JC Master Legal News Issue 805

Key Takeaways for This Issue

The China Insurance Regulatory Commission and the Ministry of Finance have jointly issued the “Guiding Opinions on Strengthening the Management of Insurance Fund Investment to Support the Prevention and Resolution of Local Government Debt Risks.”
Recently, the China Insurance Regulatory Commission and the Ministry of Finance jointly issued the “Guiding Opinions on Strengthening the Management of Insurance Fund Investments to Support the Prevention and Resolution of Local Government Debt Risks,” which aims to enable insurance institutions to serve the real economy more safely and efficiently while safeguarding against and mitigating local government debt risks.
Seven departments, including the National Development and Reform Commission and the State-owned Assets Supervision and Administration Commission, have issued the “Notice on Supporting Central Government Agencies to Deeply Participate in Comprehensive Innovation and Reform Pilot Programs in Their Respective Regions.”
Recently, seven government departments, including the National Development and Reform Commission, the State-owned Assets Supervision and Administration Commission, and the Ministry of Science and Technology, issued the “Notice on Supporting Central Government Agencies to Deeply Participate in Comprehensive Innovation and Reform Pilot Programs in Their Respective Regions,” calling for vigorous promotion of military–civilian integration and innovation. At the same time, central enterprises are required to select pilot entities within reform pilot zones tasked with implementing pilot programs for deep military–civilian integration, and to actively advance the shareholding system reform and mixed‑ownership reform of defense‑related enterprises.
The Ministry of Finance and three other departments have jointly issued the “Notice on Matters Relating to the Suspension of Collection of Wastewater Discharge Fees and Other Administrative Charges.”
On January 16, 2018, the Ministry of Finance, the National Development and Reform Commission, the Ministry of Environmental Protection, and the State Oceanic Administration jointly issued the “Notice on Matters Relating to the Suspension of the Discharge Fee and Other Administrative Charges,” officially announcing that, effective January 1, 2018, the discharge fee and the marine engineering wastewater discharge fee would be uniformly suspended nationwide.
The Second Plenary Session of the 19th Central Committee adopted the “Proposal of the CPC Central Committee on Amending Certain Provisions of the Constitution.”
The Second Plenary Session of the 19th Central Committee of the Communist Party of China was held in Beijing from January 18 to 19, 2018. The session adopted the “Proposal of the CPC Central Committee on Amending Certain Provisions of the Constitution.”
The China Banking Regulatory Commission has, in accordance with the law, investigated and prosecuted the case involving the Chengdu Branch of Shanghai Pudong Development Bank for improperly issuing loans.
On January 19, 2018, the Sichuan Banking Regulatory Bureau imposed a fine of RMB 462 million on the Chengdu Branch of Shanghai Pudong Development Bank in accordance with the law. In addition, the former president of the branch, two vice presidents, one department head, and one sub-branch president were each subjected to penalties, including a lifetime ban from engaging in banking activities, revocation of their qualifications as senior management personnel, warnings, and fines.

Table of Contents
Table of Contents

Finance & Capital Markets

The China Insurance Regulatory Commission and the Ministry of Finance have jointly issued the “Guiding Opinions on Strengthening the Management of Insurance Fund Investment to Support the Prevention and Resolution of Local Government Debt Risks.”
CSRC Annual Report on Case Handling for 2017
The People’s Bank of China has issued the “Notice on Matters Concerning the Improvement of Classified Management of Personal Bank Accounts.”

The People’s Bank of China, the China Banking and Insurance Regulatory Commission, and the China Securities Regulatory Commission jointly issued the “Opinions on Financial Support for Poverty Alleviation in Deeply Impoverished Areas.”
The China Insurance Regulatory Commission has issued the “Overall Plan for Winning the Tough Battle to Prevent and Resolve Major Risks in the Insurance Industry.”

Corporate & Commercial

  
Seven departments, including the National Development and Reform Commission and the State-owned Assets Supervision and Administration Commission, have issued the “Notice on Supporting Central Government Agencies to Deeply Participate in Comprehensive Innovation and Reform Pilot Programs in Their Respective Regions.”
The Measures for the Administration of Pollutant Discharge Permits (Trial) Have Been Issued.
The Ministry of Land and Resources has announced two major approaches to land reform.
The China National Tourism Administration and the State Council Leading Group Office of Poverty Alleviation have jointly issued the “Action Plan for Supporting Tourism‑Based Poverty Alleviation in Deeply Impoverished Areas.”
The National Development and Reform Commission has issued the “Notice on the Issuance of the Overall Plan for the Construction of the Shandong Comprehensive Pilot Zone for Transforming Old and New Growth Drivers.”
The China Insurance Regulatory Commission has issued the Measures for the Administration of Insurance Standardization Work.

