprehensively upgraded and revamped core tax administration systems, the electronic tax bureau, and other related platforms. They have also established a policy‑promotion and taxpayer‑guidance tagging system and compiled a roster of taxpayers meeting refund eligibility criteria, enabling targeted policy outreach to 15.25 million taxpayer instances. Automated pop‑up reminders prompt taxpayers to file for refunds, and over 85% of refund‑related declaration data is pre‑filled.
This year’s policy on refunding outstanding input VAT credits has benefited a large number of enterprises and covers a broad range of sectors, with vastly differing circumstances among various market entities. According to a responsible official from the Department of Goods and Services Tax of the State Taxation Administration, to promptly address taxpayers’ needs, the Administration has established a rapid-response direct‑link mechanism for tax and fee policies. It has conducted on-site visits to particularly hard‑hit enterprises in sectors such as railway, aviation, road transport, and waterway transport—areas severely affected by the pandemic—and provided tailored policy guidance to each enterprise. Nationwide, it has set up 100 direct‑link points at grassroots tax bureaus, 100 direct‑link points at tax service halls, and 100 taxpayer‑direct‑link points in each province.
“The tax rebate funds were transferred from paper to enterprises’ bank accounts in the shortest possible time, ensuring that policies designed to support businesses and alleviate their difficulties delivered maximum impact promptly, thereby meeting policy expectations and playing a crucial role in stabilizing the economy, safeguarding employment, and bolstering market confidence,” said Hu Shulin, a professor at the School of Economics and Management of Southwest University of Science and Technology.
“Precision Drip Irrigation” for Small and Micro Enterprises
The policy of refunding outstanding input VAT credits at the end of the tax period has been strengthened for small and micro enterprises, as well as for industries such as manufacturing, scientific research and technical services, and software and information technology services. Starting July 1, the scope of the policy to fully refund outstanding input VAT credits has been expanded to cover seven sectors, including wholesale and retail trade, and accommodation and catering. In accelerating the process of refunding these credits, tax authorities have adopted a “precision‑targeted” approach, tailored to the specific characteristics of different enterprises and industries.
In Qingpu District of Shanghai, the local tax authorities have established a dedicated task force to provide tax‑benefit services for the express delivery sector. By adopting a streamlined approach—proactive coordination at the tax service hall, on‑site review by duty officers at the administrative sub‑stations, ongoing guidance from the relevant business divisions, and swift processing by the accounting department in liaison with the treasury—the task force enables express delivery companies to obtain refunds promptly. Meanwhile, in Dazhou City, Sichuan Province, the tax authorities offer “one‑on‑one” and “point‑to‑point” support to eligible enterprises, ensuring that tax and fee benefits are delivered swiftly and fully realized.
The electricity, heat, gas, and water production and supply sector is one of the key industries receiving priority support under this year’s large-scale value-added tax credit refund policy. Since the onset of summer, regions across the country have experienced peak electricity demand, placing mounting pressure on energy companies to ensure a stable power supply. In June, the Ministry of Finance and the State Taxation Administration issued a notice clarifying that, on a voluntary application basis, coal-fired power generation enterprises that meet the relevant criteria and purchase imported coal will see their VAT credit refund processing accelerated further, with procedures streamlined to ensure timely, efficient, and convenient refunds. “Since the beginning of this year, the tax authorities have established a green channel for handling VAT credit refunds, enabling our company to receive over RMB 20.84 million in refund funds, which has provided ample liquidity to procure coal for power generation,” said Deng Li, a finance professional at the Huayingshan Power Generation Company of China Energy Group in Sichuan.
Ensure that policies are implemented accurately and effectively.
Since the beginning of this year, more than 2 trillion yuan in deferred tax refunds has provided market entities with unprecedented “blood‑transfusion” and “self‑sustaining” support.
From the perspective of implementation outcomes, the large-scale refund of outstanding VAT credits has boosted corporate cash flow, playing a crucial role in invigorating market entities, facilitating the recovery and growth of business operations, and helping to stabilize the overall macroeconomic landscape. Li Xuhong, a professor at the National Accounting Institute in Beijing, noted that this policy has spurred a gradual improvement in corporate performance, supported a faster rebound in sales, and accelerated the development of new drivers of economic growth.
The survey shows that tax rebate and tax reduction policies have played a clear role in stabilizing businesses and alleviating their difficulties, with enterprises expressing high satisfaction with the value-added tax credit refund policy. According to a rapid survey by the National Bureau of Statistics, following the implementation of the large-scale credit refund policy, among enterprises that received incremental VAT credit refunds, 96.2% reported being quite satisfied with the policy, and 90% said it had improved their cash flow. Among small and micro enterprises that received refunds on existing credit balances, 94.6% expressed satisfaction, and 84.5% noted an improvement in cash flow. Among industrial enterprises that obtained VAT credit refunds, 95.4% were satisfied with the policy, and 87.9% reported that it had enhanced their corporate cash flow.
An official from the State Taxation Administration stated that, in the next phase, the national tax system will roll out a work strategy centered on “expediting tax refunds, rigorously cracking down on fraudulent refunds, strictly investigating internal errors, welcoming external oversight, and maintaining ongoing public awareness campaigns.” This approach will establish institutionalized, long-term measures to strengthen tax and fee services and tax administration, ensure the effective implementation of various tax and fee support policies, and further enhance the fundamental, pivotal, and safeguarding role of taxation in national governance.
