JC Master Legal News Issue 1085

Release Date:

2023-10-29 19:28

Key Takeaways for This Issue

Finance & Capital Markets
The total scale of entrusted investment contracts for pension funds has exceeded 1.64 trillion yuan.
On October 26, the Ministry of Human Resources and Social Security held a press conference to present progress in human resources and social security work for the first three quarters of 2023. According to officials, during this period, key indicators across all areas of HR and social security remained in line with expectations, with overall employment conditions remaining stable. Nationwide, 10.22 million new urban jobs were created. Meanwhile, management of social security funds and entrusted investment activities advanced steadily; as of September, the total value of pension fund investment contracts exceeded RMB 1.64 trillion.
At a press conference, Chen Feng, spokesperson for the Ministry of Human Resources and Social Security and Deputy Director-General of the Policy Research Department, stated that during the first three quarters, human resources and social security authorities at all levels made every effort to stabilize and expand employment. From January to September, 10.22 million new urban jobs were created nationwide, and the surveyed urban unemployment rate in September stood at 5.0%. With employment‑first policies being implemented in depth, measures such as the temporary reduction of unemployment and work‑injury insurance rates, wage‑retention refunds, and one‑off subsidies for expanding employment were extended from January to September, helping enterprises cut costs by RMB 141.9 billion and disbursing RMB 80.9 billion in employment‑related subsidies.
Employment efforts targeting key groups have continued to strengthen, with the “Three Supports and One Assistance” program being implemented nationwide, recruiting a total of 42,000 college graduates to serve at the grassroots level. A targeted campaign to prevent relapse into poverty through employment was launched, and by the end of September, 32.97 million people who had been lifted out of poverty were employed. Precision job placement services were enhanced, resulting in the reemployment of 3.96 million unemployed individuals and the employment of 1.29 million people facing difficulties between January and September. Meanwhile, employment services have been continuously improved, with over 70,000 key enterprises receiving assistance in meeting their labor needs, totaling more than 1.62 million workers, from January to September.
Currently, we are in the autumn recruitment season for college graduates, with the Class of 2024 gradually entering the job market. At the same time, a portion of recent graduates remain unemployed. To ensure effective employment support for college graduates and other young people, Song Xin, Deputy Director-General of the Employment Promotion Department of the Ministry of Human Resources and Social Security, emphasized that the Ministry will implement supportive policies such as social security subsidies, employment‑incentive subsidies, and tax and fee reductions to encourage employers to hire. Recruitment efforts for the 2024 graduating class will be scheduled in advance to help stabilize public‑sector job positions.
In the area of social security, key reform initiatives have been steadily advanced. According to Chen Feng, as of the end of September, the number of participants in the national basic old-age, unemployment, and work-related injury insurance schemes stood at 1.06 billion, 240 million, and 300 million, respectively, with cumulative fund surpluses totaling RMB 8 trillion. The number of national social security card holders reached 1.377 billion, covering 97.4% of the population, while 851 million people have obtained electronic social security cards. Meanwhile, nationwide unified administration of the basic old-age insurance for enterprise employees has been promoted, providing support to provinces facing fiscal difficulties in pension payments; the individual pension system has also been implemented smoothly. In addition, management of social security funds and entrusted investment activities have made steady progress: as of September, the total value of entrusted investment contracts for pension funds exceeded RMB 1.64 trillion.
Regarding occupational injury protection for workers in new forms of employment, Zheng Xuanbo, Director-General of the Work Injury Insurance Department of the Ministry of Human Resources and Social Security, stated that on July 1 last year, the Ministry, together with relevant departments, officially launched a pilot program to provide occupational injury coverage for workers in new forms of employment in selected localities and among certain platform enterprises.
The pilot program was launched in seven provinces and municipalities—Beijing, Shanghai, Jiangsu, Guangdong, Hainan, Chongqing, and Sichuan—covering four sectors: ride-hailing, food delivery, instant‑delivery services, and intra‑city freight. It involved seven platform operators: CaoCao Mobility, Meituan, Ele.me, Dada, Shansong, Huolala, and Kuagou Taxi. As of September 2023, a total of 6.68 million workers had been brought under the occupational injury insurance scheme, with the pilot provinces disbursing 490 million yuan in occupational injury benefits. While effectively safeguarding the occupational injury rights of workers in new forms of employment, the initiative has also played a positive role in promoting the standardized and healthy development of the platform economy.

