JC Master Legal News Issue 1095

Key Takeaways for This Issue
The Shenzhen Stock Exchange has revised two sets of disciplinary sanction rules.
On January 12, the Shenzhen Stock Exchange revised and issued the “Measures for the Implementation of Self-Regulatory Supervisory Measures and Disciplinary Sanctions” and “Self-Regulatory Guidance No. 12 for Listed Companies—Standards for the Imposition of Disciplinary Sanctions,” further solidifying the institutional foundation for comprehensively strengthening regulatory oversight, actively guiding and urging all parties to operate in compliance, and jointly fostering a sound ecosystem in the capital market.
CSRC: Enhance the overseas listing regime and steadfastly advance the opening-up of the capital market.
The inaugural meeting of the Overseas Listed Companies Branch of the China Association of Public Companies was recently held, with Fang Xinghai, a member of the CPC Committee and Vice Chairman of the China Securities Regulatory Commission (CSRC), in attendance and delivering a speech. Fang Xinghai stated that the CSRC remains committed to advancing the opening-up of the capital market and will work with all stakeholders to further refine the mechanisms for overseas listings, diversify issuance channels, and effectively implement the newly introduced pilot regulations on the filing requirements for overseas listings.
New developments in bond market opening-up! The National Association of Financial Market Institutions has issued the “Guidelines for Bond Business Involving Foreign Government‑Related Entities and International Development Institutions.”
On January 12, the National Association of Financial Market Institutional Investors of China issued an announcement stating that, in order to promote the sound development of bond business involving foreign government‑related entities and international development institutions and to enhance the openness of the bond market, the Association has organized market participants to revise the “Guidelines for Bond Business Involving Foreign Government‑Related Entities and International Development Institutions (Trial)” into the “Guidelines for Bond Business Involving Foreign Government‑Related Entities and International Development Institutions.” These guidelines shall take effect from the date of their publication.
The Supreme People’s Court Intellectual Property Tribunal has further clarified the criteria for determining malicious litigation.
Recently, the Intellectual Property Court of the Supreme People’s Court concluded an appeal in a dispute over liability for damages arising from the malicious filing of an intellectual property lawsuit, holding that the defendant’s litigation conduct did not constitute malicious litigation and further clarifying the criteria for determining such conduct.
Finance & Capital Markets
The China Securities Regulatory Commission convened the 20th meeting of its International Advisory Committee in Beijing.
The 20th Meeting of the China Securities Regulatory Commission’s International Advisory Committee (hereinafter referred to as the “Advisory Committee”) was held in Beijing from January 10 to 11, 2024. This marked the first in-person meeting convened since the onset of the COVID‑19 pandemic in 2020. During the session, He Lifeng, Member of the Political Bureau of the CPC Central Committee and Vice Premier of the State Council, met with the Advisory Committee members in attendance.
The theme of this conference is “Deepening the Reform and Development of China’s Capital Market and Advancing High‑Level Opening-Up Amid Global Transformation.” Mr. Howard Davies, Chairman of the Advisory Committee, Ms. Laura Cha, Vice Chair, and 13 other members of the Committee, along with China Securities Regulatory Commission (CSRC) Chairman Yi Huiman and Vice Chairman Fang Xinghai, attended the meeting. Key officials from relevant units within the CSRC system and from its internal departments also participated.
Participants engaged in extensive and in-depth exchanges and discussions around three key themes: “Opportunities, Challenges, and Response Strategies Facing the Capital Market,” “Further Deepening Capital Market Reform to Better Support High-Quality Economic Development,” and “Continuously Advancing High-Level, Institution-Based Two-Way Opening-Up While Effectively Managing Cross-Border Risks and Challenges.” The members commended the Chinese government’s unwavering commitment to reform and opening-up, as well as its policy consistency. They noted that over the past year, China’s capital market has undertaken substantial efforts to comprehensively deepen reforms, promote high-level two-way opening-up and cooperation, and strengthen risk prevention, thereby playing a positive role in supporting corporate innovation and driving the recovery and improvement of the Chinese economy.
The members welcomed the achievements made in recent years in strengthening the rule of law in the capital markets, noting that these advances will help the markets better fulfill their functions. Participants generally agreed that, amid today’s complex and rapidly evolving international political, economic, and financial landscape, capital markets bear significant responsibilities and play a crucial role in global economic recovery and sustainable development. Securities regulators worldwide should carefully analyze and assess the international economic and financial environment, remain committed to their core regulatory mandates, enhance cross-border regulatory and enforcement cooperation, and work together to address emerging issues and challenges.
The members also put forward advisory opinions and policy recommendations on further deepening reform of China’s capital market, strengthening high‑level opening-up and cooperation in the securities and futures markets, fostering medium- and long-term funding sources, advancing sustainable‑development‑related information disclosure in light of national conditions, and enhancing communication, exchange, and market outreach.
The International Advisory Committee is an expert advisory body to the China Securities Regulatory Commission. Established in June 2004 with the approval of the State Council, it comprises overseas financial regulators, senior executives of financial institutions, and renowned scholars and experts. This year marks the Committee’s 20th anniversary. The Committee convenes annually to review developments in China’s securities and futures markets, share the latest international market trends and regulatory practices, and provide advice and recommendations to the CSRC. In doing so, it continues to play a constructive role in helping the CSRC draw on international experience and in advancing the reform, opening-up, and stable, sound development of the capital market.