Taxation

The Ministry of Finance and three other departments have jointly issued the “Notice on Matters Relating to the Suspension of Collection of Wastewater Discharge Fees and Other Administrative Charges.”
The National Tax Work Conference was held in Beijing.

Litigation & Arbitration

The Second Plenary Session of the 19th Central Committee adopted the “Proposal of the CPC Central Committee on Amending Certain Provisions of the Constitution.”
The Supreme People’s Court has issued a judicial interpretation clarifying the criteria for determining marital joint debts.

Other

The China Banking Regulatory Commission has, in accordance with the law, investigated and prosecuted the case involving the Chengdu Branch of Shanghai Pudong Development Bank for improperly issuing loans.
The General Office of the State Council has issued the “Measures for Assessing Provincial Governments’ Accountability for Farmland Protection.”

Finance & Capital Markets

The China Insurance Regulatory Commission and the Ministry of Finance have jointly issued the “Guiding Opinions on Strengthening the Management of Insurance Fund Investment to Support the Prevention and Resolution of Local Government Debt Risks.”
Recently, the China Insurance Regulatory Commission and the Ministry of Finance jointly issued the “Guiding Opinions on Strengthening the Management of Insurance Fund Deployment to Support the Prevention and Resolution of Local Government Debt Risks” (hereinafter referred to as the “Guiding Opinions”), which aim to enable insurance institutions to serve the real economy more safely and efficiently while preventing and mitigating local government debt risks.
The “Guiding Opinions” clarify the policy boundaries governing the use of insurance funds in connection with local government borrowing and financing activities, and stipulate that insurance fund investments must be standardized while strictly prohibiting illegal or non-compliant debt‑raising and guarantee practices. The key provisions include: First, insurance institutions are encouraged to conduct investments in accordance with the law and regulatory requirements. While supporting insurance funds’ investment in government‑funded projects—such as infrastructure and public‑welfare initiatives that are vital to national economic development and people’s livelihoods—the guidelines expressly prohibit providing financing to local governments in violation of laws or regulations. Likewise, local governments are prohibited from engaging in illegal or disguised borrowing from insurance institutions. Second, ensure proper coordination in managing risks associated with existing debt. Insurance institutions are required to handle their outstanding investments in local governments prudently, and local governments are expected to provide active support, promptly identify risks, and take timely remedial measures. Third, regulate the conduct of investment‑financing platform companies. Insurance institutions must thoroughly assess local fiscal affordability and may not, through such platforms, illegally incur additional local government debt. Local governments, for their part, are required to advance the transparent disclosure of fiscal and borrowing information in compliance with regulations, thereby safeguarding insurance institutions’ right to know. Fourth, pursue innovative business activities in a prudent and compliant manner. It is explicitly stated that insurance institutions may not, by means of equity‑investment plans or other innovative instruments, illegally create local government debt. Local governments are likewise prohibited from using the pretext of attracting insurance institutions or other forms of social capital to engage in illegal or disguised borrowing for new projects or expanded operations. Fifth, strengthen risk management across the industry. Relevant industry associations are tasked with serving as platforms to enhance monitoring of local government debt risks. Local governments are urged to accelerate the establishment of cross‑departmental joint monitoring and prevention mechanisms, improve information sharing, and support insurance institutions in refining their risk‑management systems. Sixth, rigorously enforce the responsibilities of market participants. The risk‑management obligations of insurance institutions are reinforced, accountability mechanisms are improved, and oversight of both insurance institutions and intermediary service providers is strengthened.