An Analysis of the Trillion-Yuan Government Bonds: Experts Say It Signals the Start of a New Round of Measures to Stabilize Growth.
Buoyed by news that the central government will increase issuance of 2023 treasury bonds by RMB 1 trillion in the fourth quarter, A-share stocks across the entire infrastructure‑related value chain surged. Sectors such as water conservancy, building materials, steel, and cement all saw a wave of limit-up rallies.
The newly issued 1 trillion yuan in government bonds will be entirely allocated to local governments through transfer payments, with resources concentrated on supporting post-disaster recovery and reconstruction and on enhancing disaster prevention, mitigation, and relief capabilities. Given that the proceeds from these additional bonds will be disbursed over the next two years, their impact on the macroeconomic landscape and financial markets is likely to be far-reaching.
Experts interviewed by the Securities Times unanimously agree that this additional issuance of government bonds has exceeded market expectations, signaling the start of a new round of pro‑growth policy cycles. This has bolstered market expectations for an improvement in next year’s economic data, allayed concerns about a weakening of macro‑control measures, and helped restore investor risk appetite. Looking ahead, proactive fiscal policy is likely to remain robust, while monetary policy will coordinate with fiscal efforts to smooth out liquidity fluctuations.
The starting gun has been fired for a new round of policies aimed at stabilizing growth.
Since the third quarter, China’s economy has shown a clearer trend of recovery and overall improvement, with positive developments emerging across multiple sectors. At present, the package of policies introduced earlier continues to deliver results, as local governments have progressively undertaken efforts to resolve implicit debt, leading to a moderation in market expectations for further aggressive macroeconomic policy measures. Against this backdrop, the issuance of an additional 1 trillion yuan in government bonds sends a clear signal of the authorities’ commitment to stabilizing growth and safeguarding people’s livelihoods.
Given that the proceeds from this additional issuance of government bonds will be deployed over the next two years, and that a time lag exists between bond issuance and the realization of tangible project output, the experts interviewed believe that this bond expansion marks the start of a new round of pro‑growth policy cycles, effectively sounding the starting gun for such measures. The full impact of these policies on economic stabilization is expected to materialize primarily in the coming year.
The proceeds from this additional issuance of government bonds will be allocated primarily to eight areas, including infrastructure projects such as “key flood‑control and management works, initiatives to enhance emergency response capabilities for natural disasters, other priority flood‑control projects, irrigation‑district construction and renovation, and major soil‑and‑water conservation efforts,” as well as “high‑standard farmland development.”
Zhong Zhengsheng, Chief Economist and Director of the Research Institute at Ping An Securities, pointed out that since the beginning of this year, many regions in China have been hit by severe rainstorms, flooding, typhoons, and other disasters. Meanwhile, over the first nine months, the year-on-year growth rate of infrastructure investment related to water conservancy and environmental protection has slowed to -0.1%. Consequently, post-disaster recovery and reconstruction, as well as efforts to enhance disaster prevention and mitigation capabilities, are both necessary and offer room for additional investment.
Zhang Shixin, Deputy Secretary-General of the National Development and Reform Commission, emphasized that the NDRC will ensure that newly initiated projects commence construction as soon as possible and that ongoing projects generate substantial physical output over the next two years.
Actively boost investor confidence
With the issuance of an additional 1 trillion yuan in government bonds, the national fiscal deficit for 2023 has increased from 3.88 trillion yuan to 4.88 trillion yuan, while the central government’s fiscal deficit has risen from 3.16 trillion yuan to 4.16 trillion yuan. The fiscal deficit-to-GDP ratio is expected to climb from 3% to around 3.8%.
Since this additional issuance of government bonds is entirely counted toward this year’s central government deficit, Zhang Yu, deputy director and chief macro analyst at Huachuang Securities Research Institute, views the move as the central government proactively increasing leverage to stabilize growth, thereby reinforcing market expectations for an improvement in economic data. From both the supply and demand perspectives, once the proceeds from these bonds are put to use, they will effectively close the demand gap and further bolster market confidence in next year’s economic growth target.
Tao Chuan, Assistant Director of the Research Institute at Dongwu Securities and Chief Macro Analyst, stated that this additional issuance of government bonds will dispel prevailing misconceptions about fiscal policy. In the first three quarters of this year, the fiscal authorities focused primarily on addressing local governments’ hidden debt, leading the market to misinterpret the direction of fiscal policy as one of “tight fiscal stance.” As the market now recognizes the trend of proactive fiscal stimulus, investor sentiment is expected to improve significantly.
Looking ahead, proactive fiscal policy still has considerable room for further strengthening. On October 24, the Sixth Meeting of the Standing Committee of the 14th National People’s Congress adopted a decision authorizing the State Council to issue in advance a portion of the new local government debt quota, signaling that part of the 2024 additional local debt ceiling may be allocated ahead of schedule.
“Over the recent period, market sentiment and risk appetite have remained relatively subdued, and this additional issuance of government bonds can play a modest role in restoring them,” said Duan Chao, Chief Macro Analyst at Industrial Securities (601377). On the one hand, the proceeds from the bond issuance will be channeled primarily into infrastructure‑related projects, further consolidating the economy’s recovery momentum and bolstering investors’ confidence in the economic rebound. On the other hand, the additional bond supply is likely to allay some investors’ concerns that macroeconomic policy may enter a lull in the fourth quarter, thereby helping to revive risk appetite.
Limited impact on liquidity
With regard to this round of additional government bond issuance, the Ministry of Finance has explicitly stated that it will be conducted through a public offering and will be coordinated with the annually scheduled government bond issuance. At the same time, the Ministry will closely monitor macroeconomic conditions and developments in the bond market, carefully calibrating the pace of bond issuance to ensure alignment between the timing of issuance and the progress of fund utilization.
Wang Xianshuang, Co‑Chief Analyst for the Banking Sector at GF Securities, points out that an increase in government bond financing directly boosts both aggregate social financing growth and money supply growth, which is favorable for broad liquidity. However, its impact on interbank liquidity depends on the ultimate holders of these bonds. If banks or asset management products end up holding them, the issuance will result in a short-term buildup of fiscal deposits, directly reducing excess reserves in the banking system. Even if those fiscal deposits are eventually redeposited, the resulting increase in money creation will still, indirectly, deplete excess reserves.
Affected by factors such as the peak tax‑payment period and government bond issuance payments, liquidity in the banking system has remained tight recently. However, surveyed experts believe that the additional issuance of treasury bonds will have only a limited impact on liquidity.
Zhang Yu believes that monetary policy currently has ample room to maneuver, and the issuance of additional government bonds would have only a limited impact on the interest-rate market. Drawing on past experience, whenever local governments issue large-scale special-purpose bonds, the central bank typically steps in by increasing liquidity injections or cutting the reserve requirement ratio, thereby keeping liquidity at an appropriate level.
In Duan Chao’s view, the central bank will employ a range of measures, including increasing rollovers of the Medium-term Lending Facility (MLF), to coordinate with this government bond issuance and further smooth out the liquidity fluctuations triggered by the additional bond supply.
“Monetary policy will certainly coordinate with fiscal measures to ensure that this round of local government debt restructuring does not impose a significant shock on the bond market, while also supporting the economy’s sustained recovery,” said Tao Chuan. He added that, in the short term, measures such as over‑sized renewals of medium-term lending facility (MLF) operations or even a reduction in the reserve requirement ratio can be expected.

The Ministry of Finance outlined the preliminary plan for the 1-trillion-yuan government bond: 500 billion yuan will be used this year, with the remaining 500 billion yuan carried over to next year.
At 10:00 a.m. on October 25, the State Council Information Office held a regular policy briefing, during which the Ministry of Finance and the National Development and Reform Commission provided details on measures to increase the issuance of government bonds to support post-disaster recovery and reconstruction and to enhance disaster prevention, mitigation, and relief capabilities.
At the meeting, Vice Minister of Finance Zhu Zhongming stated that the additional 1 trillion yuan in government bonds will be allocated for use over the next two years. Based on progress in related work and the status of project reserves, the funds from the additional bond issuance are tentatively planned to be deployed at 500 billion yuan in 2023 and carried over for use in 2024 at 500 billion yuan.
Principal and interest repayment will be borne by the central government, without increasing the repayment burden on local governments.
During the session, a question was raised: Why choose this particular moment to issue additional government bonds? In response, Zhu Zhongming said, “I understand that the concern is whether this issuance of 1 trillion yuan in government bonds constitutes a major measure to boost the economy.”
Zhu Zhongming stated that, since the beginning of this year, under the strong leadership of the Party Central Committee with Comrade Xi Jinping at its core, China has better coordinated the domestic and international contexts, balanced epidemic prevention and control with economic and social development, and integrated development with security. As a result, the national economy has continued to recover, with an overall upward trend gaining momentum. In particular, since the third quarter, the overall recovery has become even more pronounced, and several sectors have witnessed a number of positive developments.
The primary purpose of this additional issuance of 1 trillion yuan in government bonds is to implement the arrangements made at the meeting of the Standing Committee of the Political Bureau of the CPC Central Committee, supporting post-disaster recovery and reconstruction projects as well as initiatives to enhance disaster prevention, mitigation, and relief capabilities—key measures to address shortcomings, strengthen weak areas, and improve people’s livelihoods. Of course, once these bond proceeds are put to use, they will also help stimulate domestic demand, further consolidating the momentum of China’s economic recovery and improvement.
Regarding the allocation and use of proceeds from government bonds, Zhu Zhongming stated that the primary objective of this additional issuance is to concentrate resources on supporting post-disaster recovery and reconstruction, addressing shortcomings in disaster prevention, mitigation, and relief efforts, and comprehensively enhancing China’s capacity to withstand natural disasters, thereby better safeguarding the lives and property of the people. In terms of fund allocation and utilization, the following key considerations have been taken into account:
First, the central government will assume responsibility for principal and interest repayments. As I have already explained, the additional 1 trillion yuan in government bonds issued this time will be allocated to local governments entirely through transfer payments, with the full amount counted as part of the central government’s fiscal deficit. Principal and interest repayments will be borne by the central government, thereby avoiding any additional repayment burden on local authorities.
Second, the funds will be allocated and utilized over the next two years. As we have now entered late October of the fourth quarter, based on progress in relevant work and the status of project reserves, the additional government bond proceeds are tentatively planned to be deployed as follows: RMB 500 billion in 2023 and RMB 500 billion carried over for use in 2024, thereby providing robust financial support to ensure effective implementation of priority tasks.
Third, appropriately raise subsidy standards. To alleviate the fiscal burden on local governments, we will temporarily increase the central government’s subsidy rates or share of funding in relevant sectors, thereby strengthening support for local authorities and ensuring the smooth implementation of projects.
Fourth, a separate transfer‑payment item has been established. To ensure continuity across budget years, and in line with past practice, a dedicated “Subsidy for Post‑Disaster Recovery and Reconstruction and for Enhancing Disaster Prevention, Mitigation, and Relief Capabilities” will be created within the central government’s transfers to local governments. This item will be listed alongside general‑purpose and special‑purpose transfer payments, centrally reflecting expenditures financed by additional treasury bonds.
Zhu Zhongming stated that, going forward, the Ministry of Finance will, in accordance with the directives of the CPC Central Committee and the State Council, work closely with relevant departments to ensure the effective implementation of this additional issuance of government bonds, promptly initiate bond offerings, allocate budgetary funds in a timely manner, continuously monitor and strengthen oversight of bond‑funded projects, and substantially enhance the efficiency of bond‑fund utilization.
Refine the budgetary allocation for treasury bond projects in accordance with the principle of “funds follow the project.”
At the meeting, Zhang Shixin, Deputy Secretary-General of the National Development and Reform Commission, pointed out that, in accordance with the decisions and arrangements of the CPC Central Committee and the State Council, the NDRC has been actively carrying out relevant work—ranging from formulating plans to advancing projects—to lay the groundwork for the implementation of projects financed by additional government bonds.
First, we will accelerate the preparation of post-disaster recovery and reconstruction plans. In accordance with the State Council’s directives, the National Development and Reform Commission is promptly leading the drafting of the “Plan for Enhancing Disaster Prevention and Mitigation Capabilities in the North China Region, with a Focus on the Beijing–Tianjin–Hebei Area.” Meanwhile, the five provinces and municipalities of Beijing, Tianjin, Hebei, Jilin, and Heilongjiang are each formulating their own local plans, ensuring that high‑quality planning guides the recovery and reconstruction efforts.
Second, we have proactively prepared project portfolios. Since September, the National Development and Reform Commission, in coordination with relevant departments, has organized local authorities to prioritize post-disaster recovery and reconstruction efforts and to enhance disaster prevention, mitigation, and relief capacities. A batch of key projects has been swiftly identified and readied, while local governments have been urged to accelerate preparatory work, thereby laying a solid project foundation for the issuance and effective utilization of government bonds.
Third, we will study and establish a project‑management framework. In collaboration with the Ministry of Finance and other relevant authorities, we will develop an implementation mechanism for projects financed by additional government bonds, clearly defining arrangements for project selection, resource allocation, progress monitoring, and oversight. We will advance preparatory work in advance to ensure that, once the bond funds are in place, they can be swiftly and precisely channeled directly to specific projects, thereby generating tangible results as early as possible.
Zhu Zhongming further explained that, given the substantial scale of this additional issuance of government bonds, ensuring the effective allocation and utilization of funds is of paramount importance. In the preliminary phase, the Ministry of Finance has conducted thorough consultations with relevant departments and, in accordance with the principle of “funds follow the projects,” has refined the budgetary arrangements for bond‑financed projects. Specifically, this includes:
First, work requirements will be refined. Relevant departments will, for each of the eight expenditure areas, further specify the requirements by sector, clearly defining the specific scope and content of support for each area, and, in light of the realities of each sector, propose corresponding fiscal subsidy standards or subsidy policies.
Second, a project list shall be compiled. The National Development and Reform Commission and the Ministry of Finance, in coordination with relevant departments, will establish a working mechanism to guide local authorities in preparing project applications. They will require all regions to strictly adhere to the scope of funding support, comprehensively conduct project screening and reserve‑building, and promptly submit project proposals in accordance with established procedures. Following review by the working mechanism, a finalized project list will be drawn up.
Third, project budgets are issued. The Ministry of Finance promptly allocates national bond project budgets based on the list of projects determined by the working mechanism.

