JC Master Legal News Issue 1199

Key Takeaways for This Issue

Jiangsu has issued regulatory guidelines for financial leasing companies and clarified a list of prohibited business activities.
Recently, the Jiangsu Provincial Local Financial Administration issued the “Notice on the Issuance of the Detailed Rules for the Supervision and Administration of Financial Leasing Companies in Jiangsu Province.”
Government Work Report: The GDP growth target for 2026 is set at 4.5%–5%.
On March 5, Premier Li Qiang of the State Council delivered the Government Work Report at the Fourth Session of the 14th National People’s Congress.
The National People’s Congress is deliberating the Draft Ecological and Environmental Code.
On March 5, the Standing Committee of the National People’s Congress released the “Explanatory Notes (Summary) on the Draft Civil Code of the People’s Republic of China on Ecological Environment.”

Finance and Capital Markets

FINANCE &CAPITAL MARKETS

Jiangsu has issued regulatory guidelines for financial leasing companies and clarified a list of prohibited business activities.
Recently, the Jiangsu Provincial Local Financial Administration issued the “Notice on the Issuance of the Detailed Rules for the Supervision and Administration of Financial Leasing Companies in Jiangsu Province.”
The Detailed Rules clearly delineate the regulatory responsibilities among provincial, municipal, and county levels, establish consultation‑review and filing procedures for the establishment of entities and the creation of branches, subsidiaries, or project companies, and set forth key review criteria covering corporate naming, paid‑in capital, governance and risk control, as well as compliance of shareholders and senior management. They stipulate that leased assets must be real, legally owned, readily disposable, and of measurable value; prohibit the fictitious creation of leased assets or the use of consumer goods or items that give rise to new hidden liabilities as lease objects; and require registration under the Unified Registration System for Movable Property Financing. The rules enumerate prohibited activities, including accepting deposits, extending loans—including “car‑pledge loans”—engaging in interbank lending, providing financing for sham projects, raising funds through trading venues or unlicensed institutions, soliciting unauthorized financing from local governments or platform entities, or demanding guarantees, as well as engaging in false advertising and improper debt collection. For individual lessees, the rules mandate disclosure of the annualized all‑inclusive cost and strengthen the traceability of sales transactions. Regulatory indicators are established, such as a minimum of 60% of total assets being allocated to leasing activities, risk‑weighted assets not exceeding eight times net worth, fixed‑income investments capped at 20%, and limits on customer and related‑party concentration. The rules also standardize the issuance of asset‑backed securities and bonds by qualified investors, require separate accounting for subleasing, and prohibit asset transfers that include repurchase agreements or make‑whole provisions. Finally, a mechanism is put in place for classifying and handling cases as normal, non‑normal, or involving violations, along with regular inspections and mandatory reporting of significant matters within five days or 24 hours.
Jiangsu has issued measures to optimize the financial ecosystem and promote high-quality development of the financial sector.
Recently, the General Office of the Jiangsu Provincial Government released the “Several Measures for Optimizing the Financial Ecosystem and Promoting High-Quality Development of the Financial Sector.”
The Measures set forth 19 initiatives across five key areas: In the business environment, efforts will be made to promote the aggregation and sharing of enterprise‑related data, as well as authorized data‑driven operations; to refine the “Innovation Score” database and the investment‑financing matchmaking network; to improve government‑backed financing guarantee models such as “guarantee upon loan approval,” along with risk‑sharing and compensation mechanisms; to standardize pricing and fee structures for deposits and loans, mandate transparent disclosure of the total cost of corporate financing, and crack down on unfair competitive practices like “yin‑yang contracts.” In the rule‑of‑law environment, a system for statistical reporting and referral of financial‑related cases will be established; a securities and futures arbitration center will be explored; mechanisms such as representative litigation and model judgments will be refined, while measures to combat debt evasion will be strengthened; and efforts to address disputes at their source through mediation will be advanced. In the credit environment, standards for credit evaluation and identification of untrustworthy entities will be implemented; support will be provided for credit rehabilitation of enterprises undergoing bankruptcy reorganization; the professional conduct of intermediary institutions will be regulated, and illegal intermediaries will be prosecuted. In the market and circulation sphere, equity investments and M&A financing by asset management companies will be encouraged; QDLP/QFLP schemes and the “cross‑border RMB plus” framework will be promoted; reforms aimed at mitigating risks in rural and township banks will be advanced; and local financial institutions will be guided toward downsizing and quality enhancement.