Strict Supervision, Robust Remediation, and Enhanced Rectification—The SSE’s Disciplinary Measures in Multiple Dimensions Drive Improvements in Listed Company Quality
In 2023, under the strong leadership of the China Securities Regulatory Commission, the Shanghai Stock Exchange thoroughly implemented the spirit of the Central Financial Work Conference, remained officely committed to a people-centered approach, and, guided by the principles of “strict regulation, risk prevention, and promoting development,” effectively leveraged the regulatory efficacy of disciplinary sanctions. It rigorously punished all types of violations, upheld normal market order, and earnestly safeguarded the legitimate rights and interests of investors. While strengthening regulatory deterrence, the Exchange also placed greater emphasis on fostering listed companies’ awareness and motivation to self‑regulate, self‑discipline, and continuously improve themselves—promptly addressing issues, mitigating adverse impacts, enhancing internal controls, and pursuing compliant development. Through a multifaceted approach, the Exchange has worked to elevate the quality of listed companies, jointly building a capital market that is secure, well‑regulated, transparent, open, dynamic, and resilient.
According to statistics, in 2023, the Shanghai Stock Exchange issued a total of 47 public censures, 110 written criticisms, and 244 written warnings in response to violations by listed companies and related entities. It publicly determined that 13 individuals were unfit to serve as directors, supervisors, or senior management personnel of listed companies (hereinafter referred to as “public determinations”), publicly censured controlling shareholders or actual controllers 30 times, directors, supervisors, and senior management personnel (collectively referred to as “directors, supervisors, and senior executives”) 129 times, and listed companies 27 times. By imposing stringent penalties on this “key minority,” the Exchange has focused on addressing prominent issues, thereby fostering a clean and upright environment conducive to the sound development of listed companies.
Strict regulation and lawful, regulatory-compliant penalties for violations.
In 2023, the Shanghai Stock Exchange enforced stringent and robust regulatory oversight, cracking down on all types of illegal and non-compliant conduct by listed companies in accordance with laws and regulations. First, it comprehensively intensified its efforts to investigate and prosecute cases of financial fraud, issuing a total of 15 public reprimands and imposing disciplinary measures on 223 individuals; among them, 12 principal offenders were publicly identified, including delisted companies such as Zijing, Zeda, and ST Qibu. Second, it placed particular emphasis on monitoring unauthorized use of funds and illegal guarantees, publicly reprimanding five companies for such violations and issuing written criticisms to 11 others, while imposing severe accountability measures on key responsible personnel in line with regulatory requirements. For example, Renfu Pharmaceutical and *ST Mingcheng were publicly reprimanded, and their respective actual controllers were publicly barred from holding senior positions for three years. Third, it made every effort to address market irregularities such as unauthorized share reductions, issuing seven public reprimands, 14 written criticisms, and 43 written warnings for improper stock‑trading practices. Notably, a shareholder of Wole Home engaged in large‑scale, unauthorized share reductions, resulting in a public reprimand. Fourth, it rigorously addressed violations related to information disclosure involving speculative “concept” trading, issuing four written criticisms and nine written warnings; for instance, Kanghui Pharmaceutical and Baihua Pharmaceutical were criticized for inaccurately disclosing information on their e‑interaction platforms. Fifth, it strengthened accountability measures for delisted companies, ensuring that each violation is thoroughly investigated and appropriately sanctioned, underscoring that delisting does not absolve entities of responsibility. In the past two years, 13 delisted companies and their relevant liable parties have been subject to disciplinary actions or regulatory measures. Sixth, it strictly regulated disclosures pertaining to control‑related matters, issuing four public reprimands and eight written criticisms; for example, the actual controller of Xintonglian and shareholders of ST Zhongzhu were both publicly reprimanded for concealing contractual arrangements.
A multi-pronged approach combining remedial measures, disciplinary actions, and guidance.
Disciplinary action is not the ultimate goal; what matters more is guiding companies and relevant parties to take proactive remedial measures, implement effective rectifications, and pursue compliant development. Accordingly, when handling cases involving unauthorized share reductions, failure to fulfill performance‑compensation commitments, or incomplete buyback plans, the SSE, after comprehensively assessing the nature of the violations and their market impact, treats voluntary repayment of illicit gains and compensation for losses as mitigating factors, thereby encouraging violators to adopt concrete and effective steps to minimize the adverse consequences of their misconduct. For example, in the case of Yue’an New Materials, a director engaged in unauthorized share sales during a blackout period; the exchange urged the director to repurchase the more than 500,000 shares sold in violation. Similarly, for Oriental Fashion, a major shareholder’s unauthorized reduction was followed by an order to repurchase 3.4 million shares; and in the case of Mele Home, where a major shareholder’s unauthorized sale exceeded 2% of the company’s total share capital, the exchange pressed for prompt repurchase. In each instance, the relevant parties were required to repurchase the improperly disposed shares and committed to remitting any proceeds derived from such repurchases, thereby alleviating, to a certain extent, the negative repercussions of their violations. Another example involves *ST Pangda: in response to the restructuring investor’s failure to honor its performance‑compensation commitment, the exchange repeatedly urged compliance, imposed disciplinary sanctions as punishment, and encouraged the company’s directors, supervisors, and senior management to actively pursue legal remedies and seek recovery of losses.
Promote rectification and use penalties to drive improvement, addressing issues with targeted measures.
Urging listed companies to adopt concrete and effective measures to address and resolve identified issues is a key objective of disciplinary sanctions. To enhance the practical impact of case‑based rectification, the Shanghai Stock Exchange has further enriched the content of its disciplinary decision documents. In addition to detailing the facts of violations, the rationale for the sanctions, and the applicable legal basis, these documents now explicitly require companies to draw broader lessons from each case and implement targeted corrective actions—such as conducting thorough investigations into compliance risks in information disclosure and corporate governance, formulating comprehensive remediation plans, and substantially improving the quality of information disclosure and operational compliance. To date, more than 200 listed companies have completed self‑inspections and submitted remediation reports within the prescribed timeframes, thereby elevating their overall level of compliant operations. Moreover, for violations that directly harm the interests of listed companies and undermine investor rights—such as misappropriation of funds or unauthorized guarantees—the Exchange duly takes into account the steps taken by the responsible parties to resolve these issues when determining the severity of sanctions. Where appropriate, sanctions are mitigated in accordance with regulations, balancing regulatory rigor with a constructive approach that encourages companies to proactively address shortcomings and mitigate risks. In 2023, a total of 18 sanctioned companies repaid misappropriated funds and terminated unauthorized guarantees within the stipulated deadlines, achieving a remediation completion rate of 75%.
Foster synergy to establish a comprehensive accountability mechanism.
As the rule of law in the capital market continues to deepen under the comprehensive registration-based system, a multidimensional accountability framework—encompassing administrative, civil, and criminal measures—is increasingly effective. The Shanghai Stock Exchange, anchored in its primary responsibility for frontline supervision, has refined coordination mechanisms with administrative penalties and civil litigation, thereby fostering synergistic regulatory efforts. On the one hand, leveraging the timeliness and flexibility of self-regulatory oversight, it swiftly addresses minor information-disclosure violations, clarifies regulatory requirements, and delivers a “wake-up call”‑style reminder. On the other hand, it imposes stringent sanctions on serious, egregious breaches, including public censure and formal determinations at the highest level, delivering a “heavy‑handed” deterrent effect. At the same time, it maintains efficient coordination with administrative authorities and judicial proceedings. For instance, in the case of Zijing’s fraudulent issuance leading to delisting, the China Securities Regulatory Commission imposed severe penalties, while the Shanghai Stock Exchange concurrently imposed disciplinary sanctions; an electronic filing channel was established to ensure the smooth implementation of advance compensation, and the company’s actual controller has been arrested on suspicion of the crime of fraudulent issuance of securities.
In 2024, the Shanghai Stock Exchange will comprehensively strengthen its disciplinary oversight across five key areas, integrating the crackdown on illegal activities with efforts to prevent and defuse risks. Upholding a proactive approach, the Exchange will prioritize early intervention and leverage enforcement to encourage listed companies to continuously enhance the transparency of their information disclosure and internal governance. By guiding these companies to focus on their core businesses and pursue steady growth, the Exchange aims to elevate the quality of listed offices to a new level at this fresh starting point.

The Shenzhen Stock Exchange has revised two sets of disciplinary sanction rules.
Further consolidate the institutional foundation for comprehensively strengthening regulatory oversight.
Self-regulatory measures and disciplinary sanctions are key tools for the Shenzhen Stock Exchange in regulating the market. To implement the spirit of the Central Financial Work Conference, on January 12, the Exchange revised and issued the “Measures for the Implementation of Self-Regulatory Measures and Disciplinary Sanctions” and “Self-Regulatory Guidance No. 12 for Listed Companies—Standards for the Imposition of Disciplinary Sanctions,” further solidifying the institutional foundation for comprehensively strengthening regulation, actively guiding and urging all parties to operate in compliance, and jointly fostering a sound ecosystem in the capital market.
The main revisions this time cover the following areas:
Focus on salient issues and enhance regulatory effectiveness. First, strengthen penalties: where substantial funds are misappropriated and the perpetrators refuse to repay, thereby seriously harming the interests of listed companies and investors, the controlling shareholders and actual controllers who organize or direct such misappropriation shall, depending on the circumstances, be barred for a specified period from submitting issuance and listing application documents on behalf of themselves or other issuers they control. Second, close regulatory gaps by explicitly bringing within the scope of disciplinary action those individuals whose liability has been established by competent authorities as being directly linked to financial fraud or other illegal and non‑compliant conduct by listed companies. Third, ensure accountability to the end: even after a security is delisted, disciplinary provisions shall continue to apply to violations committed during the listing period, thus preventing a “one‑off removal” approach. Fourth, reinforce oversight of intermediaries by refining the categories of intermediary misconduct, with a focus on whether they have exercised due diligence and prepared truthful and accurate documentation; at the same time, intensify financial and accounting supervision by separately setting out disciplinary standards for accounting offices and their personnel. Fifth, strengthen joint punitive measures: for entities that have been subject to sanctions—such as temporary rejection of filings or designation as unsuitable candidates—by other securities trading venues, the Shenzhen Stock Exchange shall take corresponding measures in response.
Standardize disciplinary procedures and enhance the timeliness of disciplinary actions. First, standardize prior notice: where the Shenzhen Stock Exchange, after issuing a preliminary notice of disciplinary action, subsequently revises the key facts of the violation, the grounds or legal basis, or the proposed disciplinary decision, it must issue a new notice, thereby fully safeguarding market participants’ right to information. Second, optimize service of process: clarify that disciplinary documents may be served electronically—via the dedicated business portal, email, or other electronic means—or by mail; if service is impossible, public notice may be used, with a statutory period of 10 days for such service. Third, ensure prompt and efficient enforcement: specify that, in cases involving multiple violations, those violations already substantiated may be addressed on an interim basis to prevent prolonged delays; furthermore, where competent administrative regulatory authorities or judicial organs have already issued official documents establishing the facts of a violation and the situation is urgent, relevant decisions may be adopted through written voting.
In addition, this revision has concurrently refined the disciplinary sanction mechanism. Specifically, it elevates the review level for violations that have attracted widespread market attention and involve particularly serious breaches, thereby strengthening oversight of penalties; it brings post‑closing trading restrictions within the purview of the Disciplinary Sanctions Committee, enhancing the prudence of decision‑making; and it establishes a dedicated meeting convener within the Committee to further improve the professional rigor of disciplinary reviews.
Since 2023, the Shenzhen Stock Exchange has maintained a stringent stance in cracking down on securities‑related violations and illegal activities, with comprehensive regulatory strengthening as its central focus. It has implemented a coordinated regulatory approach—proactively monitoring leads, issuing timely warnings and urging corrective actions during incidents, and imposing strict penalties afterward—resulting in 179 disciplinary decisions throughout the year. These decisions targeted 93 listed companies, 8 issuers, and 575 individual responsible parties, including 223 public reprimands and 28 public determinations that certain individuals are unfit to serve as directors, supervisors, or senior executives of listed companies. Under this sustained, high‑intensity regulatory environment, the overall number of violations has declined compared with previous years, further solidifying a “strict” regulatory climate and contributing to a cleaner market ecosystem.
The Central Financial Work Conference emphasized the need to comprehensively strengthen institutional oversight, conduct‑based supervision, functional regulation,穿透式监管 (penetrative supervision), and ongoing monitoring. Moving forward, the Shenzhen Stock Exchange will thoroughly implement the spirit of the conference and, under the guidance of the China Securities Regulatory Commission, remain committed to building a capital market that is secure, standardized, transparent, open, dynamic, and resilient. Upholding the principles of lawfulness, compliance, and stringent regulatory oversight, the Exchange will continue to reinforce the institutional safeguards of the capital market, further refine its self‑regulatory framework, and effectively enhance the efficacy of frontline supervision. By exercising rigorous oversight over illegal and non‑compliant activities, the Exchange will uphold fairness and justice, bolster investor confidence, and strive to foster a clean and upright market environment, thereby providing robust support for the high‑quality development of the capital market.