Ministry of Commerce: In the third quarter, final consumption expenditure contributed 94.8% to economic growth.
Today, an official from the Department of Consumer Promotion of the Ministry of Commerce presented an overview of China’s consumer market in September 2023. During the month, commercial authorities at all levels thoroughly implemented the decisions and arrangements of the CPC Central Committee and the State Council, actively organized a series of consumption‑stimulating initiatives such as the “Golden Autumn Shopping Festival,” and accelerated the effective implementation of policies and measures to boost automobile and home‑furnishing consumption. Efforts were also made to optimize supply, improve consumption conditions, innovate consumption scenarios, and strengthen the fundamental role of consumption in driving economic growth. In September, total retail sales of consumer goods reached RMB 3.98 trillion, up 5.5% year on year—a pace 0.9 percentage points faster than in August—marking a sustained recovery. In the first three quarters, total retail sales of consumer goods totaled RMB 34.2 trillion, up 6.8% year on year, with final consumption expenditure contributing 94.8% to economic growth in the third quarter.
Retail sales posted steady growth. In September, retail sales of consumer goods rose 4.6% year on year, with the growth rate accelerating by 0.9 percentage points compared to August. By product category, more than 60% saw year-on-year growth rates that picked up from August. Sales of essential daily‑life items remained stable, while upgraded and green, smart products gained favor. Among enterprises above the designated size, retail sales of grain, oil, food, and beverages increased 8.3% year on year, and those of beverages rose 8.0%; sales of sports and entertainment goods grew 10.7%, and those of gold, silver, and jewelry advanced 7.7%. New‑energy vehicle sales surged 27.7% year on year, accounting for 31.6% of total new‑car sales.
Service consumption continues to rebound. Strong consumer willingness to travel has fueled rapid growth in spending on dining, accommodation, tourism, and transportation. In the first three quarters, retail sales of services rose 18.9% year on year, outpacing the growth rate of merchandise retail by 13.4 percentage points; per capita household spending on services increased 14.2% year on year, accounting for 46.1% of total per capita consumption expenditure. In September, nationwide catering revenue reached RMB 428.7 billion, up 13.8% year on year, while box office receipts exceeded RMB 2.8 billion, roughly doubling compared with the same period last year.
Online and offline channels are advancing in tandem. Online retail continues to grow at a robust pace: in the first three quarters, nationwide online retail sales reached RMB 10.8 trillion, up 11.6% year on year. Among these, online sales of physical goods totaled RMB 9.0 trillion, an increase of 8.9%, accounting for 26.4% of total retail sales of consumer goods. Specialty pedestrian streets and key commercial districts remain bustling, while brick-and-mortar retail is posting steady growth, with sales at department stores, convenience stores, specialty stores, and brand‑name boutiques—above the designated size threshold—rising by 7.7%, 7.5%, 4.3%, and 3.1%, respectively, compared with the same period last year.
Urban and rural consumption grew in tandem. In the first three quarters, per capita consumer spending by urban and rural residents increased by 8.6% and 9.3%, respectively, year on year. Urban retail sales of consumer goods totaled RMB 29.64 trillion, up 6.7% year on year, while rural retail sales reached RMB 4.57 trillion, up 7.4% year on year. In September, urban retail sales of consumer goods rose 5.4%, and rural retail sales climbed 6.3%.

To smooth out liquidity fluctuations, the central bank conducted net open-market operations totaling RMB 702 billion.
On October 23, the People’s Bank of China conducted an 808 billion yuan seven-day reverse repurchase operation via interest-rate bidding, with the winning rate remaining unchanged at 1.8%. As 106 billion yuan of seven-day reverse repos matured on the same day, the central bank injected a net 702 billion yuan into the open market.
Since October, liquidity in the banking system has remained tight, with the 7-day interbank pledged repo weighted average rate (DR007) rising from 1.8087% on October 16 to 2.3108% on October 20. According to a central bank announcement, recent liquidity conditions have been affected by factors such as the peak tax‑payment period and government bond issuance and settlement.
Ni Jun, a banking analyst at GF Securities, noted that since October, cumulative net government bond issuance has significantly exceeded historical levels for the same period, and large-scale government bond redemptions have put pressure on liquidity. Over the next week, net government bond financing is expected to remain elevated, which may keep market expectations of tighter liquidity unresolved. Meanwhile, with the tax filing deadline falling on October 23, recent tightening in liquidity is also likely to be further complicated by tax‑related disruptions and offices’ early completion of their tax filings.
In addition, Wang Yifeng, chief analyst for the financial sector at Everbright Securities (601788), believes that downward pressure on the RMB exchange rate has yet to ease, with market participants showing weak willingness to convert foreign currency into RMB. Coupled with mounting capital outflows, this is further draining liquidity from the domestic market.
To maintain reasonably ample liquidity in the banking system, the central bank significantly stepped up its open-market operations over the past week. According to Wind data, last week the central bank conducted a total of RMB 1.454 trillion in reverse repos and RMB 789 billion in medium-term lending facility (MLF) operations, resulting in net injections of RMB 788 billion through reverse repos and RMB 289 billion via MLF.
In Ni Jun’s view, following last Friday’s net injection of RMB 733 billion, the central bank once again carried out a substantial net injection on Monday. The main reasons are this week’s tax‑payment period disturbances, heightened demand for funds across month‑end, and the maturation of sizable reverse repos in the open market. Overall liquidity conditions remain uncertain, and it is expected that the central bank will continue to maintain large‑scale injections this week to stabilize the market.
According to Wind data, this week’s maturing reverse repos in the open market total 1.454 trillion yuan. Wang Yifeng noted that he expects the central bank to step up liquidity injections to dampen excessive volatility in money market conditions and stabilize market expectations. Over the next two months, another 1.5 trillion yuan of medium-term lending facility (MLF) maturities are due; the central bank is likely to adopt a sizable rollover strategy at that time to offset these maturities.