Business and Corporations

COMMERCIAL & CORPORATE

Three departments have clarified tax incentives for imported exhibits at exhibitions during the 15th Five-Year Plan period.
Recently, the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration issued the “Notice on Preferential Tax Policies for Imported Exhibition Items Sold During International Exhibitions in Central and Western Regions during the 15th Five-Year Plan Period.”
The Notice clarifies that, for the periods 2026–2030, at the China–Mongolia, China–Russia, China–Africa, ASEAN, and South Asia fairs; at the Qinghai Trade Fair’s Tibetan Carpet Exhibition Area; and at the Asia–Europe Expo, as well as during the 2026–2027 Northeast Asia and China–Arab States Expos, imported exhibits sold by exhibitors within the exhibition period and up to the duty‑free allowances specified in the annex shall be exempt from import duties, import value‑added tax, and consumption tax. The scope of duty‑free exhibits is set out in the attached list; the aggregate duty‑free sales ceiling for categories 1 through 20 is US$20,000, while for category 21—other exhibits—the duty‑free sales ceiling is also US$20,000. This exemption does not apply to prohibited imports, endangered species of animals and plants and their products, tobacco and alcohol, automobiles, or goods listed in the “Catalogue of Major Technological Equipment and Products Not Eligible for Duty Exemption upon Import.” Exhibits exceeding the prescribed categories or limits, or those remaining unsold at the end of the exhibition and not re‑exported, shall be subject to taxation in accordance with applicable regulations. Customs will not impose post‑clearance supervision on preferential‑treatment exhibits as if they were goods enjoying tax reductions or exemptions. The organizing entities are required to submit a report on the implementation of these measures within three months after the conclusion of each fair.
The General Office of the Ministry of Industry and Information Technology has issued the Guidelines on the Standard System for Safety and Emergency Equipment.
Recently, the General Office of the Ministry of Industry and Information Technology issued the “Notice on the Issuance of the Guidelines for Building a Standards System for Safety and Emergency Equipment (2026 Edition).”
The “Guideline (2026 Edition)” focuses on the classification and characteristics of the safety and emergency equipment industry, sets out the overall requirements and development approach for the standards system, and clarifies its structure and framework. The scope of standardization encompasses six categories: foundational and generic standards, equipment‑product standards, enabling‑technology standards, system‑integration standards, industry‑service standards, and sector‑specific application standards. Complementing this is the “Preliminary Research List of Key Standards for Safety and Emergency Equipment (2026–2028),” which identifies priority research tasks.
Government Work Report: The GDP growth target for 2026 is set at 4.5%–5%.
On March 5, Premier Li Qiang of the State Council delivered the Government Work Report at the Fourth Session of the 14th National People’s Congress.
The report sets out the following key targets for 2026: GDP growth of 4.5%–5%, an urban surveyed unemployment rate of around 5.5%, a CPI increase of approximately 2%, and a reduction in carbon dioxide emissions per unit of GDP by roughly 3.8%. It also specifies that the fiscal deficit-to-GDP ratio is slated at 4%, with plans to issue 1.3 trillion yuan of ultra‑long-term special government bonds and 4.4 trillion yuan of local special-purpose bonds. Reform measures include drafting regulations on the development of a unified national market, releasing a list of incentives and prohibitions for investment promotion, improving the fair‑competition review system, advancing reforms of the fiscal, tax, and financial systems—such as adjusting the consumption tax and shifting the collection point for certain items—and refining supporting laws and policies to bolster the Law on Promoting the Private Sector. In terms of building a law-based government and enhancing governance, the report calls for launching a special campaign to standardize administrative enforcement involving enterprises, establishing long‑term mechanisms to ensure such enforcement is规范ized, and promoting initiatives like “efficiently completing one task” and digital government development, while emphasizing adherence to the rule of law, audit oversight, and transparency in public administration.