CSRC Annual Report on Case Handling for 2017
Recently, the China Securities Regulatory Commission (CSRC) released its report on case handling for 2017. In 2017, the inspection authorities received 625 valid leads concerning various violations of laws and regulations, with abnormal trading‑monitoring alerts accounting for 70% of these. Throughout the year, 478 new investigations were initiated, yielding an initiation rate of 76%; 312 cases were formally filed, corresponding to a filing rate of 65%. The CSRC also launched four batches of targeted enforcement campaigns, totaling 54 landmark cases, focusing on cracking down on typical market misconduct such as financial fraud, speculative trading in newly listed stocks, illicit trading through high‑ratio stock dividends and share transfers, and irregularities in the private‑equity sector. The number of newly identified major cases rose to 90, doubling compared with the previous year. A total of 335 cases were concluded, up 43% year over year; of these, 303 were referred to administrative penalty authorities, and 31 cases or leads involving suspected criminal activity were handed over to public security organs. Additionally, 157 foreign‑related assistance‑inquiry cases were initiated, representing a 15% increase over the average level of the preceding three years. In total, measures restricting exit were applied to 491 individuals involved in cases, and funds related to these cases amounting to RMB 155 million were frozen in accordance with the law.
The cases exhibit the following characteristics: First, serious violations persist across all stages of information disclosure, with financial fraud becoming increasingly covert and disclosures being abused for illicit profit. Second, high‑profile insider trading cases are frequent, with mergers and acquisitions and corporate restructurings remaining particularly vulnerable; the multi‑tiered, multi‑directional, and repeated transmission of inside information often gives rise to clusters of related offenses. Third, while the number of “rat‑trading” cases has declined markedly, some asset‑management professionals continue to flout the law, and private‑fund rat‑trading is emerging as a growing concern. Fourth, the number of market‑manipulation investigations has fallen significantly, yet such schemes display clear signs of organized, professional operation, with short‑term pump‑and‑dump tactics being especially prevalent. Fifth, in the private‑fund sector, the total amount of illegal proceeds is substantial, compounded by multiple regulatory breaches, thereby exacerbating the harm to the market. Sixth, on the New Third Board, the motives for violations are diverse, with prominent issues including misappropriation of funds, improper disclosure, and collusive manipulation. Seventh, certain intermediary institutions engage in perfunctory due diligence and verification, seriously undermining professional ethics and repeatedly violating the law only to be caught again and again. Eighth, leveraging the internet and social media to fabricate and disseminate false information severely disrupts the order of the securities and futures markets and inflicts grave damage. Ninth, a stringent crackdown will remain in place against other illegal and non‑compliant activities that undermine the stable functioning of the capital market.

The People’s Bank of China has issued the “Notice on Matters Concerning the Improvement of Classified Management of Personal Bank Accounts.”
On January 19, 2018, the People’s Bank of China issued the “Notice on Matters Concerning the Improvement of Classified Management of Personal Bank Accounts,” with the aim of thoroughly implementing the spirit of the 19th National Congress of the Communist Party of China, the Central Economic Work Conference, and the National Financial Work Conference; deepening reform of the personal bank account system; effectively carrying out classified management of personal bank accounts; and optimizing services related to personal bank accounts.
The Notice places the implementation of real-name bank account registration and the protection of depositors’ legitimate rights and interests at its core, while striving to balance security with efficiency. Guided by a management approach that harmonizes innovation encouragement with risk prevention, it begins by facilitating the opening and use of Class II and Class III accounts, with a particular focus on promoting the adoption of Class III accounts. This aims to further enhance the role of bank accounts in the realm of small-value payments, thereby meeting the growing public demand for diversified and personalized payment solutions. The initiative seeks to make Class II and Class III accounts the primary channels for individuals to conduct online and mobile payments for small‑value transactions and bill payments, fully leveraging the bank account classification system to isolate risks and safeguard the financial security of the general public.

The People’s Bank of China, the China Banking and Insurance Regulatory Commission, and the China Securities Regulatory Commission jointly issued the “Opinions on Financial Support for Poverty Alleviation in Deeply Impoverished Areas.”
Recently, the People’s Bank of China, the China Banking and Insurance Regulatory Commission, and the China Securities Regulatory Commission jointly issued the “Opinions on Financial Support for Poverty Alleviation in Deeply Impoverished Areas” (hereinafter referred to as the “Opinions”). The Opinions emphasize expanding direct financing channels in deeply impoverished areas. For eligible enterprises in these regions seeking an initial public offering, the review process will be expedited, with the application of the “report‑and‑review‑immediately, approve‑and‑issue‑immediately” policy. Eligible enterprises are encouraged to list on the National Equities Exchange and Quotations for Small and Medium‑sized Enterprises, where a dedicated liaison and specialized review will be provided, along with the “report‑and‑review‑immediately, list‑upon‑approval” policy, and reduced or waived listing initiation fees. For eligible enterprises issuing corporate bonds or asset‑backed securities, a dedicated liaison and specialized review will be implemented, with the “report‑and‑review‑immediately” policy applied. Furthermore, eligible enterprises in deeply impoverished areas are supported in raising funds through debt‑financing instruments such as short‑term financing bills, medium‑term notes, poverty‑alleviation bonds, and social‑impact bonds, with a 50% reduction in relevant administrative fees. Innovative insurance products will be developed to increase insurance penetration and depth in these areas; by the end of 2020, supplementary medical insurance will achieve broad coverage among impoverished populations, and policy‑based agricultural insurance will provide full coverage at the township level.
The Opinions clearly state that ecological and environmental protection in deeply impoverished areas must be strengthened. Financial service outlets will be prioritized in these regions to expand coverage, with the goal of achieving full administrative‑village coverage of rural cash‑withdrawal services by the end of 2020, ensuring that “basic financial services remain within the village and comprehensive financial services stay within the township.” A comprehensive initiative to establish credit‑worthy townships, villages, and households will be launched, aiming to achieve full coverage of the credit‑information system for registered impoverished households in deeply impoverished areas by 2020. The credit‑evaluation mechanism will be refined, and credit‑based lending will be vigorously expanded.
The Opinions call for optimizing the regulatory assessment of banking financial institutions. For those institutions operating in deeply impoverished areas, if the non‑performing loan ratio on individual targeted poverty‑alleviation loans exceeds their overall loan NPL ratio by no more than 2 percentage points relative to their annual target, a certain degree of tolerance may be granted in both supervisory evaluations and internal performance assessments.