From January to August, the number of newly established foreign-invested enterprises in Shanghai increased by 44.2% year on year.
According to the Shanghai Municipal Bureau of Statistics, from January to August, Shanghai approved the establishment of 3,877 new foreign-invested enterprises, a 44.2% increase year on year. The actual utilized foreign capital totaled US$15.899 billion, down 2.5% compared with the same period last year. Of this amount, the tertiary sector accounted for US$15.042 billion in actual utilized foreign capital, a decline of 3.3%, representing 94.6% of the city’s total.
By sector, the top three industries in terms of actual utilized foreign investment were information transmission, software and information technology services; scientific research and technical services; and leasing and business services, with respective amounts of US$4.225 billion, US$3.239 billion, and US$2.739 billion. Their growth rates were 16.6%, −10.1%, and −35.7%, respectively. Together, these three sectors accounted for 67.8% of the total actual utilized foreign investment in the tertiary sector.
From the perspective of origin, Hong Kong, Singapore, and Japan ranked first, second, and third, respectively, in terms of the actual utilized foreign investment in Shanghai, with amounts of US$11.132 billion, US$1.178 billion, and US$822 million, and growth rates of −12.0%, −17.2%, and 3.9 times, respectively.

The China–GCC Economic and Trade Cooperation Forum opened in Guangzhou.
On the afternoon of October 22, the China–Gulf Cooperation Council Economic and Trade Cooperation Forum, co-hosted by the Ministry of Commerce and the People’s Government of Guangdong Province, opened in Guangzhou. With the theme “Jointly Discussing Cooperation, Jointly Creating the Future,” the forum focused on the outcomes and consensus reached at the inaugural China–GCC Summit, jointly exploring new opportunities for the development of China–GCC cooperation. Huang Kunming, Secretary of the Guangdong Provincial Party Committee, and Wang Wentao, Minister of Commerce, attended the opening ceremony and delivered remarks, while Wang Weizhong, Deputy Secretary of the Guangdong Provincial Party Committee and Governor of Guangdong Province, presided over the event. GCC Secretary-General Jasem Al-Budaiwi also addressed the gathering, and heads of relevant departments from GCC member states—including Oman, the United Arab Emirates, Bahrain, Saudi Arabia, Qatar, and Kuwait—made presentations. Leaders from both China and abroad jointly declared the forum officially open.
Huang Kunming stated that Guangdong will actively engage in China–Gulf Cooperation Council cooperation and strive to make an even greater contribution to deepening the strategic partnership between the two sides. He extended a warm welcome to GCC countries, urging them to seize the significant opportunities presented by the joint development of the Belt and Road Initiative, further strengthen economic and trade cooperation, steadily expand the scale of imports and exports of energy resources and specialty products, and better benefit the people on both sides. He also warmly invited all parties to participate in the construction of the Guangdong–Hong Kong–Macao Greater Bay Area, encouraging more enterprises and institutions to establish a presence there and share the fruits of open development. Furthermore, he welcomed collaborative efforts to advance scientific and technological innovation, promote a green and low‑carbon transformation of development models, and forge new drivers and advantages for growth through mutually beneficial cooperation. Finally, he extended a cordial invitation to visitors to experience Guangdong’s unique charm and appreciate the beauty of Lingnan, while working to deepen cooperation in tourism, culture, sports, and other fields, thereby enhancing mutual trust and understanding and fostering closer ties between peoples. He expressed the hope that this forum would generate more business opportunities and foster greater friendship, and extended a warm invitation to all guests to visit Guangdong, see its progress firsthand, and personally witness the new vitality and transformative changes brought about by the province’s reform and development.
Wang Wentao stated that China is advancing Chinese-style modernization through high-quality development, expanding high-standard opening-up, and accelerating the establishment of a new development paradigm, thereby continuously offering new opportunities to countries around the world, including the GCC member states, through China’s own new development. We stand ready to work with the GCC side to implement in depth the economic and trade measures adopted at the first China–GCC Summit, so as to achieve even greater results in China–GCC economic and trade cooperation. First, we will extend the oil and gas cooperation value chain and unlock the potential for collaboration in the clean energy sector. Second, we will expand the scale of trade, diversify trade products, and develop digital trade. Third, we will support the operation of the China–GCC Joint Investment Association, strengthen exchanges of ideas and experiences, and organize GCC enterprises to participate in events such as the “CIIE Goes Local” initiative hosted by China. Fourth, we will emphasize digital empowerment, explore new models and pathways, and foster new technologies and business forms.
As a leading representative in the genomics sector at the China–GCC Economic and Trade Cooperation Forum, BGI Group CEO Zhao Lijian stated during corporate discussions that BGI places great emphasis on technological cooperation with GCC member states, actively offering Chinese technologies, expertise, standards, and solutions to help Middle Eastern countries build high‑level public health laboratories. Since 2020, BGI has established state-of-the-art public health laboratories in Saudi Arabia, the United Arab Emirates, Oman, and several other countries.
In a media interview, he stated that BGI places great emphasis on localized development. The company has already established a wholly owned subsidiary in Saudi Arabia and, through a joint venture, built the kingdom’s first comprehensive precision‑medicine laboratory. Additionally, BGI is exploring the provision of primary‑care‑oriented clinical and preventive health solutions, as well as medical logistics services, within Saudi Arabia, thereby contributing through concrete actions to align Saudi Arabia’s Vision 2030 with the Belt and Road Initiative.
As the world’s largest privately‑owned desalination company, a pioneer in green hydrogen, and a leader in the energy transition, Saudi‑listed ACWA Power participated in the Green Development and Digital Economy sub‑forum held that day. Lü Yunhe, Executive Vice President of ACWA Power Group and General Manager of its China operations, stated that the group unveiled its China Strategy 2.0 in June this year, committing to steadily increase its investments in China and leveraging the GCC’s robust platform to deepen cooperation with Chinese enterprises in both domestic and international markets. Currently, the company has established an investment entity in China and plans to set up a technology‑R&D center, engaging in the development and upgrading of China’s industrial value chains in areas such as green hydrogen, new energy, and desalination, while strengthening end‑to‑end supply‑chain collaboration with Chinese partners.