Taxation

TAXATION

The Shanghai Lawyers Association has issued the Guidelines on Tax-Related Matters in Private Equity Funds (2026).
On March 2, the Shanghai Lawyers Association released the “Operational Guidelines for Lawyers Handling Tax-Related Matters in Private Equity Funds (2026) (Trial).”
The Guidelines apply to private equity and venture capital funds operating within the territory of the People’s Republic of China (excluding Hong Kong, Macao, and Taiwan), and are intended as a reference for professional practice rather than a mandatory regulatory standard. The content covers all stages—fundraising, investment, management, exit, and record‑keeping: In the fundraising phase, emphasis is placed on how the fund’s legal structure (partnership, corporation, or contract) affects income tax, value‑added tax, and stamp duty; it also highlights, under the QFLP framework, risks related to permanent establishments, beneficial owners, withholding taxes, and the withholding/reporting obligations associated with indirect transfers under Announcement No. 7. During the management phase, key issues include determining the nature of performance fees (carried interest) in alignment with VAT and income tax treatment, handling invoices and cost deductions, and addressing deferred payment timing; distinctions are drawn between withholding and self‑reporting by individual investors and self‑reporting by institutional investors. In the investment and exit phases, the guidelines set out tax‑due‑diligence priorities, address S‑transactions, the treatment of interest, debt instruments, and hybrid financial products, and outline tax‑related disputes arising from liquidations and non‑cash distributions. They further clarify the key considerations for venture capital registration and the application of regional tax incentives.