Anhui: Tax Big Data Facilitates Industrial Chains
“Orders have been picking up, but our inventory of raw material—flat glass—is now at critically low levels,” said Pan Shiling, head of Anhui Guoye Curtain Wall and Window Manufacturing Co., Ltd., looking visibly concerned. After learning of this situation during a field visit, the Huainan Municipal Tax Authority leveraged tax‑related big data to help the company identify a reliable supplier of flat glass.
Through the National Taxpayer Supply Chain Inquiry Platform, the Huainan Municipal Tax Authority leveraged tax‑related big data to precisely match Nanjing Keshida Glass Co., Ltd., a flat‑glass manufacturer, thereby facilitating the alignment of production and sales. With the tax authorities’ assistance, the two companies have entered into a long‑term purchase‑and‑sale agreement and have already completed transactions totaling RMB 8.53 million. “With raw material supplies now in place, our production capacity has also increased,” said Pan Shiling. The company has recently secured several major orders and is operating at full capacity to ramp up production.
Anhui Saimaiti Optoelectronics Co., Ltd. is a company specializing in the research and development, manufacturing, sales, and service of electronic equipment. In the early stages, affected by the pandemic, the company faced challenges in product distribution, resulting in inventory buildup. Leveraging information from its tax‑big‑data platform, the Anqing Municipal Tax Authority used the “National Taxpayer Supply Chain Inquiry” module to help the company quickly identify suitable buyers in Shanghai. Company head Wang Liming remarked, “With our sales channels now open, we feel even more confident and assured about our future growth.”
To better help enterprises streamline their production‑sales linkages, the Anhui Provincial Tax Service Bureau of the State Taxation Administration has launched the “Risk‑Based Services to 1,000 Enterprises” campaign across the province. It has identified companies facing raw‑material shortages or sluggish sales, conducted in‑depth assessments of their procurement and sales challenges and specific needs, and leveraged the National Taxpayer Supply Chain Inquiry System to match these offices with potential suppliers or buyers, thereby facilitating supply‑demand connections. Since the beginning of this year, the initiative has successfully paired 202 enterprises with 2,773 upstream and downstream partners, resulting in invoiced transactions or agreements totaling RMB 460 million; among these, enterprises within the Yangtze River Delta region account for 89.4%.
A relevant official from the Anhui Provincial Tax Service Bureau stated that the tax authorities will further leverage the power of tax-related big data, anchor themselves in the Yangtze River Delta while serving the nationwide unified market, facilitate linkages across upstream and downstream sectors as well as between production, supply, and sales, and ensure the smooth circulation of industrial and supply chains, thereby making a positive contribution to stabilizing the overall macroeconomic landscape.
Shanghai: Tax Measures Support Economic Recovery
Mobilizing major projects and key undertakings is a crucial lever for stimulating economic growth. Recently, in Shanghai, the accelerated implementation of such projects has taken on an additional dimension: a drive to “revitalize” the economy. The city’s tax authorities have leveraged their institutional roles to ensure the effective rollout of tax and fee‑related preferential policies, enhance service convenience, and support the swift resumption and smooth progress of a series of high‑quality, large‑scale initiatives.
Funds are being unleashed, building momentum for project development.
The Yangtze River Delta Oasis Smart Valley—Zhaoxiang Park is a flagship demonstration park developed by the Yangtze River Delta Investment (Shanghai) Co., Ltd. within the demonstration zone. “2022 was our year of intensive construction, with more than 800,000 square meters currently under development across phases I, II, and III,” said Yan Weixue, Director of the Finance Department at the Yangtze River Delta Zhaoxiang Emerging Industry Economic Development (Shanghai) Co., Ltd., the park’s developer and operator. He added that, due to the sudden outbreak of COVID‑19, the project faced a two-month shutdown; at present, both Phase II and Phase III are in full swing, racing to catch up on schedule.
For large-scale project development, time is money. To help major projects in the region resume work more quickly and overcome challenges, the Qingpu District Tax Service Bureau of the State Taxation Administration in Shanghai has leveraged tax‑big data to conduct precise assessments and make informed matches, enabling project‑related enterprises to promptly benefit from favorable tax policies. With guidance from the tax authorities, Yangtze River Delta Zhaoqiao Emerging Industry Economic Development (Shanghai) Co., Ltd. received a VAT credit refund totaling RMB 57.75 million. Yan Weixue remarked: “In this race against time to launch large‑scale development and construction, securing adequate funding is paramount. We are grateful to the tax authorities for bringing the policy ‘benefits’ right to our doorstep. With financial pressures eased, we have ramped up investments in personnel, materials, and machinery, doing everything possible to ensure steady progress on the construction front.”
Tax and fee services are highly efficient, and the digital economy is soaring.
In June this year, Shanghai unveiled investment promotion plans for four “new tracks”—the metaverse, green and low‑carbon development, smart terminals, and the digital economy—while also launching specialized industrial parks to serve as platforms for advancing these emerging sectors. As one of Shanghai’s four new‑track priorities, the digital economy has attracted a number of high‑profile projects to the Hongqiao Airport‑Adjacent Digital Economy Industrial Park. Notably, iFLYTEK, a well‑known publicly listed company in the Asia‑Pacific region specializing in intelligent speech and artificial intelligence, has established its Shanghai headquarters at Hongqiao Airport, positioning it to serve the Yangtze River Delta and the broader national market.