Regulatory effectiveness continues to improve, and mergers and reorganizations have entered the “era of full registration-based review.”
With the official release in February this year of the institutional framework for the comprehensive registration‑based reform, mergers and acquisitions and restructuring activities by listed companies have fully entered the “registration‑based era.” The adaptability and inclusiveness of the capital market’s foundational systems have been markedly enhanced, providing strong support for listed offices to strengthen their core businesses and improve quality, while also enabling the M&A and restructuring market to strike a “new rhythm” under the backdrop of the comprehensive registration system.
In line with the goals of making transactions more flexible, streamlining processes, and enhancing regulatory precision, a series of rules and guidelines—including the Three-Year Action Plan for Enhancing the Quality of Listed Companies (2022–2025) and the Measures for the Administration of Major Asset Restructurings of Listed Companies—have been successively issued or revised in recent years. By continuously addressing market shortcomings at the institutional level while simultaneously improving review efficiency, these measures have significantly boosted the vitality and momentum of the M&A and restructuring market.
Under the overarching framework of supporting technological innovation in the capital markets, deepening foundational institutional reforms, and adopting a balanced approach to regulation and review, listed companies have been able to forge a development path characterized by horizontal and vertical integration, enabling them to enhance their quality and strengthen their competitiveness.
Enhance review efficiency and reduce transaction costs.
With the full implementation of the registration-based IPO system, the China Securities Regulatory Commission recently revised the Measures for the Administration of Major Asset Restructurings of Listed Companies and its accompanying rules, clarifying the review and registration procedures for share‑issuance‑related restructurings, refining the criteria for identifying major asset restructurings and the pricing mechanism for share issuances, introducing a requirement that revenue must be no less than RMB 50 million, and lowering the floor price for share issuances by listed companies from 90% to 80% of the market price.
The purpose of this adjustment is squarely aimed at reducing costs. According to a seasoned investment banker, by tightening the criteria for determining materiality, the threshold for deeming an asset restructuring as “material” has been relaxed. As a result, many transactions that previously would have been classified as major restructurings are now treated as ordinary asset‑related transactions. Given the substantial differences between the two in terms of disclosure requirements and procedural standards, this move has significantly lowered the cost of certain restructuring deals.
In addition, based on a review of the experience gained from earlier pilot programs, the China Securities Regulatory Commission has drafted the “Rules on Listed Companies Issuing Convertible Corporate Bonds to Specific Investors for Asset Acquisitions (Draft for Public Comment)” to further advance market‑oriented reforms in mergers and acquisitions and restructuring.
The Shanghai and Shenzhen Stock Exchanges, with information disclosure as their core focus, have concurrently formulated and refined rules for reviewing restructuring transactions and guidelines on information disclosure for major asset restructurings. These measures aim to further leverage the exchanges’ frontline regulatory strengths, strengthen information‑disclosure requirements for listed companies’ mergers and acquisitions and restructurings, streamline review procedures, and enhance review efficiency.
In practice, for share‑issuance‑based restructuring transactions, the SSE Review Center currently takes about 40 days on average—shorter than the statutory two‑month deadline—demonstrating a substantial improvement in review efficiency. A notable example is Changling Hydraulic, the first “small‑amount, fast‑track” restructuring deal under the comprehensive registration system, which was reviewed by the SSE in just 28 days.
Encourage technological innovation and enhance valuation inclusiveness.
Over the past few years, asset-light companies, as targets of mergers and acquisitions, have often been accompanied by the “three highs”—high valuations, hefty earn-out commitments, and substantial goodwill—posing hidden risks to the post‑acquisition sustainable growth of listed companies.
From a valuation perspective, the “three highs” phenomenon has eased in recent years. Upon closer examination, this trend is largely attributable to the growing prevalence of industry‑focused restructuring, which has enabled both parties to develop a deeper understanding of the sector and engage in more thorough, pragmatic negotiations. At the same time, regulators’ decisive interventions in recent years—targeting blind cross‑industry diversification and deceptive restructuring practices—have served as an important deterrent.
Recently, a responsible official at the China Securities Regulatory Commission stated in a media interview that the valuation tolerance for restructuring transactions involving light‑asset technology companies should be appropriately increased. The industry generally believes that this measure will not only provide financial support for foundational innovation and industrial upgrading but also facilitate the continuous iteration and advancement of science‑and‑technology‑driven industries.
According to statistics, since the launch of the STAR Market, companies listed on the board have undertaken a total of nine share‑issuance‑for‑assets transactions, five of which have been approved. A closer examination of these cases reveals that the target assets typically exhibit characteristics such as light‑asset operations, relatively rapid or highly volatile performance during the reporting period, robust revenue and profit growth over the forecast horizon, and high valuation‑based premium rates.
As the target of Haoyuan Pharmaceutical’s restructuring, the company primarily engages in drug research and manufacturing, exhibiting a distinctly light‑asset business model. Meanwhile, its CRO and CDMO operations are experiencing rapid growth, yet its accumulated net assets remain relatively modest, resulting in an appraisal‑based valuation increase rate exceeding 600%.
Furthermore, the target of Xin’an Shiji’s restructuring primarily engages in the R&D and provision of information security products, requiring no investment in fixed assets such as production lines. Coupled with its relatively late market entry, the company’s net asset base remains comparatively small. At the same time, however, the target’s related products are expected to expand into new application areas, driving rapid revenue growth and resulting in an assessed appreciation rate approaching 800%.
Enhance regulatory effectiveness and closely monitor improper restructuring.
Does the full implementation of the stock issuance registration system mean that the requirements for listed-company restructurings have been relaxed? The answer is clearly no. The China Securities Regulatory Commission has emphasized that adopting the registration system in no way implies a relaxation of quality standards; on the contrary, review and oversight have become even more stringent.
To ensure effective oversight, the first step is to refine regulation across the entire M&A and restructuring value chain and strictly scrutinize improper restructuring activities. The China Securities Regulatory Commission and stock exchanges are further strengthening information-disclosure supervision in M&A and restructuring transactions, emphasizing the role of transparent, timely, and targeted inquiries in identifying transaction risks, thereby safeguarding market order in this sector.
Data show that since 2022, main-board listed companies in Shanghai have disclosed a total of 85 major asset‑restructuring plans, with 15 of them subsequently terminated. In particular, regulatory scrutiny has been intensified for M&A and restructuring transactions involving “three high” sectors, blind cross‑industry diversification, illicit transfer of benefits, and speculative hype around hot topics.
Secondly, regulatory oversight of cash‑based restructuring must be strengthened to rigorously prevent the transfer of benefits to related parties. Since the China Securities Regulatory Commission abolished administrative approval for cash‑based major asset restructurings, such transactions have increasingly become a key component of M&A and restructuring activities; however, they have also given rise to issues like illicit benefit transfers. To deter listed companies and their affiliates from exploiting cash‑based restructurings to pursue “high‑price, high‑premium, high‑ratio” acquisitions or engage in improper benefit‑shifting that infringes upon the legitimate rights and interests of small and medium investors, the Measures for the Administration of Major Asset Restructurings of Listed Companies explicitly stipulate that, for cash‑based restructurings, stock exchanges may exercise self‑regulatory oversight through methods such as inquiries, on‑site inspections, on‑site supervision, and requiring intermediary institutions to conduct supplementary verification and disclose professional opinions.
Data show that in 2022 and the first half of 2023, Shanghai‑listed companies disclosed 26 and 14 cash‑based restructuring transactions, respectively, reflecting a marked decline in the number of such deals. From the perspective of regulatory inquiries, a total of five M&A and restructuring transactions on the Shanghai Stock Exchange were terminated in 2022, accounting for nearly 20% of the cases. The regulatory scrutiny focused on issues such as the reasonableness of valuations and the fairness of pricing, the authenticity of the target assets’ financial performance, the sources of funds for the listed company’s cash acquisitions, whether the target assets are subject to fund misappropriation or illegal guarantees, and the achievability of performance commitments.