The China Insurance Regulatory Commission has issued the “Overall Plan for Winning the Tough Battle to Prevent and Resolve Major Risks in the Insurance Industry.”
On January 17, 2018, the China Insurance Regulatory Commission issued the “Overall Plan for Winning the Tough Battle of Preventing and Resolving Major Risks in the Insurance Industry” (hereinafter referred to as the “Plan”), aimed at further strengthening risk prevention and control in the insurance sector, enhancing risk‑mitigation capabilities, and officely safeguarding the bottom line of preventing systemic financial risks. The Plan sets out three key tasks to be accomplished over a three‑year period: effectively managing and addressing risks in priority areas of the insurance industry; resolutely cracking down on illegal and non‑compliant insurance business activities; and reinforcing regulatory frameworks in weak links.
The Plan breaks down the three major tasks into 21 specific sub‑tasks. Specifically, with regard to risk prevention and resolution in key areas, the Plan outlines eight tasks, including the prevention and handling of risks associated with a small number of troubled companies, failures in corporate governance, mismanagement of funds, insurance operations, capital inadequacy, emerging types of insurance business, external risk transmission and shocks, and mass‑action incidents. In terms of preventing and addressing risks related to the use of funds, the Plan emphasizes guarding against illegal investment practices by insurance funds, particularly risks involving circumvention of related‑party transaction oversight and the transfer of benefits to persons with special relationships. It also calls for vigilance against irrational mergers and acquisitions, stock speculation, illicit real‑estate investments conducted through nested financial products, and other aggressive investment strategies such as short‑term funding for long‑term projects. Furthermore, it underscores the need to mitigate the risk of substantial losses resulting from investment failures.

Commercial & Corporate

Seven departments, including the National Development and Reform Commission and the State-owned Assets Supervision and Administration Commission, have issued the “Notice on Supporting Central Government Agencies to Deeply Participate in Comprehensive Innovation and Reform Pilot Programs in Their Respective Regions.”
Recently, seven government departments, including the National Development and Reform Commission, the State-owned Assets Supervision and Administration Commission, and the Ministry of Science and Technology, issued the “Notice on Supporting Central Government Agencies to Deeply Participate in Comprehensive Innovation and Reform Pilot Programs in Their Respective Regions” (hereinafter referred to as the “Notice”), which calls for vigorous promotion of military–civilian integration and innovation. At the same time, central enterprises are required to select pilot entities within reform pilot zones tasked with implementing pilot programs for deep military–civilian integration, and to actively advance the shareholding system reform and mixed‑ownership reform of defense‑related enterprises.
The Notice clarifies that defense‑related research institutes engaged in production and business activities may convert non‑commercial assets into commercial ones. It also permits defense enterprises to establish mechanisms for the re‑development, declassification, and decryption of military‑grade technologies. Furthermore, defense units are authorized to pilot the adoption of advanced, applicable civilian standards in the research and production of military products, thereby promoting the harmonization of military and civilian product and technology standards. Central government agencies are required to establish resource‑sharing mechanisms for their respective defense‑related assets and, on a case‑by‑case basis, open defense‑science‑and‑technology laboratories, major defense‑industry test facilities, and large scientific instruments to the public.
The Notice also calls for the improvement of innovation‑incentive mechanisms within state-owned enterprises. It permits units affiliated with central SOEs to strengthen performance assessments and incentive systems that are officely oriented toward innovation, establish an evaluation framework centered on innovation‑driven performance, and implement, on a case‑by‑case basis, special tenure‑based evaluations focused on bolstering innovative capacity and advancing key projects. Furthermore, it introduces a fault‑tolerance mechanism for major innovation initiatives and projects undertaken by these units, and adopts medium- and long‑term innovation‑oriented incentives such as equity‑based rewards, thereby fully mobilizing the enthusiasm and creativity of senior management as well as core personnel in managerial and technical roles.