“Shanghai’s open and inclusive business environment, coupled with its supportive policies for the digital economy, has attracted us. As we deepen our presence in the Yangtze River Delta market, we have genuinely felt the tax authorities’ assistance to AI‑related enterprises,” said Tan Yongxian, Finance Manager for the East China Region at iFLYTEK. He added that in the first half of the year, due to the pandemic, many operations at iFLYTEK’s Shanghai headquarters were unable to proceed as usual. “The continuous stream of tax and fee‑relief measures has significantly eased our burden,” Tan noted. Specifically, the policy reducing or exempting six taxes and two fees for small and micro businesses unlocked RMB 150,000 in working capital for the company’s smaller subsidiaries, while the accelerated processing of export tax rebates ensured that iFLYTEK received RMB 1.53 million in export tax refunds on time.
Cleverly addressing pressing challenges, the elderly care project has been successfully implemented.
Shanghai is a megacity with a high degree of population aging, and establishing a sound, multi-tiered elderly care service system that meets diverse needs has long been a key priority for the city. The Shanghai Ronghui Health and Wellness Center is a flagship elderly care project in both Huangpu and Songjiang districts. Following its official resumption of operations, the Huangpu District tax authorities, through their “chief liaison officer” mechanism, conducted a needs‑assessment survey of the developer, Shanghai Jinwaitan (Group) Development Co., Ltd., seamlessly aligning with the company’s tax‑related requirements and providing tailored professional services to address its most pressing tax‑related challenges.
“In our day-to-day management of this enterprise, we leverage a regular survey mechanism to dynamically gather its tax-related requests and queries. A dedicated chief liaison provides one‑on‑one guidance to address specific issues, thereby establishing an effective closed-loop system for managing key tax sources,” said a responsible official from the 11th Tax Office of the Huangpu District Tax Bureau.
“The tax department’s chief liaison not only resolved our tax-related issues with precision and efficiency but also saved us considerable time and effort in handling tax matters, providing substantial support to our tax‑related work,” said the finance director of Shanghai Jinwaitan (Group) Development Co., Ltd.
Henan: Export Tax Rebates Help Foreign Trade Enterprises Cut Costs and Speed Up Processes
Accelerating the processing of export tax refunds is a key measure for stabilizing foreign trade. The Henan Provincial Tax Authorities have fully leveraged the role of taxation, optimized export tax‑refund services, enhanced the functionality of the refund system, streamlined procedures, and improved efficiency, helping foreign‑trade enterprises operate with greater agility and better secure orders while expanding into new markets. As export tax refunds are processed more swiftly and services are further improved, the dynamism of Henan’s foreign‑trade enterprises continues to be energized.
Streamlining procedures and enhancing services, the tax refund process is becoming increasingly convenient.
“Export tax rebates have become increasingly efficient and convenient, and we’ve also benefited from the devolution of approval authority, allowing refunds to be processed swiftly,” said Li Yang, head of the Finance Department at Chery Automobile Henan Co., Ltd., when reflecting on the changes in export tax rebates over the years.
In recent years, the tax authorities of Henan Province have continuously refined the categorized management of enterprises eligible for export tax refunds (exemptions), streamlined the administration of supporting documentation for such refunds, implemented paperless filing across the entire process, and ensured prompt review and refund at every stage, thereby significantly shortening processing timelines.
“As a long-established export enterprise, our company has truly felt the support the state provides to exporters. Today, we can file our returns simply by entering data through the electronic tax bureau and track the processing progress in real time. The tax authorities’ continuous service upgrades have brought tremendous convenience to our business,” said Yang Min, a finance professional at Wugang Ruisen Xianyi Import & Export Co., Ltd.
Speaking about the new experience of paperless, green filing for export tax rebates, Li Yan, the financial director of Kaifeng Economic Development Zone Digital Culture Investment Co., Ltd., said that the company can choose to store its import and export documentation electronically. This approach significantly reduces the time required to file documents for each batch of exported goods, saving on office expenses and labor costs while being environmentally friendly and easy to manage.
In addition to strengthening internal efforts—streamlining documentation requirements and achieving paperless processing—the Henan Provincial Tax Authority has proactively coordinated with the customs authorities to launch a distinctive one-stop service within the free trade zone, integrating the registration procedures for importers and exporters with those for export tax refund (exemption) filing. This initiative enables joint window services, collaborative staff handling, and seamless data sharing, allowing foreign‑trade taxpayers to submit all required documents to both tax and customs agencies at a single integrated counter, thereby completing both tax and customs formalities in one go and ushering in an “express lane” for cross‑departmental registration.
“Our company handles substantial monthly export volumes, and now the ‘one-stop’ service saves time, effort, and worry—allowing us to complete two procedures at a single window,” said Liang Hongrui, the finance director of Zhengzhou Lefantian Textiles Co., Ltd., referring to the joint customs‑tax initiative that streamlines export tax rebate processing into a one‑stop solution.
Reducing burdens and boosting vitality, the path of development is becoming increasingly smooth.