Commercial & Corporate
The National Development and Reform Commission has issued 17 key tasks to promote green innovation and high-quality development in the refining industry.
On October 27, the National Bureau of Statistics released its monthly report on industrial economic performance. Yu Weining, a statistician with the Industrial Statistics Department of the National Bureau of Statistics, commented on corporate profit data, noting that in the first three quarters, as the effects of a comprehensive package of macroeconomic policies continued to emerge, market demand steadily improved, industrial production grew at a steady pace, and both revenue and profits of industrial enterprises kept recovering and trending upward. The overall performance of enterprises exhibited the following key characteristics:
Profits of industrial enterprises have rebounded quarter by quarter, with quarterly profits turning from decline to growth. In the first three quarters, profits of industrial enterprises above designated size nationwide fell 9.0% year on year, a decline that narrowed by 7.8 and 12.4 percentage points compared with the first half of the year and the first quarter, respectively. By quarter, in the first and second quarters, profits of these enterprises declined 21.4% and 12.7% year on year, respectively; in the third quarter, profits rose 7.7%. After five consecutive quarters of year-on-year declines, industrial enterprise profits recorded their first shift from decline to growth, signaling an accelerating recovery. On a month-by-month basis, in September, profits of industrial enterprises above designated size increased 11.9% year on year, marking double-digit growth for two consecutive months.
Corporate revenue for the quarter turned from decline to growth, driving a faster improvement in profits. As market demand continues to recover and industrial prices gradually rebound, the revenue of industrial enterprises has improved markedly. In the first three quarters, operating income of large-scale industrial enterprises remained flat year on year, with growth rates picking up by 0.4 and 0.5 percentage points compared with the first half of the year and the first quarter, respectively. Notably, in the third quarter, after two consecutive quarters of decline, operating income of large-scale industrial enterprises rose 0.3% year on year, reversing the quarter’s profit trend from decline to growth. On a month-by-month basis, in September, operating income of large-scale industrial enterprises increased 1.2% year on year, marking two consecutive months of growth, with the pace accelerating by 0.4 percentage points compared with August.
Profits across all three major sectors improved, with profit growth observed in 60 percent of industries. In the third quarter, the decline in mining profits narrowed by 11.6 percentage points compared with the second quarter; manufacturing profits reversed from a year-on-year contraction in the second quarter to a 11.8 percent increase; and the electricity, heat, gas, and water production and supply sector posted a 44.5 percent rise in profits, with the growth rate accelerating by 10.6 percentage points from the second quarter. Over the first three quarters, among the 41 major industrial categories, 25 saw either an acceleration in profit growth or a narrowing of the decline—turning from negative to positive—accounting for 61.0 percent.
The decline in profits for the raw materials manufacturing sector narrowed significantly. As downstream demand gradually recovered and prices of certain bulk commodities rebounded, offices’ production enthusiasm increased. Coupled with a relatively low base in the same period last year, these factors jointly drove a marked recovery in the sector’s profitability. In the first three quarters, the drop in profits for raw materials manufacturing narrowed by 18.8 percentage points compared with the first half of the year, helping to reduce the overall decline in profits for industries above designated size by 6.0 percentage points—making it the sector that contributed most to this improvement. Notably, in the third quarter, raw materials manufacturing profits turned from a year-on-year decline in the second quarter to growth of 60.8%. By sub‑sector, the declines in profits for steel, petroleum processing, and nonferrous metal smelting narrowed by 95.8, 51.9, and 28.9 percentage points, respectively, compared with the first half of the year.
Profits in the consumer goods manufacturing sector improved markedly. Supported by the ongoing economic recovery, the gradual emergence of effects from policies aimed at expanding domestic demand, and other factors, consumer demand continued to rebound, leading to a significant improvement in industry profits. In the first three quarters, the decline in profits for consumer goods manufacturers narrowed by 7.9 percentage points compared with the first half of the year; in particular, in the third quarter, profit growth turned positive, rising 11.8% year on year, reversing the year‑on‑year decline recorded in the second quarter. By subsector, during the same period, the liquor, beverage, and tea industry shifted from a year‑on‑year decline in the first half to a 5.6% increase; the chemical fiber industry saw its profit decline narrow by 44.7 percentage points compared with the first half; and the paper, agricultural and sideline food processing, and textile industries all experienced reductions in their profit declines ranging from 13.6 to 19.3 percentage points.
Profits across all types of enterprises have rebounded. As the effects of various policies designed to support businesses continue to materialize, business confidence has strengthened, and the performance of all market entities has steadily improved. In the first three quarters, among industrial enterprises above designated size, the year-on-year decline in profits for state‑controlled, private, and foreign‑invested as well as Hong Kong, Macao, and Taiwan‑invested offices narrowed by 9.5, 10.3, and 2.3 percentage points, respectively, compared with the first half of the year; meanwhile, the declines in profits for large, medium, and small enterprises narrowed by 10.9, 4.5, and 3.5 percentage points, respectively.
Corporate unit costs declined, while the operating income profit margin improved. In the third quarter, ex‑factory prices for industrial goods continued to rebound, boosting corporate revenues and expanding profit margins. For large‑scale industrial enterprises, costs accounted for 84.74 yuan per 100 yuan of operating revenue, down 0.71 yuan year on year; the operating income profit margin stood at 6.02%, up 0.41 percentage points from the same period last year.
Overall, industrial enterprises’ profits improved quarter by quarter in the first three quarters, with a clear trend of recovery and improvement. Going forward, it is essential to continue implementing and refining the decisions and arrangements of the CPC Central Committee and the State Council, focus on expanding effective demand, bolster market confidence, help enterprises overcome difficulties, stabilize business expectations, and make solid progress in advancing new‑type industrialization. By doing so, we can continuously cultivate new competitive advantages, consolidate the foundation for the sustained recovery of industrial profitability, and keep driving high‑quality development of the industrial economy.