The China Securities Regulatory Commission held its first press conference of 2024.
On January 12, the China Securities Regulatory Commission held its first press conference of 2024. Officials from the Issuance Department, the Institutional Department, and the Listing Department addressed key issues of current market concern, including the pace of new share offerings, reforms on the investment side, and matters related to cash dividends, share buybacks, and additional share purchases by listed companies.
Based on the press release, the CSRC will continue to rigorously oversee IPO approvals, implement counter-cyclical adjustments, and further promote the coordinated and balanced development of the primary and secondary markets. It will accelerate reforms on the investment side of the capital market, step up efforts to attract medium- and long-term capital, and strengthen support for pension‑related financial services. Listed companies will be encouraged to utilize share‑repurchase mechanisms in compliance with laws and regulations, while also being urged to enhance their dividend‑paying practices, thereby bolstering investors’ sense of gain.
Market participants noted that the CSRC’s timely and proactive responses to market concerns help stabilize market expectations and safeguard the steady development of the capital markets.
Key Issue 1: Continue to rigorously control the IPO approval process and effectively implement counter-cyclical adjustments.
Recently, there has been considerable discussion in the market about the pace of new share issuances. Yan Bojin, Director-General of the Issuance Department of the China Securities Regulatory Commission, outlined the evolution of the issuance schedule since the implementation of counter-cyclical adjustments, as well as the progress made in pricing new shares under the registration-based system.
Yan Bojin stated that throughout 2023, the Shanghai and Shenzhen stock markets approved IPO applications for 245 companies and initiated offerings for 237. Specifically, from January to August 2023, 213 IPOs were approved and 193 were launched; from September to December 2023, 32 approvals were granted and 44 offerings commenced. Since late August 2023, the China Securities Regulatory Commission has strengthened counter-cyclical adjustments, temporarily tightening IPO issuance and carefully managing the pace of new share listings. Market participants have observed that, from September to December last year, both the monthly average number of IPO approvals and the number of offerings launched in the Shanghai and Shenzhen markets declined significantly.
Yan Bojin stated that, going forward, the CSRC and the stock exchanges will continue to rigorously control the IPO approval process, enhance the quality of listed companies at the source, and implement counter-cyclical adjustments to better promote the coordinated and balanced development of the primary and secondary markets.
When discussing the pricing of new share offerings under the registration-based system, Yan Bojin stated that the underwriting mechanism for new stock issuances is currently operating smoothly, with market‑driven pricing gradually taking effect. The coexistence of oversubscription and undersubscription indicates that a competitive, differentiated issuance ecosystem is emerging.
In response to the phenomenon of extreme oversubscription, Yan Bojin noted that the CSRC monitors and curbs abnormal bidding behavior, urges issuers and underwriters to fully disclose risks and exercise prudent pricing, and rigorously investigates violations in the inquiry and pricing stages. In terms of outcomes, from September to December 2023, the average price‑earnings ratio of new share offerings declined, and its ratio relative to the average P/E ratio of comparable listed companies fell significantly, with no instances of substantial oversubscription.
Yan Bojin emphasized that, since the full implementation of the registration-based system, the CSRC has drawn on the successful experience of the pilot program to maintain stringent oversight of issuance and underwriting activities, guiding offline investors to submit reasonable bids and urging issuers and underwriters to adopt prudent pricing. At the same time, taking into account the distinct characteristics of different market segments, the CSRC has refined the mechanisms for bookbuilding, pricing, and allocation—centered on institutional investors—while safeguarding the interests of retail investors through differentiated arrangements regarding the scope of eligible inquiry participants and the allocation ratios between online and offline channels. Overall, the new‑stock issuance and underwriting mechanism has operated smoothly.
Hotspot No. 2: Over the past two months, share buybacks and additional purchases have totaled nearly RMB 43 billion.
Since November last year, listed companies have become more proactive in share buybacks and additional share purchases, continuously sending positive signals to the market. Statistics show that, as of now, since November 2023, a total of 309 companies on the Shanghai and Shenzhen stock exchanges have newly disclosed plans for buybacks and additional share acquisitions, with aggregate upper limits totaling RMB 42.8 billion—representing year-on-year increases of 189% in the number of companies and 85% in the total amount. Looking at the implementation of these announcements, 514 companies have actually carried out buybacks and additional purchases worth over RMB 27.7 billion during this period, with the number of companies executing such transactions and the total amount involved up 46% and 71%, respectively, compared with the same period last year.
Specifically, leading companies are engaging in substantial share buybacks and additional purchases: Poly Development has set a buyback cap of RMB 2 billion, while Sanan Optoelectronics, JCET Group, Hengyi Petrochemical, and Hoshine Silicon Industry have each established buyback caps of RMB 1 billion. Meanwhile, controlling shareholders of companies such as Yintai Gold and Lujiazui are expected to increase their holdings by more than RMB 2 billion. State-owned enterprises have further stepped up their proactive participation in buybacks and additional purchases, with 59 SOEs announcing new buyback and增持 plans—double the number from the same period last year—and many offices undertaking such initiatives for the first time. STAR Market–listed companies continue to play an active role, with 37 adding new buyback programs totaling up to RMB 3.4 billion; currently, over 100 STAR Market offices are in the process of implementing buybacks and additional share acquisitions.
Over the past three years, on average each year 537 companies listed on the Shanghai and Shenzhen stock exchanges have disclosed share‑repurchase plans, with proposed repurchase amounts totaling RMB 146.2 billion; meanwhile, an average of 628 companies have carried out share repurchases, amounting to RMB 101.6 billion. Additionally, an average of 367 companies have announced shareholder‑increase‑in‑shareholdings plans, with proposed increase amounts reaching RMB 25.9 billion.
Guo Ruiming, Deputy Director-General of the Listing Department of the China Securities Regulatory Commission, stated that the CSRC encourages listed companies to make lawful and compliant use of share‑repurchase mechanisms, actively return value to investors, and promote the stable and sound development of the market. At the same time, the CSRC will strengthen ongoing and post‑event supervision of repurchases and, in accordance with the law, rigorously investigate and prosecute any illegal activities—such as insider trading or market manipulation—carried out through repurchase schemes.
Regarding dividend payouts, Guo Ruiming noted that over the past five years, the total dividends distributed by Chinese A-share listed companies have grown annually, reaching a cumulative 8.4 trillion yuan—exceeding the period’s total financing volume. In 2023, a total of 3,361 A-share listed companies on the Shanghai and Shenzhen stock exchanges declared cash dividends, accounting for 65.9% of all listed companies at year-end; the aggregate cash dividend payout for the year totaled 2.13 trillion yuan, hitting yet another record high, with an average dividend yield of 3.04%. Additionally, 243 companies announced interim dividends, a 55% year-on-year increase.
Guo Ruiming stated that, going forward, the China Securities Regulatory Commission will, while respecting corporate autonomy, further enhance its regulatory role in guiding and constraining listed companies, encouraging them to strengthen their dividend‑paying awareness. Companies that meet the conditions for dividends are expected to distribute them, while those that do not should refrain from issuing dividends financed by debt, thereby preventing “false profits masquerading as genuine dividends.” The Commission will also work to optimize dividend‑distribution practices, foster a culture of regular dividend payouts, raise the level of cash dividends, and further bolster investors’ sense of gain.
Hotspot Three: Strengthen Efforts to Attract Medium- and Long-Term Capital
Addressing the market’s attention to the entry of medium- and long-term capital into the equity market, Lin Xiaozheng, Deputy Director-General of the Institutional Department of the China Securities Regulatory Commission, stated that as of the end of 2023, professional institutional investors—including social security funds, public mutual funds, insurance funds, and pension funds—held a combined A‑share free‑float market capitalization of RMB 15.9 trillion, more than doubling since the beginning of 2019. Their share of total A‑share market capitalization rose from 17% to 23%, making them a key force in promoting the stable and sound development of the capital market. Among them, public mutual funds held A‑share free‑float market capitalization of RMB 5.1 trillion, with their share increasing from 3.8% to 7.3%, thereby becoming the largest category of professional institutional investors in the A‑share market.
“At present, the China Securities Regulatory Commission is aligning comprehensively with the spirit of the Central Financial Work Conference and is formulating the ‘Action Plan for Reform on the Investment Side of the Capital Market’ as a strategic framework to address, over the medium to long term, issues such as insufficient medium- and long-term funding in the capital market,” said Lin Xiaozheng. “The overarching approach is to prioritize the increased attraction of medium- and long-term capital, build on an optimized investment ecosystem in the capital market, and leverage the development of world-class investment institutions as key levers to advance reform on the investment side across the board. The goal is to enhance investors’ long-term returns and foster a virtuous cycle between the capital market, the real economy, and household wealth.”
Lin Xiaozheng stated that, going forward, the China Securities Regulatory Commission will earnestly implement the requirements of the Central Financial Work Conference. Under the unified leadership of the Central Financial Commission and in close coordination with relevant ministries and commissions, it will officely uphold the political and people-centered nature of regulation, steadily advance institutional development, and more vigorously attract medium- and long-term market capital.
Hotspot 4: Equity funds still have ample room for growth.
Since 2023, contrarian positioning has become a market consensus. Industry institutions generally agree that, on the one hand, the fundamental trend of China’s economy—showing a steady recovery and long-term improvement—remains unchanged; on the other hand, current A-share valuations are at historically low levels, suggesting strong investment appeal over the long term. At this stage, investors are presented with a favorable window for contrarian positioning, which should help them secure attractive returns.
Lin Xiaozheng stated that industry institutions have been actively stepping up their allocation to equity funds amid market volatility, reflecting strong confidence in the future performance of China’s economy and capital markets. First, in terms of product registration, equity funds accounted for 72% of all approved products in 2023, a 28-percentage-point increase from 2022. Second, while the overall fundraising scale for equity funds has declined, the number of products has risen and their structure has improved: the number of equity funds raised increased from 706 in 2022 to 763, with their share of total offerings climbing from 49% to 60%. Third, there has been a marked rise in launch‑driven equity funds, with the total reaching 313—nearly doubling compared with 2022. All these trends underscore public fund managers’ unwavering investment confidence, their optimistic outlook on the market ahead, and their willingness to align returns more closely with investors. Looking ahead, equity funds still have ample room for growth.
Lin Xiaozheng stated that, going forward, the China Securities Regulatory Commission will continue to support industry institutions in deploying capital against market trends and will develop an incentive‑and‑constraint mechanism for “counter‑cyclical positioning.” The focus will be on guiding these institutions to prioritize their core functions, fully fulfilling their role as fiduciaries entrusted with managing investors’ assets, strengthening positive incentives for counter‑cyclical investment, and encouraging them to embrace long‑term and value‑oriented investing, thereby genuinely enhancing investors’ sense of gain.
Regarding fee‑rate reform in the public fund industry, Lin Xiaozheng stated that this reform is a comprehensive, system‑wide undertaking. Going forward, the China Securities Regulatory Commission will, in accordance with its established work plan, steadily and systematically advance fee reductions for funds, introduce complementary supportive policies and measures, and further enhance the industry’s ability to meet investors’ wealth‑management needs.
Hotspot 5: Are personal pension investment returns generally underwhelming? They should be viewed objectively and rationally.
In 2023, the overall performance of target‑date retirement funds was lackluster, sparking debate in the market. Lin Xiaozheng noted that this underperformance was largely attributable to short-term volatility in the underlying markets; however, compared with other equity‑based funds, target‑date retirement funds have demonstrated relatively stable returns. With the relevant regulatory framework having been in trial operation for only one year, it is important to view short‑term market fluctuations and return outcomes objectively and rationally, while steadfastly pursuing long‑term investing to better preserve and enhance capital, thereby fully leveraging the advantages and functional positioning of the third pillar of the pension system.
In November 2022, five ministries and commissions jointly issued the Measures for the Implementation of Individual Pension Schemes, while the China Securities Regulatory Commission concurrently released the Provisional Regulations on the Administration of Public Fund Investment in Individual Pension Schemes, prudently designating eligible institutions and target‑date pension funds and offering preferential fee rates, including management fees. Over the past year, these initiatives have advanced steadily; by the end of November 2023, individual pension accounts held RMB 5.76 billion invested in target‑date pension funds.
Lin Xiaozheng stated that, going forward, the CSRC will coordinate with relevant ministries and commissions to conduct thorough pilot evaluations, while also urging fund managers to steadily enhance their capabilities in managing and servicing individual pension schemes. Specifically: first, comprehensively strengthen institutions’ core investment research and management capabilities; second, steadily introduce a broader range of investment products tailored to the needs of individual pension plans; and third, continuously improve investor services.