Cash flow is the lifeblood of a business; receiving tax refunds more quickly means reducing capital tied up and accelerating cash repatriation, giving companies a competitive edge in the global marketplace. As export tax rebates are now being processed and disbursed swiftly, an increasing number of enterprises are finding that they can set sail with lighter burdens and greater momentum.
“This year, we’ve been under tremendous financial pressure. Tax officials proactively reached out to us, provided end-to-end guidance and support, and promptly processed a tax refund of over 31 million yuan, significantly easing our working capital constraints,” said Li Yuying, head of the finance department at Luoyang Longding Aluminum Co., Ltd. “The refund can be used to ramp up R&D investment in new products and processes, or to help expand production. With the government’s thoughtful policies and the tax authorities’ attentive service, we’re confident we can take our company to the next level.”
Henan Zhongyuan Roller and Shaft Co., Ltd. is a manufacturer of metallurgical equipment, with its pipe molds, rolling mills, and shaft components primarily exported to countries such as the United States, the United Arab Emirates, and India. According to Zhang Jianyun, the company’s finance director, in recent years, the dual impact of the pandemic and international trade tensions has driven up global logistics costs, posing significant challenges to the company’s export operations. “At a time when our cash flow was under severe strain, the tax authorities’ export‑tax rebate program proved invaluable. So far this year, we have received over RMB 2.64 million in export tax rebates. With the tax department’s support, we feel fully confident as we expand into overseas markets.”
“The company’s rapid growth over the past decade and more would not have been possible without the strong support of a favorable tax‑related business environment and robust tax incentive policies,” said Wu Yuanda, a deputy to the National People’s Congress, a researcher at the Institute of Semiconductors of the Chinese Academy of Sciences, and the deputy general manager of Henan Shijia Photonics Technology Co., Ltd.
Over more than a decade, export tax rebates have provided tangible financial support, enabling the company to ramp up its R&D efforts and steadily strengthen independent innovation in the chip sector. Since 2014, Shijia Photonics has cumulatively processed export tax refunds totaling over RMB 24 million, including RMB 4.82 million from 2022 to the present. As sales of its AWG chip series and DFB laser‑chip series continue to grow steadily, the company’s revenue has posted year‑on‑year increases.
An official from the Henan Provincial Tax Service stated that the province’s tax authorities will further fully leverage and effectively implement tax preferential policies, continuously optimize the tax-related business environment, accelerate export tax rebate processing, and consistently reduce burdens, enhance convenience, and invigorate foreign‑trade enterprises, thereby making an even greater contribution to fostering high‑quality development of the province’s foreign‑trade economy.
Litigation & Arbitration
Zhou Qiang presented a report to the Standing Committee of the National People’s Congress on the pilot program for reforming the functional positioning of the four-level court system.
On the morning of August 30, the 36th session of the Standing Committee of the 13th National People’s Congress held its first plenary meeting, during which Chief Justice of the Supreme People’s Court Zhou Qiang delivered the “Interim Report of the Supreme People’s Court on the Pilot Program for Reforming the Functional Positioning of the Four-Tier Court System.”
Zhou Qiang stated that refining the functional positioning of courts at the four levels is an important reform task set by the CPC Central Committee. In August 2021, the 30th Meeting of the Standing Committee of the 13th National People’s Congress adopted the Decision on Authorizing the Supreme People’s Court to Organize and Conduct a Pilot Program for Reforming the Functional Positioning of Courts at the Four Levels. In September 2021, the Supreme People’s Court issued the Measures for the Implementation of the Pilot Program, and the pilot work was officially launched on October 1 of the same year. Under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core and the robust oversight of the National People’s Congress and its Standing Committee, all aspects of the pilot program have been carried out smoothly and in an orderly manner.
Zhou Qiang stated that since the launch of the pilot program, the Supreme People’s Court has remained guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, thoroughly implemented Xi Jinping’s Thought on the Rule of Law, and ensured that the pilot work progresses in the right direction. This has helped resolve the majority of disputes effectively at the grassroots level, while complex, novel, and cases susceptible to undue external interference are adjudicated fairly by higher-level courts. As a result, the vast majority of disputes are substantively resolved after two rounds of trial, achieving tiered resolution, effective filtering, and precise upward referral of cases. Moreover, judicial resources and the case‑handling structure have been aligned with the functional positioning of the four-tier court system, thereby better meeting the public’s judicial needs.
Zhou Qiang stated that, following pilot initiatives, the hierarchical functions of courts at all four levels have been steadily refined, the quality and effectiveness of dispute resolution have been significantly enhanced, and the public’s sense of gain has continued to grow. Practice has fully demonstrated that the decisions and arrangements of the CPC Central Committee and the authorization granted by the Standing Committee of the National People’s Congress are entirely correct. Through these reform pilots, the focus of adjudication has been appropriately shifted downward, facilitating the fair, efficient, and substantive resolution of disputes at the grassroots level; the mechanism for elevated jurisdiction has been effectively activated, further highlighting the role of higher and intermediate people’s courts in hearing major, landmark first-instance cases; the operating mechanisms of the retrial procedure have been continuously improved, achieving a balance between correcting errors in accordance with the law and upholding the authority of final judgments; the functional positioning of the highest judicial organ has been continually optimized, enabling it to better fulfill the duties entrusted to it by the Constitution and laws; and the litigation rights of the parties have been fully safeguarded, thereby steadily enhancing the public’s sense of benefit from the reforms.