In the first three quarters of 2023, China’s gold consumption totaled 835.07 tonnes, up 7.32% year on year.
According to the latest statistics from the China Gold Association, in the first three quarters of 2023, domestic raw gold production totaled 271.248 tonnes, an increase of 1.261 tonnes, or 0.47% year on year. Of this, gold produced from primary mines reached 214.866 tonnes, while gold recovered as a by-product of non‑ferrous metal mining amounted to 56.382 tonnes. Additionally, during the same period, imported raw materials yielded 96.277 tonnes of gold, up 11.48% year on year. Including this imported output, total national gold production stood at 367.525 tonnes, a year-on-year rise of 3.14%.
In the first three quarters of 2023, building on the steady performance of national gold production, the gold industry made steady progress in geological exploration, technological innovation, and corporate consolidation and mergers: at the Xiling Gold Mine in Laizhou, Shandong, an additional 209.61 tonnes of gold were discovered on top of the previously proven 382.58 tonnes, bringing the total proven reserves to 592.19 tonnes; China National Gold Group received the 24th China Patent Excellence Award for two breakthroughs in bioleaching and tailings resource utilization; meanwhile, Shandong Gold (600547), Zijin Mining (601899), Shandong Zhaojin, and other companies secured multiple gold and copper projects—including the Xihe Dajiao Gold Mine in Gansu, the Zhuno Copper Mine in Tibet, and the Beishan Gold Mine in Dunhuang, Gansu—through acquisitions and competitive bidding. Large domestic gold enterprises (groups) produced 107.058 tonnes of mine‑produced gold, accounting for 49.83% of the national total. Meanwhile, overseas mines operated by Zijin Mining, Shandong Gold, Chifeng Gold (600988), and other offices generated 43.067 tonnes of mine‑produced gold, up 18.10% year over year.
In the first three quarters of 2023, China’s total gold consumption reached 835.07 tonnes, up 7.32% year on year. Specifically: gold jewelry accounted for 552.04 tonnes, a 5.72% increase; gold bars and coins totaled 222.37 tonnes, up 15.98%; and industrial and other gold uses stood at 60.66 tonnes, down 5.53%. During this period, with the national economy continuing to recover and market demand expanding, retail sales of gold, silver, and jewelry led all product categories, according to data from the National Bureau of Statistics. In the third quarter, as gold prices remained elevated, the growth rate of gold jewelry consumption moderated—particularly in late September, when sharp price swings ahead of the Mid-Autumn and National Day holidays intensified wait-and-see sentiment. Nevertheless, premium products such as hard‑foot gold and traditional‑style gold continued to post robust growth. Meanwhile, the high‑volatility of gold prices drew heightened attention to physical gold investments, driving brisk expansion in the consumption of gold bars and coins.
In the first three quarters of 2023, the Shanghai Gold Exchange recorded a cumulative bilateral trading volume of 31,500 tonnes (15,800 tonnes on a single‑sided basis) across all gold contracts, up 3.08% year over year, with a bilateral turnover of RMB 13.86 trillion (RMB 6.93 trillion on a single‑sided basis), an increase of 16.52% year over year. Meanwhile, the Shanghai Futures Exchange reported a cumulative bilateral trading volume of 92,200 tonnes (46,100 tonnes on a single‑sided basis) for all gold contracts, up 40.55% year over year, and a bilateral turnover of RMB 35.27 trillion (RMB 17.64 trillion on a single‑sided basis), up 51.81% year over year. During the same period, domestic gold ETF holdings generally followed a trend of initial decline followed by a rebound; in the third quarter alone, holdings increased by 9.53 tonnes. As of the end of September, total domestic gold ETF holdings stood at approximately 59.69 tonnes.
In the first three quarters of 2023, downward pressure on the global economy continued to mount, geopolitical tensions persisted, and international gold prices remained volatile at elevated levels. By the end of September, as market expectations grew that the Federal Reserve would maintain high interest rates, international gold prices retraced sharply to their year‑beginning levels, yet they still lingered near historic highs. At the end of September, the London spot gold fixing stood at $1,870.50 per ounce, up 1.48% from the start of the year; meanwhile, the Shanghai Gold Exchange’s Au9999 gold closed at 447.10 yuan per gram, a gain of 8.78% compared with the beginning of the year.
In the first three quarters of 2023, the People’s Bank of China cumulatively increased its gold holdings by 181.02 tonnes. From November 2022 to September 2023, the bank has boosted its gold reserves for eleven consecutive months, bringing China’s total gold reserves to 2,191.55 tonnes as of the end of September.

MIIT: In the first three quarters, China’s software industry revenue reached 8.761 trillion yuan.
On October 25, the Ministry of Industry and Information Technology released data on the software industry’s economic performance for the first three quarters of 2023. China’s software business revenue reached RMB 8.76 trillion, up 13.5% year on year, while total profits amounted to RMB 1.01 trillion, an increase of 18.3% compared with the same period last year. By sector, in the first three quarters of 2023, software product revenue stood at RMB 2.05 trillion, up 10.3% year on year and accounting for 23.4% of the industry’s total revenue; information technology services revenue totaled RMB 5.83 trillion, up 15% year on year and representing 66.6% of the industry’s overall revenue; revenue from information security products and services reached RMB 142.1 billion, up 9.3% year on year; and embedded systems software revenue was RMB 738.9 billion, up 12% year on year.

The removal of foreign‑investment access restrictions in the manufacturing sector will further enhance the competitiveness of Chinese manufacturing.
“Completely lifting foreign‑investment access restrictions in the manufacturing sector” — this was the major announcement made by China at the opening ceremony of the Third Belt and Road Forum for International Cooperation.
Chen Wenling, Chief Economist of the China Center for International Economic and Trade Exchange, Deputy Director of its Executive Bureau, and Deputy Director of its Academic Committee, stated that this means that, as China’s manufacturing sector continues to undergo transformation and upgrading, foreign investment will enjoy unimpeded access.
Public opinion widely holds that the comprehensive removal of foreign‑investment access restrictions in the manufacturing sector is a clear manifestation of China’s high‑level opening-up.
This perspective is, of course, correct. The fact that China’s economy has sustained rapid growth for many years demonstrates that, regardless of how the external environment may change, leveraging openness to drive development has always been a key strategic move for China.
Recently, the scale of foreign investment absorbed by China has declined. Data show that, in the first eight months of this year, the amount of actual utilized foreign capital fell 5.1% year on year.
Although there are many reasons behind the decline in actual utilized foreign investment—particularly given the current slow recovery of the global economy and weak cross-border investment, which is a widespread phenomenon—China, which remains committed to an open‑door policy, must remain steadfast in its expectation of stabilizing both foreign trade and foreign investment.
By stabilizing foreign trade and foreign investment and steadfastly advancing reform and opening-up, China is far from merely paying lip service.
In fact, since 2017, China has revised its negative list for foreign investment access for five consecutive years. Effective January 1, 2022, the “Special Management Measures for Foreign Investment Access (Negative List) (2021 Edition)” and the “Special Management Measures for Foreign Investment Access in Pilot Free Trade Zones (Negative List) (2021 Edition)” came into force. The new national and free trade zone negative lists for foreign investment access have been further shortened to 31 and 27 items, respectively, representing reduction rates of 6.1% and 10%.
Reducing the negative list and striving to build a market‑oriented, law‑based, and internationally competitive business environment will help foreign‑invested enterprises remain confident in China’s economic prospects and increase their investment in the country.
In the manufacturing sector, the comprehensive removal of foreign‑investment access restrictions also signals a major step in China’s economic transformation and upgrading.
Manufacturing is the foundation of a nation and the cornerstone of its strength. In today’s global production and supply chain systems, China’s manufacturing sector has steadily advanced from the mid‑low end to the mid‑high end; however, it still falls short of being a true manufacturing powerhouse.
The comprehensive removal of foreign‑investment access restrictions in the manufacturing sector signifies China’s commitment to a development path centered on strengthening the real economy. For a country to transition from being a manufacturing giant to a manufacturing powerhouse, it must actively engage in economic globalization and attract and leverage all high‑quality resources available worldwide.
It is important to recognize that international competition to attract investment has become increasingly fierce. Against the backdrop of U.S. efforts to bring manufacturing back home, what will enable China to continue drawing foreign capital? According to a survey report, when deciding to invest in China, foreign investors first and foremost value the Chinese market, followed by the country’s business environment and favorable factors such as factor costs.
Building on the latest version of the Negative List, China has further deepened its opening-up in the manufacturing sector, enabling foreign investors to reap the benefits of the country’s expanded market access. If, going forward, China continues to strengthen its regulatory and institutional frameworks, its appeal to foreign capital will be self‑evident.
Of course, the complete removal of foreign‑investment access restrictions will inevitably put some domestic enterprises under pressure. However, China’s experience with reform and opening-up demonstrates that relying on policy protection cannot enable a company to grow; only by confronting competition head‑on, strengthening internal capabilities, and learning from others’ strengths can the full potential of both talent and enterprises be unlocked.
In fact, China’s comprehensive removal of foreign‑investment access restrictions in the manufacturing sector has unfolded in a gradual, step‑by‑step process. Initially, these restrictions were lifted within the free‑trade pilot zones; today, the scope has been expanded nationwide, a development that, from a timing perspective, can be described as entirely natural and well‑timed.
We believe that foreign investors will reap substantial benefits from China’s opening-up, and we are also confident that Chinese enterprises are well-prepared and will grow stronger amid intensifying competition.

The National Development and Reform Commission has issued a document to strengthen power system stability under the new circumstances.
On October 25, the National Development and Reform Commission’s website published the “Guiding Opinions on Strengthening Power System Stability in the New Context.”
The Guiding Opinions clearly state that it is necessary to consolidate the foundation of power system stability, optimize a rational power‑source structure, coordinate the scale and spatial distribution of various types of power sources, build a robust and flexible grid platform, define principles for grid‑structure design, scientifically plan and deploy energy storage, tailor energy‑storage deployment to demand, strengthen power‑system planning, ensure integrated planning, enhance preliminary engineering design, refine design solutions, improve management of power‑generation equipment, reinforce management of power‑infrastructure construction, bolster operation and maintenance support for power equipment, strengthen emergency management of the power system, fortify cybersecurity safeguards in the power sector, intensify safety‑protection measures, establish a stable technical support framework, and so forth.