Shanghai has issued “32 Measures” to promote the high-quality development of equity investment.
Shanghai has officially released the “Several Measures to Further Promote the High-Quality Development of the Equity Investment Industry in Shanghai,” outlining 32 policy initiatives across key areas, including guiding investment toward early-stage, small-scale, and technology‑focused ventures; fostering long-term and patient capital; streamlining equity‑investment exit channels; implementing favorable fiscal and tax policies; and building high‑quality equity‑investment clusters. These measures further refine and optimize end-to-end services spanning fundraising, investment, management, and exit, while cultivating an environment in which the government leads with strategic investments and institutions follow suit. This approach aims to encourage more capital to become long-term, patient capital, attracting additional investment offices to establish a presence in Shanghai and pursue sustained growth.
Among these measures, with regard to guiding investment toward early-stage, small-scale, and technology‑focused ventures, the “Several Measures” stipulate that Shanghai will explore establishing a Science and Technology Innovation Guidance Fund, systematically expand the scale of the Shanghai Venture Capital Guidance Fund and the Shanghai Angel Investment Guidance Fund, refine the profit‑sharing mechanism for government‑led funds, and, in accordance with market‑oriented principles, gradually put in place standardized procedures for valuation, negotiation, pricing, and other related processes in share‑transfer transactions.
With regard to fostering long-term and patient capital, the Measures stipulate that insurance funds will be guided to collaborate with Shanghai’s high-quality private equity investment institutions by gradually expanding their investment quotas, thereby increasing investment in Shanghai’s key industries and hard‑tech sectors. Eligible commercial bank wealth management subsidiaries will be encouraged to establish specialized subsidiaries in Shanghai, establishing channels to connect with bank wealth management funds and investing in unlisted enterprises and private equity funds in the Lingang New Area and the Yangtze River Delta region. Furthermore, corporate annuities, pension funds, and other long-term capital sources will be supported in investing in private equity funds on a commercially driven basis.
With regard to streamlining equity investment exit channels, the “Several Measures” expands avenues for equity investment exits by enhancing the efficiency of M&A and restructuring exits, facilitating domestic and overseas listing pathways for enterprises, improving the functionality of equity‑investment fund‑share transfer platforms, vigorously promoting the development of secondary‑market funds (S‑funds), and piloting the distribution of equity‑investment fund shares in kind.
With regard to implementing fiscal and tax preferential policies, the “Several Measures” stipulate that tax incentives for the venture capital industry will be put into effect. Specifically, for individual partners of venture capital offices that opt for the single‑fund accounting method, gains from the transfer of equity interests and dividend income will be subject to personal income tax at a rate of 20%. Furthermore, venture capital offices and angel investors who directly invest in seed‑stage or early‑stage technology enterprises through equity investments for a period of no less than two years may deduct 70% of their investment amount from their taxable income.
With regard to the development of equity‑investment clusters, the Measures stipulate that Shanghai should further optimize the spatial distribution of equity‑investment institutions. Districts and the Lingang New Area—where professional service capabilities are strong, policy support is robust, and industry governance is advanced—will be supported in becoming equity‑investment hubs, thereby attracting newly established or relocated equity‑investment offices. Equity‑investment clusters are required to establish district‑level government‑guided funds with a minimum size of RMB 10 billion.
The Measures also support equity investment fund managers in pursuing an IPO, leveraging the implementation of the comprehensive registration system and the new regulations on overseas listing filings to enable eligible equity investment fund managers based in Shanghai to list on domestic and international capital markets through initial public offerings, mergers and acquisitions, and other means.
According to statistics from the Asset Management Association of China, as of the third quarter of 2023, Shanghai had 1,843 registered private equity and venture capital managers, overseeing 8,865 funds with total assets under management amounting to RMB 2.3 trillion—each of these three metrics ranking among the highest nationwide. Notably, Shanghai’s venture capital fund AUM stood at RMB 615 billion, placing it first in the country.