Zhou Qiang stated that the pilot program still faces challenges, including uneven implementation across regions, room for further improvement in pilot outcomes, and the need to continuously refine supporting mechanisms. Moving forward, the Supreme People’s Court will strengthen overall coordination and guidance, improve the mechanisms for advancing the pilot program to promote balanced development nationwide; enhance supporting measures, bolster the systemic integration of reforms, and consolidate and elevate the effectiveness of the pilot work; and systematically summarize lessons learned, conduct in-depth research and deliberations on legislative amendments, and, when appropriate, put forward practical, high‑quality proposals for law reform.
Zhou Qiang stated that the Standing Committee of the National People’s Congress has specially heard and deliberated the mid-term report on the pilot program, which fully demonstrates its high regard for, and earnest support of, the reform pilot work. Under the strong leadership of the Party Central Committee with Comrade Xi Jinping at its core, and subject to the robust oversight of the National People’s Congress and its Standing Committee, the Supreme People’s Court will thoroughly implement the requirements of the authorization decision and the pilot implementation measures, conscientiously address the opinions deliberated at this session, ensure that the pilot program yields positive results, make new and greater contributions to the comprehensive building of a modern socialist country, and greet the successful convening of the 20th National Congress of the Communist Party of China with concrete actions.
Zhou Qiang attended the opening ceremony of the China–SCO Countries Forum of Chief Justices of Local Courts (2022) and delivered a speech, stating that…
Deepen judicial exchanges and cooperation to advance the building of a closer Shanghai Cooperation Organization community with a shared future.
Li Ganjie’s Address
On the afternoon of August 31, the China–SCO Member States’ Forum of Chief Justices of Local Courts (2022) was held in Qingdao, Shandong Province. Hosted by the Shandong Provincial Higher People’s Court, the forum adopted a hybrid format—combining in-person and online participation. Zhou Qiang, Chief Justice of the People’s Republic of China and President of the Supreme People’s Court, attended the opening ceremony online and delivered a speech. He expressed his hope that all participants would uphold the “Shanghai Spirit,” strengthen judicial cooperation that is closer, more pragmatic, and more efficient, jointly seize new opportunities, meet new challenges, and advance the building of an even closer Shanghai Cooperation Organization community with a shared future, thereby making greater contributions to lasting peace and common prosperity worldwide. Li Ganjie, Secretary of the CPC Shandong Provincial Committee and Director of the Standing Committee of the Shandong Provincial People’s Congress, also attended the opening ceremony online and addressed the gathering.
Zhou Qiang stated that this year marks the 20th anniversary of the signing of the SCO Charter and the 15th anniversary of the Treaty on Long-Term Good-Neighborliness, Friendship, and Cooperation among Member States, both of which are of landmark significance for the Shanghai Cooperation Organization. At the 21st Meeting of the Council of Heads of State of the SCO, held in September 2021, Chinese President Xi Jinping and the leaders of the participating countries reached a series of important consensuses, jointly charting a new blueprint for the organization’s development and setting the course for building an even closer community with a shared future. Over the years, the supreme courts of the SCO member states have earnestly implemented the spirit of each session of the Council of Heads of State, engaging in pragmatic and efficient cooperation in areas such as jointly combating transboundary crime, negotiating solutions to cross-border trade disputes, deepening judicial assistance, and strengthening judicial exchanges on pandemic response, thereby contributing to regional peace, stability, and prosperity.
Zhou Qiang stated that last year, the establishment of the China–SCO Countries Judicial Exchange Base and the successful convening of the inaugural China–SCO Countries Forum of Chief Justices of Local Courts further expanded a new platform for judicial exchanges among SCO member states and enriched the substance of judicial cooperation. This forum, which conducted in-depth discussions around the theme “Deepening Judicial Cooperation among Local Courts within the SCO Framework,” will undoubtedly play a vital role in helping all countries jointly explore new avenues for judicial cooperation and innovative models of legal services, thereby providing robust judicial support for building a closer Shanghai Cooperation Organization community with a shared future and for high-quality joint efforts to advance the Belt and Road Initiative.
Zhou Qiang put forward three initiatives. First, he called for continuously strengthening the foundation of judicial cooperation, urging all parties to engage in candid exchanges, share experiences, and learn from one another in areas such as civil litigation reform, criminal justice cooperation, and judicial protection of intellectual property, with a view to reaching greater consensus. Second, he emphasized deepening and expanding the outcomes of judicial cooperation by further enhancing exchanges in legal services, judicial reform, and public legal education, thereby helping to foster a business environment that is market‑oriented, law‑based, and internationally competitive. Third, he proposed improving and refining mechanisms for judicial cooperation, adhering to the principles of extensive consultation, joint contribution, and shared benefits, continuously enhancing the effectiveness of such cooperation, and actively contributing to the building of a community with a shared future for mankind.