Litigation and Arbitration

LITIGATION & ARBITRATION

The Supreme People’s Procuratorate has released typical cases to deepen the “Procuratorial Protection of People’s Livelihood” initiative.
Recently, the Supreme People’s Procuratorate released typical cases from its ongoing special campaign to “Protect People’s Livelihoods through Prosecutorial Oversight.”
The cases cover areas such as personal information protection, combating telecom and online fraud, supervising false litigation, coordinating wage‑arrears enforcement, environmental public interest litigation, linking judicial assistance with social assistance, and protecting plant variety rights. They include: in the “social worker database/open‑box” case, conducting technical reviews of massive electronic data and prosecuting offenses of infringing citizens’ personal information and illegally using information networks; in a cross‑border order‑boosting fraud case, inferring the amount of fraud based on illicit proceeds and recovering nearly RMB 14 million; in a case involving false litigation over labor‑relationship conofficeation and commercial housing sales, overturning the original judgment through retrial and pursuing criminal liability for false litigation; in administrative non‑litigation enforcement of wage arrears, facilitating the entry of rulings granting enforcement into the execution phase; in a case of wastewater‑treatment plants discharging pollutants beyond regulatory limits, issuing a prosecutorial recommendation followed by filing an administrative public interest lawsuit; and in the sale of seeds in “white packages,” urging the agriculture and rural affairs authorities to carry out targeted law‑enforcement actions.
The Supreme People’s Court has provided an overview of judicial work related to people’s livelihoods since the Civil Code came into effect.
Recently, the Supreme People’s Court held a press conference titled “The Law Safeguards a Beautiful Life, the Civil Code Illuminates a Quality Lifestyle.”
The report discloses judicial data and rule‑making efforts related to people’s livelihoods since the Civil Code came into effect: 17 judicial interpretations have been formulated on issues such as marriage and family, labor disputes, torts, food and drug safety, and consumer protection, and 76 batches comprising 771 typical cases have been released. Over the past five years, approximately 86.74 million first‑instance civil and commercial cases were adjudicated. Key points of the judgments cover: differentiated protection in actions challenging enforcement based on whether registration discrepancies reflect actual rights; refined provisions on liability for construction‑project quality and for objects thrown or dropped from heights; rules governing the termination of prepaid‑consumption contracts, the calculation of refunds, accountability for malicious debt evasion, and the regulation of “professional shop‑closing” practices; adherence to the principles of reasonableness and necessity in the collection and use of personal information in online consumption; the application of personality‑right injunctions and the handling of infringements involving AI‑generated face swaps and AI‑created voices; clarifications in Interpretation (II) of the Marriage and Family Chapter, including the invalidity of bigamy, the nullity of gifts arising from breaches of the duty of fidelity, compensation for domestic labor, and factors to be considered in the division of property acquired with parental contributions upon divorce; as well as evidentiary requirements and standards for personal safety protection orders, and the inclusion of psychological violence within the scope of domestic violence.
The Supreme People’s Procuratorate has issued the second batch of typical cases under the linkage and conversion mechanism.
Recently, the Supreme People’s Procuratorate issued the “Notice on the Issuance of the Second Batch of Typical Cases of the Mechanism for Linking and Converting Representatives’ Suggestions, CPPCC Proposals, and Public Interest Litigation Prosecutorial Recommendations.”
This release features 10 typical cases, with leads originating from six suggestions submitted by deputies to the People’s Congress and four proposals put forward by members of the Chinese People’s Political Consultative Conference. The cases fall into two categories: eight administrative public-interest litigation proceedings initiated prior to formal filing, and two cases that proceeded to litigation. The areas covered include false advertising of intangible cultural heritage labels and platform governance; cross‑regional cooperation on the quality and safety of food agricultural products; joint military‑civilian efforts to protect sites bearing evidence of crimes committed during Japan’s invasion of China; enforcement of bans on employment in the food industry; preservation of the traditional architectural character of villages and remediation of fire‑safety hazards; litigation concerning overflow from stormwater–sewage networks and oversight of drainage management; rectification of illegal water extraction in a World Geopark; litigation aimed at regulating prepaid fitness cards; improvements to water pollution prevention and stormwater–sewage separation; and the recovery of improperly disbursed special subsidies for camellia oleifera plantations, along with project verification and corrective measures. Case‑handling approaches encompass issuing prosecutorial recommendations, holding public hearings, conducting data‑model screening, exercising case‑type supervision, and fostering cross‑regional or military‑civilian collaboration. Building on individual case resolutions, mechanisms such as information sharing and collaborative memoranda have been established.
The National People’s Congress is deliberating the Draft Ecological and Environmental Code.
On March 5, the Standing Committee of the National People’s Congress released the “Explanatory Notes (Summary) on the Draft Civil Code of the People’s Republic of China on Ecological Environment.”
The draft comprises five parts and 1,242 articles: The General Provisions section consolidates overarching mechanisms related to planning, standards and monitoring, environmental impact assessment, emergency response, and information disclosure; it explicitly incorporates greenhouse gases into the EIA framework, standardizes the registration and quality‑control requirements for EIA technical agencies, and revises the provision on “National Ecological Day.” The Pollution Prevention and Control section centers on the pollutant discharge permit system, refining regulations on air quality (including VOCs limits and labeling, oversight of motor vehicles, ships, and non‑road mobile machinery, and control of straw burning), water quality (such as approval and remediation of river‑borne discharge outlets, management of key groundwater areas, and governance of priority river basins), and solid waste (including inter‑provincial transfer reporting, a zero‑import policy for solid waste, and the use of joint manifest systems for construction waste). It also introduces new chapters on chemical substance risk management, electromagnetic radiation, and light pollution. The Ecological Conservation and Green, Low‑Carbon Development section incorporates principled rules on ecosystem protection, efficient and sustainable use of natural resources, the circular economy, energy conservation, and climate change. The Liability section unifies liability attribution and daily fines, while imposing penalties for violations of discharge permits, EIA requirements, and carbon‑trading data‑reporting obligations. Upon enactment, it is slated to concurrently repeal ten related laws.
The National People’s Congress is deliberating the draft Law on National Development Planning.
On March 5, Xinhua News Agency released the “Explanation (Summary) on the Draft Law of the People’s Republic of China on National Development Planning.”
The draft comprises six chapters and 38 articles, clearly defining the national development plan as the five-year program outline for national economic and social development, together with its requisite long-term vision, and establishing its overarching status within the national planning system. With respect to preparation, the State Council shall organize its formulation upon the recommendation of the CPC Central Committee, specifying that its principal contents include environmental analysis, target indicators, major strategic tasks, key policy measures and projects, and implementation safeguards, while also providing for procedures such as public participation and expert review. As for review and approval, the State Council shall submit the plan to the National People’s Congress for examination and approval; the Standing Committee of the NPC shall review and approve any adjustments and promulgate them in accordance with the law. In terms of implementation, annual plans, plans at all levels and of various types, and the allocation of policy resources must be coordinated and aligned, with a mechanism for dynamic monitoring and evaluation established. Regarding oversight, the NPC and its Standing Committee, along with the supervisory and auditing authorities, shall exercise lawful supervision, with mid-term and final evaluations conducted; local plans shall be submitted for record‑keeping and coordination, and provisions are made to support Hong Kong and Macao in aligning with the national plan.

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