CSRC: Enhance the overseas listing regime and steadfastly advance the opening-up of the capital market.
The inaugural meeting of the Overseas Listed Companies Branch of the China Association of Public Companies was recently held, with Fang Xinghai, a member of the CPC Committee and Vice Chairman of the China Securities Regulatory Commission (CSRC), in attendance and delivering a speech. Fang Xinghai stated that the CSRC remains committed to advancing the opening-up of the capital market and will work with all stakeholders to further refine the mechanisms for overseas listings, diversify issuance channels, and effectively implement the newly introduced pilot regulations on the filing requirements for overseas listings.

New developments in bond market opening-up! The National Association of Financial Market Institutions has issued the “Guidelines for Bond Business Involving Foreign Government‑Related Entities and International Development Institutions.”
On January 12, the National Association of Financial Market Institutional Investors of China issued an announcement stating that, in order to promote the sound development of bond business involving foreign government‑related entities and international development institutions and to enhance the openness of the bond market, the Association has organized market participants to revise the “Guidelines for Bond Business Involving Foreign Government‑Related Entities and International Development Institutions (Trial)” into the “Guidelines for Bond Business Involving Foreign Government‑Related Entities and International Development Institutions.” These guidelines shall take effect from the date of their publication.
The guideline provides clear and standardized provisions for bond issuances by foreign government‑related entities and international development institutions, covering aspects such as registration and issuance, requirements for registration documents, information disclosure obligations, and the regulation of intermediary institutions.

Commercial & Corporate
The Ministry of Finance has issued the “Guiding Opinions on Strengthening Data Asset Management.”
On January 11, the Ministry of Finance issued the “Guiding Opinions on Strengthening Data Asset Management,” aimed at standardizing and enhancing data asset management to better promote the development of the digital economy.
The “Opinions” set forth twelve key tasks, including managing data assets in accordance with the law and regulatory requirements, clarifying the rights and responsibilities associated with data assets, improving relevant standards for data assets, and strengthening the management of data asset utilization. The document further stipulates that when public data asset holders make their data assets available for open sharing, they must establish and refine systems and mechanisms for security management and external provision. It also encourages the exploration of diverse models for the development and utilization of data assets in data‑rich sectors such as finance, transportation, healthcare, energy, industry, and telecommunications.

An official from the People’s Bank of China stated: “We will foster a favorable monetary and financial environment for high-quality development.”
In line with the spirit of the Central Economic Work Conference, the Director-General of the Monetary Policy Department, the Director-General of the Financial Stability Bureau, and the Director-General of the Macroprudential Management Bureau of the People’s Bank of China were interviewed on the key measures to be taken in 2024 regarding “prudent monetary policy,” “preventing and defusing financial risks,” and “enhancing the quality and level of RMB internationalization.”
An official from the People’s Bank of China stated that the bank will thoroughly study and implement the spirit of the Central Economic Work Conference, strengthen counter-cyclical and cross‑cycle adjustments, and foster a sound monetary and financial environment conducive to high‑quality economic development. Going forward, financial regulators will institutionalize risk‑resolution functions and reinforce the framework for safeguarding financial stability. They will also steadily and prudently advance the international use of the renminbi, better meeting market demand for transaction settlement, investment and financing, and risk management among economic entities.

2023 foreign trade data released: Exports of the “new three major products” surpassed one trillion yuan for the first time, with automobile exports surging 76.8%.
On the morning of January 12, the State Council Information Office held a press conference on China’s import and export performance for the full year 2023 (hereinafter referred to as the “Import‑Export Press Conference”). At the event, Wang Lingjun, Deputy Director‑General of the General Administration of Customs, announced that China’s total value of goods trade in 2023 reached 41.76 trillion yuan.
Overall, China’s imports and exports in 2023 showed a steady upward trend, with each quarter outperforming the previous one. The second, third, and fourth quarters all exceeded RMB 10 trillion, and December even set a new monthly record.
In terms of the volume and value of key export commodities, the “new three major products”—electric passenger vehicles, lithium-ion batteries, and solar‑energy storage batteries—have, for the first time, surpassed the RMB 1 trillion mark. Exports of automobiles, including chassis, rose by 76.8%, continuing to maintain their status as a “dark horse” performer.
The shifts in the aforementioned data are attributable both to the international environment and to China’s industrial transformation. Based on these figures, how should we assess China’s trade performance in 2023, and what projections can we draw regarding the trends in imports and exports for 2024?
“New Three” Exports Exceed One Trillion Yuan
In 2021, the Ministry of Commerce issued the “14th Five-Year Plan for High-Quality Development of Foreign Trade,” which aims to promote the import and export of green and low-carbon products such as environmental protection goods and new energy technologies; encourage high-tech, high-value-added equipment manufacturers to engage in international cooperation at a higher level; and facilitate the transformation and upgrading of traditional labor-intensive industries like textiles and apparel.
Looking back, the original plan is now becoming a reality. From the past era of massive exports of the “old three” — apparel, furniture, and home appliances — to today’s growing share of the “new three” — electric vehicles, lithium‑ion batteries, and solar panels — what lies behind this shift is China’s industrial transformation and upgrading.
In 2023, China’s exports of electromechanical products totaled RMB 13.92 trillion, up 2.9% and accounting for 58.6% of the country’s total export value. Among these, electric passenger vehicles, lithium-ion batteries, and solar photovoltaic cells—the so‑called “new three major” products—combined to reach RMB 1.06 trillion in exports, an increase of 29.9%.
In addition, China’s automobile exports—including chassis—were equally impressive, reaching 5.221 million vehicles, up 57.4% year on year, with export value totaling RMB 716.51 billion, a year-on-year increase of 76.8%.
He Weiwen, a senior researcher at the Center for China and Globalization, told Times Finance, “The strong performance of the ‘new three major exports’ and automobile exports highlights China’s competitive advantages and underscores its transition from ‘Made in China’ to ‘Created in China.’”
In terms of trading partners, in 2023, China’s imports and exports with countries participating in the Belt and Road Initiative totaled RMB 19.47 trillion, up 2.8% and accounting for 46.6% of the country’s total trade value—an increase of 1.2 percentage points. Trade with Latin America and Africa reached RMB 3.44 trillion and RMB 1.98 trillion, respectively, growing by 6.8% and 7.1%. In the fourth quarter, trade with the European Union and the United States rebounded, with annual bilateral trade volumes of RMB 5.51 trillion and RMB 4.67 trillion, representing 13.2% and 11.2% of China’s total trade, respectively.
He Weiwen believes: “In 2024, we should continue to devote significant effort to expanding into the markets of developed economies such as the United States, Europe, Japan, and South Korea.”
The economy continues to recover and improve.
Regarding China’s import and export performance in 2023, Wang Lingjun stated at the press conference on foreign trade that, despite external pressures and internal challenges, China comprehensively deepened reform and opening-up, strengthened macroeconomic regulation, and achieved sustained economic recovery and steady improvement. As a result, the country’s merchandise trade performed better than expected, successfully meeting its goals of stabilizing growth and enhancing quality. Overall, last year China’s foreign trade recorded steady growth in both the scale of imports and exports and improved quality of development.
Looking ahead, He Weiwen stated that in 2024, China’s imports and exports are expected to continue growing compared with 2023. “We should further promote the export and import of high‑tech products and encourage enterprises to expand overseas and engage in international exchanges.”
Wang Lingjun stated that in 2024, the complexity, severity, and uncertainty of the external environment will increase, requiring even greater efforts. At the same time, it is important to recognize that China’s economy continues to show a clear trend of recovery and long-term improvement, and the underlying factors and conditions supporting high-quality development are steadily accumulating and growing. With policy effects gradually taking hold and high‑level opening-up advancing in a steady and orderly manner, new drivers of trade growth will be accelerated, the fundamentals of foreign trade and foreign investment will continue to strengthen, and the foundation for stable growth, improved quality, and enhanced efficiency in imports and exports will be further consolidated.