The Measures for the Administration of Pollutant Discharge Permits (Trial) Have Been Issued.
The Ministry of Environmental Protection recently issued the Measures for the Administration of Pollutant Discharge Permits (Trial) (hereinafter referred to as the “Measures”), which sets forth procedures for issuing discharge permits and other related provisions, and clarifies the legal responsibilities of environmental protection authorities, polluting entities, and third-party institutions, marking a solid step forward in reforming and improving the pollutant discharge permit system.
The Administrative Measures serve as the primary legal basis for the application for and issuance of pollution discharge permits. They set forth the procedures for issuing such permits, delineating the full lifecycle—from application and review to issuance—as well as the handling of various scenarios, including amendments, renewals, revocations, cancellations, and replacements in cases of loss. The Measures also standardize the documentation that enterprises must submit, the information that must be made publicly available, the procedures followed by environmental protection authorities during acceptance, the requirements for review, the provisions governing permit issuance, and the application of best available techniques in the application and issuance processes.
The Measures clearly stipulate strict regulatory oversight and law enforcement in accordance with the discharge permit. Regulatory and law‑enforcement authorities shall formulate enforcement plans for discharge permits, specifying priority areas and frequency of inspections. During enforcement, they shall verify compliance with the permit’s conditions by applying the principles for calculating actual pollutant emissions, reviewing accounting records, online monitoring data, and other surveillance measures or conducting enforcement‑based monitoring, to assess whether enterprises are implementing the requirements set forth in their discharge permits. Furthermore, the Measures provide that if a discharging entity promptly reports an abnormal situation and proactively takes measures to eliminate or mitigate the adverse consequences of the violation, it shall be subject to lighter penalties in accordance with the law.
The Measures further specify the legal liabilities of environmental protection authorities, polluting entities, and third-party institutions. Within the existing legal framework, they detail the legal responsibilities and corresponding penalties applicable to polluting entities, environmental protection authorities, and technical service agencies. The Measures also elaborate on specific violations, including discharging pollutants without a permit, discharging in violation of permit conditions, submitting falsified or misleading documentation, conducting unauthorized self-monitoring, and failing to disclose environmental information as required by law, and clearly set forth the penalties for such violations in accordance with relevant laws.

The Ministry of Land and Resources has announced two major approaches to land reform.
On January 15, 2018, Minister of Land and Resources Jiang Daming announced two major approaches to land reform:
First, the government will no longer be the sole provider of residential land. China will study and formulate measures to allow non-real estate enterprises, under conditions where property rights remain unchanged and in compliance with planning requirements, to legally obtain land-use rights for residential purposes. It will also deepen pilot programs to utilize rural collectively-owned construction land for developing rental housing, and work to establish a housing system characterized by multi‑stakeholder supply and diversified channels for both renting and purchasing, ensuring that all people have access to adequate housing.
II. China will explore the separation of the three rights—ownership, qualification, and usage—related to rural residential land: upholding collective ownership of such land, safeguarding farmers’ qualification rights, and appropriately liberalizing the right to use it. However, urban residents will not be permitted to purchase rural residential land, and the construction of villas, large compounds, or private clubs on such land in rural areas is strictly prohibited.

The China National Tourism Administration and the State Council Leading Group Office of Poverty Alleviation have jointly issued the “Action Plan for Supporting Tourism‑Based Poverty Alleviation in Deeply Impoverished Areas.”
Recently, the China National Tourism Administration and the State Council Leading Group Office of Poverty Alleviation issued the “Action Plan for Supporting Tourism‑Based Poverty Alleviation in Deeply Impoverished Areas,” focusing on these regions and substantially strengthening support for tourism‑driven poverty reduction.
The Plan states that the objectives and tasks for supporting tourism‑driven poverty alleviation in deeply impoverished areas are as follows: By 2020, the level of tourism‑based poverty‑alleviation planning in deeply impoverished regions such as the “Three Areas and Three Prefectures” will have been significantly enhanced; infrastructure and public service facilities will have been markedly improved; rural tourism‑based poverty‑reduction measures will be more robust; the quality of training for rural tourism‑related personnel will have risen substantially; the quality of distinctive tourism products will have been notably upgraded; rural tourism brands will have been effectively promoted; overall tourism‑related benefits will continue to grow; achievements in tourism‑driven poverty alleviation will be steadily consolidated; and rural tourism will play an effective role in helping the “Three Areas and Three Prefectures” and other deeply impoverished areas achieve poverty eradication on schedule.
The Plan sets forth that the fundamental principles for supporting tourism‑driven poverty alleviation in deeply impoverished areas are: concentrating superior resources and strengthening accountability; leveraging industrial strengths to generate meaningful spillover effects; pursuing in-depth development while seeking innovative breakthroughs; and prioritizing equitable benefit-sharing to ensure targeted poverty reduction. To this end, a series of concrete measures will be implemented, including the Tourism‑Driven Poverty Alleviation Planning Initiative, the Tourism Infrastructure Enhancement Project, the High‑Quality Tourism Product Development Program, the Tourism Promotion Campaign, the Tourism Talent Training Scheme, and the Demonstration‑Based Poverty Alleviation Pilot Program, with the aim of fully advancing and officely establishing all aspects of tourism‑based poverty alleviation.