In his address, Li Ganjie provided a brief overview of Shandong’s economic and social development. He noted that President Xi Jinping, at the 21st Meeting of the Council of Heads of State of the Shanghai Cooperation Organization, put forward an initiative emphasizing the importance of pursuing unity and cooperation. Last year’s successful inaugural China–SCO Countries Forum of Supreme Court Justices fostered broad judicial consensus and effectively expanded areas of collaboration. The convening of this forum will undoubtedly open a new chapter in exchanges and mutual learning among SCO member states. We will thoroughly implement Xi Jinping’s thought on the rule of law, concentrate our efforts on strengthening the legal environment, further opening up the legal field, and enhancing the practical effectiveness of rule-of-law‑driven empowerment. By leveraging this forum as a vital bridge and platform, we will deepen exchanges and cooperation with all parties and strive to achieve more concrete and pragmatic outcomes. As an important strategic hub along the Belt and Road Initiative, Shandong shoulders the significant responsibility of building the SCO Demonstration Zone. We welcome everyone to visit Shandong, engage with the SCO, recommend more projects to take root here, and help attract greater resources to the province, so that, through deepened cooperation, we may advance together and achieve mutual benefit and win‑win results.
Deputy Secretary-General of the Shanghai Cooperation Organization, Mr. Logvinov, attended the opening ceremony online and delivered a speech, stating that this forum marks a new milestone in international judicial cooperation among SCO member states. It will help all member countries strengthen multilateral cooperation in the judicial field and jointly address the challenges and threats they currently face. He expressed hope that participants would engage in fruitful discussions, actively exchange and share judicial experiences, further deepen ties, build mutual trust, foster friendship, enhance the efficiency of judicial cooperation, elevate the professional standards of judges, and collectively create a sound rule-of-law environment conducive to regional stability and economic development.
Zhang Jiati, a Second‑Class Justice of the People’s Republic of China and President of the Shandong Provincial Higher People’s Court; Musabekuly Zhandos, President of the Military Court of the Republic of Kazakhstan; Borombayev Mirlan, President of the Osh Regional Court of the Kyrgyz Republic; Muhammad Shafi Siddiqui, Chief Justice of the Sindh High Court of the Islamic Republic of Pakistan; Vasily Voloshin, President of the Third Cassation Appeal Court of the Russian Federation; Saidzoda Gulbonu, President of the Shahmansur District Court of Dushanbe, Tajikistan; and Sayidov Maqsutbek, Chairman of the Judicial Panel on Economic Cases of the Tashkent City Court of the Republic of Uzbekistan, attended the opening ceremony and delivered remarks, either in person or online.
Yang Wanming, a Second‑Class Grand Justice and Vice President of the Supreme People’s Court of the People’s Republic of China; Zhang Haibo, Member of the Standing Committee and Secretary-General of the Shandong Provincial Party Committee; Li Jing, a Second‑Class Grand Justice and President of the Tianjin Higher People’s Court; Gong Jiali, a Second‑Class Grand Justice and President of the Guangdong Higher People’s Court; Li Yongli, a Second‑Class Grand Justice and President of the Chongqing Higher People’s Court; and Bahargul Saimaiti, a Second‑Class Grand Justice and President of the Xinjiang Uygur Autonomous Region Higher People’s Court, attended the opening ceremony either online or in person. Officials from relevant departments of the Supreme People’s Court and the courts of Shandong Province and Qingdao also took part in the ceremony.
Judges of the local courts of the Republic of Kazakhstan, the Kyrgyz Republic, the Islamic Republic of Pakistan, the Russian Federation, the Republic of Tajikistan, and the Republic of Uzbekistan attended the opening ceremony online.
Strong jurisdiction, robust adjudication, and emphasis on mediation.
— A Record of Zhejiang Courts’ Efforts to Substantively Resolve Administrative Disputes
Promoting reform of the hierarchical jurisdiction system for administrative cases and optimizing the case portfolio of grassroots courts are key components of the reform to redefine the functional roles of the four-tier court system. Since October 2021, Zhejiang’s courts have meticulously implemented the adjudication of four categories of administrative cases devolved to grassroots courts, thereby effectively bolstering litigants’ confidence in and sense of gain from the reform.
As of the end of July this year, grassroots people’s courts across the province had accepted 828 cases falling under the “four categories of administrative cases” and concluded 610 of them, accounting for 8.53% and 9.26%, respectively, of the total first-instance filings and dispositions of administrative cases in the province. From January to July this year, courts throughout the province received 7,775 first-instance administrative cases, a decrease of 8.9% year on year; the first-instance defeat rate for administrative agencies stood at 7.17%, down 2.17 percentage points from the same period last year.
Optimize the case jurisdiction mechanism to give parties greater peace of mind when pursuing litigation.
“Jurisdiction over cases is a central issue in the first-instance adjudication of administrative cases by grassroots courts. Fearing local administrative interference, parties often hesitate to have their cases heard by the court where the administrative agency is located, which can undermine efforts to achieve substantive resolution of administrative disputes,” said Ge Hongwei, Chief Judge of the Administrative Division of the Zhejiang Provincial Higher People’s Court. He added that this pilot reform will transfer four categories of straightforward administrative cases—where the defendant is a county‑level or prefecture‑level people’s government—to the jurisdiction of grassroots courts. Accordingly, the primary challenge is to refine the case‑jurisdiction mechanism and allay parties’ concerns.
To this end, the Zhejiang High People’s Court, building on the previously implemented mechanisms of cross‑jurisdiction, out‑of‑jurisdiction, and centralized jurisdiction for administrative cases at the grassroots level across the province, has comprehensively restructured the jurisdictional arrangements for such cases. It has established a variety of jurisdictional frameworks, including “rotational cross‑jurisdiction plus reciprocal cross‑jurisdiction,” “out‑of‑jurisdiction plus centralized jurisdiction,” “party‑choice plus out‑of‑jurisdiction,” and “out‑of‑jurisdiction plus local jurisdiction,” thereby fully respecting parties’ right to choose the competent court and bolstering their confidence in the reform.