Five departments have jointly issued implementation guidelines to accelerate the development of a nationwide integrated computing power network.
Recently, the National Development and Reform Commission and four other departments jointly issued the “Opinions on Deeply Implementing the ‘East Data, West Computing’ Project and Accelerating the Construction of a Nationally Integrated Computing Power Network,” setting out a series of goals, including the preliminary establishment of a comprehensive computing power infrastructure system by the end of 2025.
The implementation guidelines stipulate that by the end of 2025, the newly added computing power in the national hub node regions will account for more than 60% of the nation’s total new computing capacity, and the utilization rate of computing resources at these hubs will significantly exceed the national average. A preliminary mechanism for two-way coordination between computing power and electricity will be established, with green energy accounting for over 80% of the electricity consumed by newly built data centers in the national hubs. User accessibility to various computing services will be markedly improved, costs will be substantially reduced, and inter‑hub network transmission fees will be sharply cut. Furthermore, core technologies critical to the computing power network will largely achieve security and reliability.
The implementation guidelines adopt a five‑pronged integrated approach—coordinated deployment of general‑purpose, intelligent, and supercomputing capabilities; unified, synergistic development of computing resources across eastern, central, and western regions; integrated applications of computing power with data and algorithms; seamless integration of computing power with green energy; and holistic advancement of computing‑power development alongside robust security safeguards—to advance the construction of a nationwide, interconnected, schedulable, universally accessible, and green, secure integrated computing network.

The National Development and Reform Commission convened a national investment work conference for the development and reform system.
The National Development and Reform Commission convened a national investment work conference for the development and reform system in Beijing. The meeting emphasized the need to advance, with high quality, projects financed by additional government bonds; to expedite the issuance and allocation of project lists and the implementation of projects; and to strengthen project oversight. It called for maximizing the effectiveness of central budgetary investments, accelerating the release of investment plans, and improving the quality of plan execution. Furthermore, it urged making full use of local government special-purpose bonds, promptly completing project preparation, and speeding up the commencement of construction. Efforts should be made to stimulate private investment by enhancing support and services, ensuring that private capital can invest effectively, invest well, enter the market easily, and exit smoothly. The meeting also stressed the importance of deepening reforms of the investment and financing system, strengthening feasibility studies and justifications for projects, improving the efficiency of investment management, and innovating the application of online investment platforms. Finally, it called for further bolstering project planning and reserves, diligently carrying out preliminary work, and substantially raising project quality.

The National Administration of Financial Regulation has issued the “Notice on Strengthening Financial Services Throughout the Entire Lifecycle of Technology-Based Enterprises.”
On December 29, the website of the State Administration for Market Regulation published the “Announcement on the Release of the ‘Guidance on Enterprise Deregistration (Revised in 2023)’.”
The Guidelines focus on the distinctive characteristics of various types of business entities. Building on the existing provisions regarding company deregistration, they extend coverage to non‑corporate legal persons, partnerships, sole proprietorships, specialized farmer cooperatives, and individual industrial and commercial households, thereby providing more precise and tailored guidance for each category. In response to frequent inquiries and concerns from businesses and the public, the Guidelines further specify the composition, appointment procedures, and duties of liquidation committees; set out requirements for publishing liquidation committee information and creditor notices; and clarify the procedures for both standard and simplified deregistration. Moreover, the Guidelines explicitly define enterprises’ liquidation obligations, reinforce their principal responsibility, and promote a healthy, orderly, and risk‑controlled exit process.

The Ministry of Industry and Information Technology is soliciting public comments on the “Guideline for Building a Comprehensive Standardization System for Cloud Computing.”
On January 9, 2024, the official website of the Ministry of Industry and Information Technology published a notice soliciting comments on the “Guidance on Building a Comprehensive Standardization System for Cloud Computing” (Draft for Comments). The deadline for submitting feedback is January 23.
The Guidelines set forth the following development objectives: by 2025, the cloud computing standards system will be further refined, with plans to revise foundational standards such as the reference architecture and terminology, and to prioritize the formulation of key standards for innovative cloud computing technologies, emerging service applications, and critical areas currently lacking coverage. By 2027, more than 50 national and industry standards for cloud computing will have been established, broadly encompassing fundamental, technological and product‑related, service‑oriented, application‑focused, management‑related, and security‑related domains, thereby effectively meeting the demands of the next phase of industrial standardization.

The Ministry of Transport has revised two administrative measures on the safety and service of postal and express delivery.
On January 10, 2024, the Ministry of Transport promulgated the “Decision on Amending the Measures for the Supervision and Administration of Universal Postal Services” and the “Decision on Amending the Measures for the Supervision and Administration of Delivery Safety in the Postal Industry.”
The Ministry of Transport has conducted a comprehensive review of the Measures for the Supervision and Administration of Universal Postal Services, amending relevant provisions on fines, affecting a total of four articles; it has also revised the Measures for the Supervision and Administration of Delivery Safety in the Postal Industry, with changes to two articles.

Three departments jointly promote synergistic efficiency in pollution reduction and carbon mitigation in wastewater treatment.
On January 10, 2024, the National Development and Reform Commission, the Ministry of Housing and Urban–Rural Development, and the Ministry of Ecology and Environment jointly issued the “Implementation Opinions on Promoting Synergistic Efficiencies in Pollution Reduction and Carbon Emission Reduction through Wastewater Treatment.”
The Opinions state that by 2025, the wastewater treatment sector will have made significant progress in synergistically enhancing pollution reduction and carbon mitigation, with continuous improvements in energy efficiency and carbon‑reduction capabilities. In prefecture‑level and above water‑scarce cities, the reuse rate of reclaimed water will reach at least 25%, and 100 benchmark green, low‑carbon wastewater treatment plants featuring efficient energy and resource circulation will be built.

Shenzhen has issued the nation’s first document establishing a chief compliance officer system for enterprises.
Recently, the Shenzhen Municipal Justice Bureau issued the “Shenzhen Guidelines for Implementing the Chief Compliance Officer System in Enterprises,” providing specific guidance to enterprises of all types in Shenzhen for establishing such a system and further enriching the city’s framework of compliance‑building guidelines.
Based on domestic and international practice, appointing a Chief Compliance Officer is a common practice among world-class enterprises. The Guidelines are divided into six sections, primarily clarifying the duties and appointment of the Chief Compliance Officer, the operational mechanisms supporting the Chief Compliance Officer system, the measures to ensure the effective functioning of the system, and the oversight and performance‑evaluation framework for corporate Chief Compliance Officers.

Jiangsu has issued guidelines to improve the management of false‑statement credit commitments in market supervision.
Recently, the Jiangsu Provincial Administration for Market Regulation issued the “Opinions on Improving Measures for the Management of False Credit Commitments in Market Supervision and Administration.”
The “Opinions” clearly define the criteria for identifying, handling, rectifying, and managing 14 types of false credit‑commitment matters—both licensing‑related and declaration‑based—thereby helping to establish a basic closed-loop management system for credit commitments in the field of market regulation. According to the Opinions, for business entities that have made false credit commitments and thereby breached trust, market regulatory authorities will implement five categories of administrative measures, including credit‑based restrictions, enhanced oversight, and limitations on participation in performance‑evaluation programs.

The National Intellectual Property Administration plans to revise the Regulations on National Defense Patents.
On January 3, the website of the National Intellectual Property Administration published the “Notice on Soliciting Public Comments on the Draft Amendment to the Regulations on National Defense Patents,” with the deadline for submitting feedback set for January 31, 2024.
The Regulations comprise six chapters and 48 articles. This revision adds one new chapter, introduces 16 additional articles, deletes four articles, and amends 22 articles, covering such matters as the confidentiality of national defense patents, the application, examination, and grant of national defense patents, the implementation of national defense patents, and their administration and protection. The Regulations confer upon the entity that completed the invention the rights to file a national defense patent application, to implement it, and to derive benefits therefrom; with respect to benefit distribution, they explicitly require the completing entity to provide rewards and incentives to the inventor; in terms of recognition and awards, they stipulate that both the holder of a national defense patent and the inventor shall be commended and rewarded; they further clarify that national defense inventions and creations must be patented as national defense patents. In cases where halting the implementation of a national defense patent could significantly impact national defense development, the Regulations provide for an alternative approach: the infringer may continue implementation while paying reasonable compensation to the national defense patent holder. Additionally, a dedicated chapter on “Confidentiality of National Defense Patents” has been established, which sets forth detailed provisions governing the classification and declassification of national defense patents, specifies the authority responsible for classifying patent applications, and establishes a review mechanism for determining the appropriate classification level of national defense patents.