The National Development and Reform Commission has issued the “Notice on the Issuance of the Overall Plan for the Construction of the Shandong Comprehensive Pilot Zone for Transforming Old and New Growth Drivers.”
On January 17, 2018, the National Development and Reform Commission issued the “Notice on the Issuance of the Overall Plan for the Construction of the Shandong Comprehensive Pilot Zone for Transforming Old and New Growth Drivers” (hereinafter referred to as the “Plan”).
The Plan states that, based on resource and environmental carrying capacity, existing foundations, and development potential, efforts will be accelerated to strengthen the core status of Jinan, Qingdao, and Yantai, thereby establishing an overarching framework for kinetic energy transformation characterized by a three‑core leadership model and integrated, mutually reinforcing regional interactions.
The Plan calls for resolving excess capacity and opening up new avenues for kinetic energy transformation. It emphasizes properly balancing the relationships among government and market, short-term and long-term, existing stock and new additions, and supply and demand, with a particular focus on curbing overcapacity in sectors such as steel, coal, electrolytic aluminum, thermal power, and building materials, while maintaining an appropriate level of capacity utilization. Environmental, energy‑consumption, water‑use, safety, quality, and technological standards will be progressively raised, and fiscal, tax, financial, pricing, and land policies will be better coordinated. Through measures including stringent approval and authorization procedures, tight controls on new financing, and the implementation of differentiated water and electricity tariffs, backward production capacity will be compelled to exit the market in accordance with laws and regulations. A market‑based trading platform for capacity‑replacement quotas—such as those for steel—will be established to facilitate the trading of such quotas. By means of industrial transformation and restructuring, relocation and upgrading, enterprises will be supported in undertaking cross‑regional and cross‑ownership mergers and reorganizations, while the transfer of outdated production capacity will be strictly prohibited. Meanwhile, emerging industries will be developed to foster and strengthen new drivers of growth. With a focus on next‑generation information technology, high‑end equipment, new energy and new materials, modern marine industries, and medical‑healthcare services, efforts will be made to deepen the integration of the internet, big data, artificial intelligence, and the real economy, creating advanced manufacturing clusters and serving as hubs for the development of strategic emerging industries, thereby cultivating a robust force of new growth drivers.

Taxation TAXATATION

The Ministry of Finance and three other departments have jointly issued the “Notice on Matters Relating to the Suspension of Collection of Wastewater Discharge Fees and Other Administrative Charges.”
On January 16, 2018, the Ministry of Finance, the National Development and Reform Commission, the Ministry of Environmental Protection, and the State Oceanic Administration jointly issued the “Notice on Matters Relating to the Suspension of the Discharge Fee and Other Administrative Charges” (hereinafter referred to as the “Notice”), officially announcing that, effective January 1, 2018, the discharge fee and the marine engineering wastewater discharge fee would be uniformly suspended nationwide. Meanwhile, this year, the environmental protection tax—intended to replace the discharge fee—has been formally levied.
The Ministry of Finance, in accordance with the principle of institutional transition, has restructured the pollutant discharge fee into an environmental protection tax, ensuring a smooth and seamless shift from the former to the latter. Specifically, it has established tax categories based on the existing pollutant discharge fee items, designated payers of the discharge fee as taxpayers of the environmental protection tax, used the quantity of taxable pollutant emissions as the tax base, and set the current discharge‑fee collection standards as the minimum tax rates for the environmental protection tax.