The effective resolution of the series of cases concerning government information disclosure brought by Mr. Ye and others was made possible precisely by the Quzhou Intermediate People’s Court’s ongoing refinement of the centralized jurisdiction mechanism. In order to actively advance the reform of the functional positioning of courts at all four levels, the Quzhou Intermediate Court established an additional court with centralized jurisdiction, allowing parties, on the basis of legitimate grounds, to choose any one of these courts to file their lawsuits. Mr. Ye and the other plaintiffs opted to bring their cases before the People’s Court of Kecheng District; following multiple rounds of communication and coordination, all plaintiffs ultimately withdrew their suits.
As cases are being devolved to lower courts, Zhejiang’s courts have simultaneously advanced reforms to elevate jurisdiction over certain types of cases. Specifically, they have moved some novel categories—cases that bear broad guidance for the application of law or involve significant national or public interests—up one level in the judicial hierarchy, assigning them to intermediate people’s courts or even higher‑level courts. This approach helps ensure consistent adjudication of similar cases and achieves the goal of “adjudicating one case to guide a whole region.” Since the pilot program began, intermediate people’s courts across the province have already elevated jurisdiction over two administrative cases, yielding positive results as a model and catalyst for broader implementation.
Strengthen the capacity of administrative adjudication to ensure more attentive guidance at the lower levels.
According to Ge Hongwei, the devolution of “four categories of administrative cases” has raised higher standards for strengthening the administrative adjudication capacity of grassroots courts across the province, optimizing the allocation of judicial resources, and ensuring uniformity in the application of legal standards in administrative cases. All intermediate people’s courts must earnestly reinforce their guidance to lower-level courts and proactively promote the enhancement of the trial capabilities of grassroots courts.
“In regions like Lishui, where the sheer number of administrative cases is relatively small, it has become all the more urgent to effectively coordinate and pool the city’s administrative adjudication resources,” said Wu Linxiong, Vice President of the Lishui Intermediate People’s Court. To strengthen guidance at the lower levels, Lishui has launched a citywide integrated reform for intelligent governance of administrative cases. At the front end, it promotes the comprehensive pre-litigation inclusion of disputes within the jurisdiction of the local administrative dispute mediation centers, thereby establishing a dispute-resolution model in which “disputes are resolved locally at the front end, while adjudication takes place remotely at the back end.” At the mid‑stage, it has assembled four specialized teams—the judicial mediation team, the administrative agency expert team, the full‑time mediator team, and the liaison team. Notably, without altering the hierarchical relationship between judges and the courts, it has brought together 18 administrative judges from across the city to form a “city‑wide shared” adjudicatory team, while also refining mechanisms such as online consultations and cross‑disciplinary professional judge conferences, thus actively fulfilling its role in guiding administrative mediation. At the back end, leveraging integrated data connectivity between government and courts, it shares in real time key indicators—including the volume of first-instance administrative litigation filings and the rate of administrative agencies losing cases—thereby supporting administrative agencies in making informed decisions and ensuring law-based administration.
Meanwhile, intermediate people’s courts across the province have strengthened their guidance to lower-level courts. The Ningbo Intermediate People’s Court has stipulated that, in principle, the four categories of administrative cases delegated to it are to be handled by court presidents or presided over as chief judges; cases presided over by court presidents account for 53.66% of the total. Meanwhile, the Jinhua Intermediate People’s Court, leveraging a mechanism of “jurisdictional transfer plus local resolution,” has guided courts within its jurisdiction to foster multi‑level, cross‑regional, constructive interactions between government and the judiciary, ensuring that the substantive resolution of administrative disputes is fully effective.
“The reform of hierarchical jurisdiction over administrative cases, in response to the new circumstances and tasks of the current reform, will help promote tiered resolution of disputes, effective screening, and precise upward referral, while also optimizing the functional positioning of the four-level court system and the appellate hierarchy,” said the head of the Research Office of the Zhejiang High People’s Court.
Deepen the development of administrative dispute mediation centers to ensure more concerted efforts in resolving disputes.
In recent years, Zhejiang Province has, in line with the guiding principle of “Party committee leadership, government coordination, court guidance, and judicial oversight,” standardized the procedures and operational model for mediating administrative disputes. It has established and refined ten supporting mechanisms—covering decision‑making authorization for mediation plans, fault tolerance and exemption from liability, performance assessment and evaluation, and incentives for administrative agencies to correct errors on their own—thereby pooling resources to advance the development of administrative dispute mediation centers. Zhejiang has taken the lead nationwide in achieving full coverage at the provincial, municipal, and county levels, and in 2021, it successfully mediated and resolved 39.2% of administrative cases. Its rate of case withdrawals through mediation has ranked first nationwide for three consecutive years, making this initiative a major reform and innovation in the field of administrative adjudication.
During the pilot program to advance the reform of the functional positioning of the trial levels, the Zhejiang High People’s Court has instructed all localities to further harness the momentum generated by this major reform and to effectively implement measures for resolving disputes in administrative cases that have been devolved to the jurisdiction of grassroots people’s courts.