Four departments: Support Fujian in piloting the effective implementation of VAT and consumption tax policies for cross-border e-commerce retail export goods.
On January 8, the Ministry of Commerce, the Taiwan Affairs Office of the CPC Central Committee, the National Development and Reform Commission, and the Ministry of Industry and Information Technology jointly issued the “Notice on Several Measures to Support Fujian in Pioneering a New Path for Cross-Strait Integrated Development in the Economic and Trade Fields,” outlining 14 measures across five key areas.
First, we will support Fujian in expanding its opening-up and cooperation with Taiwan. We will promote the Fujian Pilot Free Trade Zone as a pioneering platform for cross‑strait initiatives and assist Fujian in strengthening investment promotion targeting Taiwan. Second, we will support the high‑quality development of Fujian’s trade with Taiwan by enhancing trade facilitation and helping Fujian establish itself as a key trade hub for cross‑strait commerce. Third, we will deepen the integrated development of Fujian and Taiwan’s industries where each has comparative advantages, and support the construction of platforms for cross‑strait cooperation. Fourth, we will help Taiwanese enterprises operating in Fujian better integrate into the domestic economic circulation. Fifth, we will accelerate the integrated development of key regions by supporting Fujian in using the Cross‑Strait (Xiamen–Quanzhou–Kinmen) Cooperation Development Zone, the Fuzhou–Matsu Industrial Cooperation Park, and the Pingtan Comprehensive Experimental Zone as pilot areas, while guiding the province’s cross‑border e‑commerce comprehensive pilot zones to effectively leverage the VAT and consumption tax policies applicable to cross‑border e‑commerce retail exports.

Taxation
Tax-related business entities are thriving: From January to November 2023, newly established tax‑related business entities increased year over year.
Tax‑related business entities serve as a barometer of economic activity and a keen indicator of market conditions. From January to November 2023, the number of newly registered business entities that completed tax‑related procedures—such as tax type registration, invoice acquisition, and tax filing and payment—reached 15.151 million, up 25.4% year on year and averaging an 11.9% increase over the past two years.
Behind the growth in numbers lies the continued improvement of the business environment. Xiongchuan New Energy Technology (Chengdu) Co., Ltd., a newly established tax‑compliant enterprise, registered in Chengdu in 2023 and is focused on building a core‑technology ecosystem for hydrogen fuel cells. According to General Manager Yao Linfeng, a favorable business climate was a key factor in the company’s decision to establish itself in Chengdu.
“The primary reason we chose to establish our base in Chengdu is its promising future prospects and favorable business environment. From a transportation standpoint, the development of the Chengdu–Chongqing Twin-City Economic Circle is a national strategy. Among the six hydrogen corridors officially announced nationwide, the ‘Chengdu–Chongqing Hydrogen Corridor’ spans the entire twin-city region, aligning perfectly with our company’s strategic priorities. Most importantly, Chengdu boasts an excellent business climate,” said Yao Linfeng.
“Centering on five major systems—responsive handling of taxpayer requests, policy-based services, convenient tax administration, refined service delivery, and collaborative governance—the Chengdu tax authorities are continuously improving the tax-related business environment. For key enterprises that have established operations in Chengdu, they have also created individualized information files, which will help regional industries and businesses grow together,” said Li Jiesheng, Party Secretary and Director of the Chengdu Municipal Tax Service Bureau.
Xiamen Qingyuan Technology Co., Ltd. is one of many newly established foreign-invested enterprises. According to a company official, 2023 marked the company’s first year of establishing roots in Xiang’an District, Xiamen. The most significant takeaway has been the high‑quality business environment that the Chinese market offers. In response to challenges related to communication and tax‑system differences, the tax authorities have provided tailored services—such as bilingual dedicated desks and tax‑benefit programs—substantially reducing the costs associated with tax‑related procedures and further reinforcing the company’s confidence in deepening its presence in the Chinese market.
It is precisely a favorable business environment that has injected greater vitality into tax‑related market entities. According to Lian Qifeng, Director of the Tax Collection and Management and Science & Technology Development Department of the State Taxation Administration, among newly established tax‑related entities in the first 11 months of 2023, 10.557 million—accounting for 69.7%—obtained invoices and filed income returns within the same year, an increase of 3.1 percentage points compared with the same period last year, underscoring the robust and improving dynamism of these entities.
Furthermore, from the perspective of industrial development structure, during the first 11 months of 2023, the “three new” economy—centered on emerging industries, new business forms, and novel business models—saw the establishment of 4.554 million newly registered tax‑liable entities, accounting for 30.1% of all new registrations, up 2.5 percentage points year over year. Among these, the number of new entrants in the internet and information technology services sector grew by 32% compared with the same period last year, reflecting robust expansion. In terms of regional distribution, over the first 11 months of 2023, the four major economic circles—the Yangtze River Delta, the Pearl River Delta, the Beijing–Tianjin–Hebei region, and the Chengdu–Chongqing metropolitan area—accounted for a cumulative total of 6.994 million newly registered tax‑liable entities, representing 46.2% of all new registrations.
The growth of business entities numbering in the tens of millions hinges on the targeted support of high-quality services and a favorable business environment. According to reports, in 2023, the State Taxation Administration, marking the tenth consecutive year of its “Spring Breeze Action for Convenient Tax Services,” rolled out 109 measures across five batches, including initiatives such as advancing the “policies find taxpayers” approach, launching the special campaign “Spring Rain Nurtures Seedlings,” and introducing the “Smart New Business Startup” feature, all aimed at providing robust support for the high‑quality development of tax‑related business entities. Recently, the Administration, in collaboration with the Ministry of Finance, also released the “Guidance on Tax and Fee Preferential Policies Supporting the Development of Small and Micro Enterprises and Individual Business Households (Version 2.0),” further streamlining preferential policies for these entities and ensuring that the “spring breeze” of service continues to warm the market.
Shen Xinguo, Director-General of the Taxpayer Services Department of the State Taxation Administration, stated that, going forward, the tax authorities will continue to effectively implement structural tax and fee reduction policies, particularly the various preferential tax and fee measures supporting technological innovation and the development of the manufacturing sector. They will also work to help newly established tax‑related business entities grow and thrive, thereby making a proactive contribution to continuously promoting both qualitative improvements and reasonable quantitative growth in the economy.

The role of taxation in national governance has become increasingly prominent.
The Central Economic Work Conference proposed planning a new round of fiscal and tax system reform and implementing a series of tax and fee preferential policies that will be extended, optimized, and refined… On January 9, the China International Tax Research Association, the China Tax News Agency, and the China Tax Magazine jointly released the “Top Ten Chinese Tax News Stories of 2023,” with a number of significant developments making the list.
“The year 2023, which has just concluded, witnessed numerous significant developments in China’s economy and tax sector—characterized by broad scope and far-reaching implications—further underscoring the foundational, pivotal, and safeguarding roles of taxation in national governance,” said Sun Ruibiao, President of the China International Taxation Research Association and former Deputy Director-General of the State Administration of Taxation.
Meanwhile, the State Taxation Administration has successively introduced new measures to boost the development of the private sector and support high-quality growth; raised the standards for the individual income tax special additional deductions for “the elderly and the young”; launched the 10th consecutive “Spring Breeze Action” to facilitate tax services, adding five new batches of initiatives; achieved notable results through joint efforts by seven departments to crack down on tax-related illegal and criminal activities; and unveiled the “Shuilutong” service brand to promote high-level opening-up. These developments were also selected as among the “Top Ten Tax News Stories in China for 2023.”
Gao Peiyong, an academician of the Chinese Academy of Social Sciences, believes that China’s economic recovery remains at a critical juncture, and that comprehensively deepening reform—particularly the latest round of fiscal and tax system reform—will inject strong momentum into the recovery process.
“We must forge new advantages in opening up to the outside world by establishing a new system of a higher‑level open economy, and advance institutional openness through innovative tax systems and stable tax policies, thereby providing both the material foundation and institutional support for high‑level opening up,” said Deng Liping, Director of the Research Center for Socialist Finance and Taxation with Chinese Characteristics at the Xiamen National Accounting Institute and a professor.
Li Xuhong, vice president and professor at the National Accounting Institute in Beijing, believes that taxation, as a key tool for macroeconomic regulation, focused in 2023 on innovation, coordination, green development, openness, and shared prosperity, thereby providing significant support for advancing high-quality development.
“Over the past year, tax policies and tax administration have further enhanced their role in promoting inclusive development. For example, by raising the special additional deductions for personal income tax related to elderly and young dependents, targeted measures have reduced the personal income tax burden on the middle-income group, thereby improving the progressivity of China’s tax system and strengthening efforts to ensure that the benefits of economic growth are shared more broadly by all citizens,” said Bai Jingming, a researcher at the Chinese Academy of Fiscal Sciences.
In addition, the Ten Major Global Tax Events of 2023 were also announced, including the successful convening of the Third Belt and Road International Cooperation Summit Forum, which underscored the importance of strengthening multilateral cooperation platforms in taxation and other fields; the adoption and release of six outcomes at the Fourth Belt and Road Tax Administration Cooperation Forum; the United Nations General Assembly’s adoption of the resolution “Promoting Inclusive and Effective International Tax Cooperation within the United Nations”; and the Organization for Economic Cooperation and Development (OECD) issuing the Statement of Outcomes on the Two-Pillar Approach to Addressing the Tax Challenges of Digitalization.