The National Tax Work Conference was held in Beijing.
On January 17, the National Tax Work Conference was held, at which six key tasks for 2018 were outlined: ensuring tax revenue is collected in accordance with the law; proactively supporting major national strategies; deepening tax system reform; further advancing the “delegation, regulation, and service” reform within the tax administration; effectively strengthening international tax cooperation; and continuously promoting tax governance based on the rule of law.

LITIGATION & ARBITRATION

The Second Plenary Session of the 19th Central Committee adopted the “Proposal of the CPC Central Committee on Amending Certain Provisions of the Constitution.”
The Second Plenary Session of the 19th Central Committee of the Communist Party of China was held in Beijing from January 18 to 19, 2018. The session adopted the “Proposal of the CPC Central Committee on Amending Certain Provisions of the Constitution.”
The overarching requirement of this constitutional amendment is to hold high the great banner of socialism with Chinese characteristics, fully implement the spirit of the 19th National Congress of the Communist Party of China, and adhere to Marxism-Leninism, Mao Zedong Thought, Deng Xiaoping Theory, the important thought of Three Represents, the Scientific Outlook on Development, and Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as guiding principles. It seeks to uphold the organic unity of the Party’s leadership, the people being masters of the country, and governance according to law; to enshrine in the nation’s fundamental law the major theoretical viewpoints and major policies adopted at the 19th National Congress, particularly Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era; and to reflect the new achievements, new experiences, and new requirements in the development of the Party and the state. On the basis of maintaining the overall continuity, stability, and authority of China’s Constitution, this amendment aims to advance the Constitution in keeping with the times and to further improve and develop it, thereby providing robust constitutional guarantees for upholding and developing socialism with Chinese characteristics in the new era, achieving the Two Centenary Goals, and realizing the Chinese Dream of national rejuvenation.
The plenary session stated that this constitutional amendment must adhere to the following principles: upholding the leadership of the Communist Party of China, following the path of socialist rule of law with Chinese characteristics, and maintaining the correct political direction; proceeding strictly in accordance with the law and established procedures; fully promoting democracy and broadly building consensus, so as to ensure that the amendment reflects the will of the people and enjoys their support; and adhering to the principle of making only partial amendments to the Constitution rather than undertaking major revisions—thus meeting both the requirements of the development of the Party and the cause of the people and respecting the inherent laws governing the evolution of the Constitution and the law, while safeguarding the Constitution’s continuity, stability, and authority.
The plenary session held that constitutional amendments bear on the overall situation and have broad and far-reaching implications. It is essential to uphold the principles of scientific, democratic, and law-based legislation, to approach issues from a political, overarching, and strategic perspective, and to examine them in light of the objective laws governing constitutional development and its intrinsic requirements, thereby safeguarding the authority of the Constitution.

The Supreme People’s Court has issued a judicial interpretation clarifying the criteria for determining marital joint debts.
On January 17, 2018, the Supreme People’s Court issued the “Interpretation of the Supreme People’s Court on Certain Legal Issues in the Adjudication of Cases Involving Disputes over Spousal Debt” (hereinafter referred to as the “Interpretation”).
The Interpretation consists of four articles and primarily covers the following three aspects:
I. Joint Debts Arising from a Common Expression of Intent. Article 1 of the Interpretation provides: “Debts incurred through a joint expression of intent, such as when both spouses sign jointly or when one spouse subsequently ratifies the debt, shall be recognized as joint marital debts.” This provision is formulated in accordance with relevant provisions of the General Provisions of the Civil Law, the Marriage Law, and the Contract Law, and in line with the principle of contractual relativity and the fundamental requirements for concluding contracts. From the perspective of how joint marital debts arise, it clearly establishes and underscores the basic principle that debts incurred through joint signatures by both spouses, subsequent ratification by one spouse, or other forms of joint expressions of intent—such as telephone calls, text messages, WeChat communications, emails, and the like—shall be deemed joint marital debts.
II. Marital joint debts incurred in the course of daily family life. Article 2 of the Interpretation provides: “If, during the subsistence of the marital relationship, one spouse incurs a debt in his or her own name for the needs of daily family life, and the creditor asserts rights on the ground that such debt constitutes a joint marital debt, the people’s court shall uphold such claim.” In other words, where the spouses have not agreed that property acquired during the marriage shall be owned separately by each, or where such an agreement exists but the creditor was unaware of it, any debt incurred by one spouse in his or her own name for the purposes of daily family life shall be deemed a joint marital debt.
III. Marital Debts That Creditors Can Prove. Article 3 of the Interpretation provides: “If, during the subsistence of the marital relationship, one spouse incurs a debt in his or her own name that exceeds the needs of daily family life, and the creditor seeks to enforce such debt on the ground that it constitutes a joint debt of the spouses, the people’s court shall not support such claim, unless the creditor can prove that the debt was used for the common life of the spouses, for their joint production or business operations, or was incurred with the mutual consent of both spouses.”