Leveraging its first-mover advantage as the site of the province’s inaugural administrative dispute mediation center, the Huzhou Intermediate People’s Court has taken this center as a hub to deepen and refine its “1+9+6” administrative dispute resolution framework. By diversifying dispute‑resolution resources, strengthening the pool of mediators, and bolstering mediation capacity, it has succeeded in resolving more than 60 percent of administrative disputes at their source. Addressing the challenge of fragmented accountability in cases involving out-of‑jurisdiction jurisdiction, the Shaoxing Intermediate People’s Court, relying on its administrative dispute mediation center, has actively mobilized the mediation efforts of three key stakeholders—the local administrative authorities, the local courts, and the judges handling the case in another jurisdiction—thereby reinforcing local responsibility for resolution and significantly improving the effectiveness of administrative dispute settlement. Meanwhile, the Zhoushan Intermediate People’s Court has fully harnessed the role of its administrative dispute mediation center, expanded mediation capacity, institutionalized an administrative dispute early‑warning mechanism, and rigorously enforced the system requiring heads of administrative agencies to appear in court. These measures have guided administrative agencies to correct their own mistakes, enabling them to resolve administrative disputes at the source and achieve substantive outcomes.
Ordered to pay RMB 100,000 in restoration costs! The first public-interest lawsuit in China concerning the protection of movable cultural relics has concluded its first-instance verdict.
At 9:30 a.m. on August 30, the Intermediate People’s Court of Jiujiang City, Jiangxi Province, held a public trial in the public-interest litigation case brought by the Jiujiang Municipal People’s Procuratorate against Chen Mouwang concerning the protection of movable cultural relics. The court rendered its first-instance judgment on the spot, ordering the defendant, Chen Mouwang, to bear RMB 100,000 in relic restoration costs and expert appraisal fees, and to publish a public apology in national media. This case is the first civil public-interest lawsuit nationwide involving the protection of movable cultural relics, and it holds significant importance in raising public awareness of cultural relic preservation and disseminating knowledge about such protection.
　Upon trial, it was ascertained that on October 25, 2020, the defendant, Chen Mouwang, discovered a bronze artifact while collecting debris in a mountain plot he had contracted in a certain village of Yangxin County, Huangshi City, Hubei Province. After taking it home and consulting villagers via their mobile phones, he learned that it was an ancient bronze chime bell set, which is of considerable value, and that such sets typically appear in batches. Consequently, on the following morning, Chen Mouwang brought a hoe to the contracted plot where he had found the chime bells and proceeded to excavate, ultimately uncovering a total of eight bells; three of them were damaged during the excavation. In May 2021, while illegally reselling these bronze chime bells, Chen Mouwang was apprehended on the spot by the Jiujiang public security authorities. In December 2021, he was sentenced to two years and five months’ imprisonment and fined RMB 20,000 for trafficking cultural relics.
　Upon examination, the nine bronze bianzhong bells in question are classified as excavated cultural relics dating to the late Western Zhou period. They are generally well preserved, with a small number of “bronze pendants” exhibiting minor fractures or damage; most can be designated as second‑level cultural relics, while those with fractured pendants may be categorized as third‑level. Overall, the collection is deemed a national second‑level cultural relic. Following an expert panel’s assessment, the findings are as follows: (1) Among the nine bells, No. 002 bears two areas of damage, No. 003 has ten distinct damages accompanied by obvious scratch marks, and No. 004 exhibits one instance of damage—each representing recent external‑force‑induced injury. (2) Taking into account the damaged items’ classification, extent of damage, cultural value, and the materials and techniques required for restoration, the expert panel estimates that the cost of repairing the externally damaged portions will be approximately RMB 100,000. The Jiujiang Municipal People’s Procuratorate incurred expert‑assessment expenses totaling RMB 4,000 in connection with this matter.
During the trial, the Jiujiang Municipal People’s Procuratorate submitted four sets of evidence to the court, and the defendant, Chen Mouwang, raised no objections to the admissibility, relevance, or authenticity of these evidentiary materials. The parties then engaged in a heated debate over key issues, including whether the defendant’s damage to the chime bells infringed upon the public interest, whether the defendant should bear liability for such conduct, and, if so, how that liability should be determined.
　The Jiujiang Intermediate People’s Court held that cultural relics, as material legacies of history, possess historical, scientific, and artistic values that constitute non‑renewable, irreplaceable resources. The defendant, Chen Mouwang, illegally excavated and damaged cultural relics, thereby infringing upon the public interest and incurring civil liability for tort. In accordance with Article 1165, Paragraph 1 of the Civil Code of the People’s Republic of China; Articles 5, Paragraph 1; 27, Paragraph 2; 32; and 65, Paragraph 1 of the Law of the People’s Republic of China on the Protection of Cultural Relics; as well as Articles 58, Paragraph 2, and 155 of the Civil Procedure Law of the People’s Republic of China, the court rendered the aforementioned first‑instance judgment in accordance with the law.
　The defendant, Chen Mouwang, is currently serving a sentence for the crime of trafficking cultural relics. His authorized litigation agent appeared in court to participate in the proceedings. Following the first-instance judgment, the defense stated that it accepted the verdict and would not appeal, and expressed remorse for the damage caused to the Bianyong bell through unauthorized excavation, extending a sincere apology to the public.

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