Structural tax and fee reduction policies are being further implemented, boosting the innovation-driven vitality of market entities.
From January to November 2023, nationwide tax and fee reductions, refunds, and deferrals totaled RMB 1.812509 trillion, with the private sector, small and micro enterprises, and the manufacturing industry—along with related wholesale and retail sectors—reaping significant benefits. The number of newly established tax‑related business entities reached 15.151 million, up 25.4% year on year and averaging an 11.9% increase over the past two years. Among them, 10.557 million were tax‑active entities that obtained invoices and filed income returns in the same year, accounting for 69.7%—a 3.1‑percentage‑point rise compared with the same period last year. In 2023, proactive fiscal policy, as a key tool of macroeconomic regulation, continued to strengthen in both intensity and effectiveness, striving to foster an overall economic recovery while providing sustained support for the growth and development of market entities.
The 2023 Central Economic Work Conference emphasized that “proactive fiscal policy should be moderately strengthened and made more effective and efficient,” and that “structural tax and fee reduction policies must be fully implemented.”
Structural tax and fee reductions are primarily targeted at specific groups or sectors, as well as particular tax categories, to alleviate their tax and fee burdens. Industry experts note that the meeting’s emphasis on “prioritizing support for scientific and technological innovation and the development of the manufacturing sector” reflects precision‑based policy adjustments, with clear targeting and guiding effects. Such measures are expected to bolster new drivers of growth and advance high‑quality economic development.
The additional deduction rate for eligible enterprises’ R&D expenses will be uniformly raised from 75% to 100% and institutionalized as a long-term measure. Furthermore, from January 1, 2023, to December 31, 2027, advanced manufacturing enterprises will be permitted to reduce their value-added tax liability by an additional 5% of their current deductible input VAT. With the successive implementation of a series of tax and fee policies supporting scientific and technological innovation, a comprehensive policy framework—characterized by broad coverage, substantial incentives, and alignment with key stages of corporate innovation—is providing robust policy support for Chinese businesses to drive technological advancement and achieve high-quality development.
Among these measures, the policy of allowing an additional deduction for R&D expenses is one of the key policies driving innovation‑driven development. In recent years, China has steadily strengthened efforts to refine this policy: on the one hand, it has increased the magnitude of the deduction and broadened the scope of eligible entities; on the other, it has advanced the timing for claiming the benefit, ensuring that enterprises receive the corresponding tax relief more promptly, thereby encouraging them to step up their R&D investments.
For the vast majority of business entities, tax policies are vigorously driving corporate innovation and development.
“Following the introduction of new policies in 2023, during our quarterly provisional corporate income tax filing for the second quarter, we were able to claim an additional R&D expense deduction of RMB 4.25 million—earlier than in previous years. This marks another significant boost from the state’s support for corporate technological innovation, effectively replenishing our R&D funding and providing strong momentum for elevating our R&D capabilities and translating research outcomes into practical applications,” said Pan Hongyan, the finance director of an information technology company in Yunnan.
In Xinjiang, Zhu Yuying, the finance director of a reputable third-party electronic certification service provider, stated that as the company’s R&D investment has grown year after year, it has also benefited from an increasing array of tax and fee incentives. In addition to enjoying the preferential 15% tax rate for high-tech enterprises, the company accumulated R&D expense super‑deductions totaling RMB 7.26 million in the first three quarters of 2023 alone. With the support of favorable policies, we are more confident in deepening our commitment to technological innovation, intensifying efforts to overcome critical bottlenecks in key technologies, and translating the tangible benefits of these policies into productive forces that drive the company’s innovative development.
Luo Zhiheng, Chief Economist at Yuekai Securities, stated that, amid a tight fiscal balance, China’s fiscal policy has consistently supported independent and self-reliant technological innovation. Corresponding support measures aimed at balancing development with security and fostering the new development paradigm have been steadily rolled out, effectively encouraging enterprises to increase R&D spending and boosting the growth of advanced manufacturing offices.
“The development of advanced manufacturing enterprises helps safeguard the stability of industrial and supply chains, promotes a higher‑level cycle of supply and demand, and fosters more secure growth,” said Luo Zhiheng. A range of economic indicators also underscores the effectiveness of fiscal and tax policies: from January to November 2023, investment in high‑tech industries rose 10.5% year on year, with investment in high‑tech manufacturing increasing by the same rate. Within high‑tech manufacturing, investment in the aerospace vehicle and equipment sector grew by 16.2%, while investment in medical instruments and apparatus as well as in instrumentation and metering equipment expanded by 14.8%—both significantly outpacing the overall growth rate of fixed‑asset investment.

LITIGATION & ARBITRATION
The bankruptcy liquidation case of Zhongzhi Enterprise Group Co., Ltd. has been lawfully accepted.
Recently, the No. 1 Intermediate People’s Court of Beijing has, in accordance with the law, accepted the bankruptcy liquidation case of Zhongzhi Enterprise Group Co., Ltd.
The debtor, Zhongzhi Enterprise Group Co., Ltd., filed with the court a petition for bankruptcy liquidation on the grounds that it is unable to pay its matured debts, its assets are insufficient to cover all its liabilities, and it clearly lacks the capacity to repay its debts. After review, the No. 1 Intermediate People’s Court of Beijing held that the petition satisfies the grounds for bankruptcy set forth in Article 2, Paragraph 1 of the Enterprise Bankruptcy Law of the People’s Republic of China, and accordingly, on January 5, 2024, issued an order accepting the bankruptcy liquidation application of Zhongzhi Enterprise Group Co., Ltd.

Jiangsu Issues Opinions on the Standards for Prosecuting Fraudulent Acquisition of Public and Private Property
On January 8, 2024, the Higher People’s Court of Jiangsu Province, the Provincial People’s Procuratorate, and the Provincial Public Security Department jointly issued the “Opinions on the Standards for Determining ‘Relatively Large Amount,’ ‘Large Amount,’ and ‘Especially Large Amount’ in Cases of Fraudulent Acquisition of Public or Private Property within Our Province,” revising the previously applicable standards. The Opinions shall take effect from the date of their issuance.
The Opinions clarify that fraud involving public or private property valued at RMB 6,000 or more is deemed “a relatively large amount”; fraud involving public or private property valued at RMB 100,000 or more is deemed “a huge amount”; and fraud involving public or private property valued at RMB 500,000 or more is deemed “an especially huge amount.” Where the amount of fraud is close to the threshold for “a relatively large amount” and one of the special circumstances listed in the Opinions is present, the offender shall be convicted and punished for the crime of fraud.

The Supreme People’s Court has released typical cases demonstrating the people’s courts’ lawful protection of agricultural land.
On January 10, the Supreme People’s Court released a batch of typical cases in which people’s courts have legally protected agricultural land.
The ten typical cases released this time exhibit the following key characteristics: First, they uphold the principle of proactive judicial action, actively serving and safeguarding food security as a matter of paramount national importance; second, they adhere to the concept of green development, achieving a dialectical unity between high-quality growth and high-level environmental protection; third, they embrace a systems‑based approach to conservation, helping to establish a new paradigm for integrated protection of farmland in terms of quantity, quality, and economic value; fourth, they apply the principle of the strictest rule of law, continuously strengthening judicial enforcement to protect agricultural land; and fifth, they champion the principle of collaborative governance, consistently pooling efforts to advance the protection of agricultural land.

The Supreme People’s Court Intellectual Property Tribunal has further clarified the criteria for determining malicious litigation.
Recently, the Intellectual Property Court of the Supreme People’s Court concluded an appeal in a dispute over liability for damages arising from the malicious filing of an intellectual property lawsuit, holding that the defendant’s litigation conduct did not constitute malicious litigation and further clarifying the criteria for determining such conduct.
A certain biotechnology joint-stock company in Guilin filed a lawsuit with the court of first instance, seeking a declaration that the litigation initiated by a certain biological resources joint-stock company in Hunan—case No. (2018) Xiang 01 Min Chu 3843—constitutes an abusive intellectual property suit, and requesting the court to order the defendant to compensate for economic losses in the amount of RMB 1 million and reasonable expenses in the amount of RMB 500,000.
The court of second instance in this case is the Supreme People’s Court. The appellate judgment clearly states that a lawsuit is deemed to be brought in bad faith only when the litigant, fully aware that it lacks a legal basis, factual support, or legitimate grounds, or knowingly recognizes that the alleged infringer does not constitute infringement, nevertheless proceeds with the litigation and thereby causes harm to the opposing party. When Hunan Company instituted the proceedings in Case No. 3843, the patent-in-suit had already been granted and was in force, constituting a lawful exercise of its right to sue; thus, no subjective bad faith was present. Accordingly, the court upheld the original judgment and dismissed all claims brought by Guilin Company.

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