Other

The China Banking Regulatory Commission has, in accordance with the law, investigated and prosecuted the case involving the Chengdu Branch of Shanghai Pudong Development Bank for improperly issuing loans.
On January 19, 2018, the Sichuan Banking Regulatory Bureau imposed a fine of RMB 462 million on the Chengdu Branch of Shanghai Pudong Development Bank in accordance with the law. In addition, the former president of the branch, two vice presidents, one department head, and one sub-branch president were each subjected to penalties, including a lifetime ban from engaging in banking activities, revocation of their qualifications as senior management personnel, warnings, and fines.
Upon investigation, the Chengdu Branch of Shanghai Pudong Development Bank Co., Ltd. was found to have engaged in the following violations: 1) Severe failure of internal controls, constituting a serious breach of prudential operating rules; 2) Failure to provide, or untimely provision of, inspection-related materials, and lack of active cooperation with on-site regulatory inspections, thereby impeding the smooth conduct of such inspections; 3) Serious violations in credit management, constituting a grave breach of prudential operating rules; 4) Improper handling of credit business, constituting a serious breach of prudential operating rules; 5) Improper handling of interbank investment and wealth management business, constituting a serious breach of prudential operating rules; 6) Improper handling of commercial acceptance bill business, constituting a serious breach of prudential operating rules; 7) Improper handling of letter-of‑credit business, constituting a serious breach of prudential operating rules; 8) Improper handling of bank‑accepted bill business, constituting a serious breach of prudential operating rules; 9) Improper use of factoring companies to facilitate circular financing, constituting a serious breach of prudential operating rules.
This case has exposed numerous problems at the Chengdu Branch of Shanghai Pudong Development Bank: First, internal controls have severely failed. For years, the branch has issued loans through unlawful means, yet its internal control system failed to detect and rectify these practices in a timely manner. The branch has also pursued excessively rapid growth in business volume at the expense of sound risk management. To inflate performance metrics and boost profits, it resorted to falsification and fabricated reporting, while placing undue emphasis on improving its ranking in the head office’s branch‑level performance evaluations. Second, compliance awareness is weak. In order to circumvent the head office’s authorization limits and evade regulatory oversight, the branch fragmented transactions and engaged in large‑scale falsification, using superficial compliance as a cover for material violations. Furthermore, this case highlights systemic shortcomings at the head office, including its failure to identify anomalies such as persistently zero non‑performing loans at the branch level, inappropriate performance‑based incentive mechanisms, lax implementation of job‑rotation policies, and insufficient attention to risks flagged by supervisory authorities.

The General Office of the State Council has issued the “Measures for Assessing Provincial Governments’ Accountability for Farmland Protection.”
Recently, the General Office of the State Council issued the “Measures for Assessing Provincial Governments’ Performance in Fulfilling Their Responsibilities for Farmland Protection” (hereinafter referred to as the “Measures”), which shall take effect from the date of issuance. The Measures stipulate that the State Council shall assess the extent to which the people’s governments of provinces, autonomous regions, and municipalities directly under the central government have fulfilled their farmland protection responsibilities. The Ministry of Land and Resources, in conjunction with the Ministry of Agriculture and the National Bureau of Statistics, will be responsible for organizing and conducting the assessment and inspection. A combined approach will be adopted, involving annual self-assessment, mid-term inspections, and end-of-period assessments. Annual self-assessments will be conducted once per year by each province, autonomous region, and municipality directly under the central government; starting in 2016, a five-year planning period will be established, with a mid-term inspection carried out in the third year of each period; and an end-of-period assessment will be conducted in the year following the conclusion of each planning period. Both the mid-term inspections and the end-of-period assessments will comprehensively evaluate and score the implementation of each province’s farmland protection targets, ranking them accordingly. The Measures require relevant departments to, based on the relevant indicators set forth in the “National Land Use Master Plan Outline,” as well as actual conditions such as high-standard farmland construction tasks, nationally coordinated supplementary farmland, ecological conversion of cultivated land, and farmland damaged by disasters, assign assessment and inspection targets—such as the total amount of farmland held and the area of permanent basic farmland protected—to each province, autonomous region, and municipality directly under the central government, thereby defining their farmland protection responsibility targets. Data on the area of farmland, the area of ecologically converted farmland, and the area of permanent basic farmland provided by the national land-use change survey, together with the results of farmland quality surveys, evaluations, and grading, shall serve as the basis for these assessments.

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