The Standing Committee of the National People’s Congress has adopted the Law on the Protection of the Marine Environment.
On October 24, the Marine Environmental Protection Law of the People’s Republic of China was revised for the second time at the Sixth Meeting of the Standing Committee of the 14th National People’s Congress and promulgated by Presidential Order No. 12 of the People’s Republic of China, entering into force on January 1, 2024.
The Law on the Protection of the Marine Environment comprises nine chapters and 124 articles, covering general provisions, marine environmental supervision and management, marine ecological conservation, prevention and control of land-based pollutant pollution, pollution prevention and control in engineering construction projects, prevention and control of pollution from waste dumping, pollution prevention and control related to ships and associated operations, legal liabilities, and supplementary provisions. The revised Law on the Protection of the Marine Environment advances the institutional framework for marine environmental supervision and management, embodies integrated land–sea governance and regional coordination, strengthens the protection of marine biodiversity, imposes stringent controls on discharge permits in maritime areas, enhances oversight of offshore discharge outlets, and reinforces measures to prevent and control marine litter.

The State Council has promulgated the Regulations on the Protection of Minors in Cyberspace.
On October 24, the Chinese Government Website published the Regulations on the Protection of Minors in Cyberspace, which will take effect on January 1, 2024.
The Regulations comprise seven chapters and sixty articles, further refining the rules for protecting minors’ personal information and improving mechanisms for preventing and addressing cyberbullying. They stipulate that online live‑streaming service providers must establish a dynamic verification system to conoffice the real identities of streamers, and must put in place comprehensive mechanisms for early warning, prevention, identification, monitoring, and response to cyberbullying. The Regulations also require such providers to offer users—particularly minors and their guardians—convenient features and channels for preserving records of cyberbullying incidents and exercising their right to notify authorities. Moreover, they must provide options enabling minors to block unfamiliar users, control the visibility of their own posts, prohibit the re‑posting or commenting on their content, and prevent others from sending them messages—measures designed to safeguard minors who have been subjected to cyberbullying. In addition, the Regulations strengthen efforts to prevent and address online addiction among minors and mandate that online service providers furnish guardians with user‑management and spending‑control functions in a clear and accessible manner, thereby facilitating their fulfillment of parental responsibilities.

Taxation
Another tax incentive has been extended, covering the restructuring of for-profit cultural institutions.
On October 25, the Ministry of Finance, the State Taxation Administration, and two other departments jointly issued the “Announcement on Extending the Application of Tax Policies Related to the Transformation of Profit‑Making Cultural Institutions into Enterprises during the Cultural System Reform,” under which the specified tax policies will remain in effect until December 31, 2027.
The Notice clarifies several tax preferential policies: For business-oriented cultural institutions that are restructured into enterprises, corporate income tax shall be exempted for a period of five years from the date of registration of the restructuring; for cultural entities whose operating funds are allocated by fiscal authorities and that are restructured into enterprises, property tax on their self‑used properties shall be exempted for five years from the date of registration of the restructuring; and for cultural enterprises established through the separation of the distribution and printing operations, along with the corresponding commercial assets, of Party newspapers and journals, value-added tax shall be exempted on the revenue derived from the distribution and printing of such Party publications, effective from the date of registration. The Notice further specifies that cultural enterprises benefiting from these tax incentives must simultaneously meet five prescribed conditions, among other requirements.

Tax policies support the development of the national integrated fire and rescue force, and relevant import‑export tax preferential measures have been introduced.
According to a notice posted on the Ministry of Finance’s website on October 25, the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration jointly issued the “Notice on Import Tax Policies for the National Integrated Fire and Rescue Teams.”
The Notice clarifies that, from January 1, 2023, to December 31, 2025, customs duties, value-added tax at the import stage, and consumption tax will be exempted on fire‑fighting and rescue equipment imported by the national integrated fire‑rescue teams when such equipment is either not produced domestically or fails to meet domestic performance requirements. The list of equipment eligible for this tax exemption is set out in Annex 1, “Catalogue of Fire‑Fighting and Rescue Equipment Exempt from Import Duties.” Furthermore, with respect to equipment already imported by the national integrated fire‑rescue teams between January 1, 2023, and the date of issuance of this Notice (October 23, 2023), import taxes paid on such equipment shall, upon application and in accordance with applicable provisions, be refunded.

Promoting the Digital Transformation of Global Tax Administration: China Advances Three Proposals
Digitalization is a key trend in contemporary societal development, and accelerating digital transformation across all sectors of the economy and society has become a widely shared consensus within the international community. In the tax domain, further enhancing the digitalization of tax administration has likewise become an essential priority for tax authorities worldwide.
From October 19 to 20, the High-Level International Symposium on the Digitalization of Tax Administration was held in Beijing. Representatives from tax authorities of 20 countries across Asia, Africa, Europe, the Americas, and Oceania, along with delegates from six international organizations and guests from select academic institutions and multinational enterprises, engaged in in-depth discussions on topics such as the digital transformation of tax administration, innovation in taxpayer services, and the optimization of the tax-related business environment, reaching several points of consensus.
The participating parties stated that in-depth exchanges and the sharing of practical experience among countries are essential for achieving the goals of digital transformation, and that they will further intensify efforts to advance the development of multilateral tax cooperation platforms, working together to build a closer‑knit, higher‑quality international tax cooperation framework.
Wang Jun, Director of the State Taxation Administration of China, attended the conference and delivered a keynote address on advancing the digital transformation and upgrading of tax collection and administration. Wang Jun stated that in recent years, China’s tax authorities have studied and drawn on the advanced practices of countries around the world, focusing on building a sophisticated digital tax system in the online and cloud environments, comprehensively optimizing and integrating service resources, and ensuring that tax and fee preferential policies are promptly and accurately matched to every eligible taxpayer and payer, thereby achieving continuous upgrades in the digital transformation of tax collection and administration.
To jointly advance the digital transformation of global tax administration, Wang Jun put forward three initiatives:
First, we will jointly build platforms and intensify efforts to advance the development of cooperation mechanisms. Upholding the principles of openness, cooperation, and mutual benefit, we will work to refine the Belt and Road tax administration cooperation mechanism, striving to establish a multilateral tax‑cooperation platform that fosters broader consensus, embraces cutting‑edge ideas, and paves the way for greater growth.
Second, we will share resources and continue to strengthen mutual learning and exchange. We will further enhance the sharing of digital tax administration resources and intensify training efforts. Over the next five years, China’s tax authorities will offer 10,000 training places to countries participating in the Belt and Road Initiative, creating better conditions for tax officials from these countries to come to China for study and exchanges.
Third, we will pursue shared development and actively broaden pathways for digital transformation. We will respond proactively to the OECD’s initiatives, conduct meaningful explorations tailored to the specific circumstances of each country, and continuously innovate, optimize, and enhance our efforts. In doing so, we will help more countries and regions elevate their tax administration’s level of digitalization, work together to foster a tax business environment that is more market‑oriented, rule‑based, and internationally competitive, and advance the sound development of the global economy as well as its digital transformation and upgrading.
According to reports, in recent years, the State Taxation Administration has made significant progress in advancing tax collection and administration reform through digital transformation, continuously enhancing taxpayer and payer satisfaction. For instance, to streamline tax‑filing procedures, the Administration has issued multiple public notices, reducing the number of steps required to handle tax and fee matters and enabling the entire process for tax administrative licensing to be conducted online.
Meanwhile, in efforts to enhance the convenience of tax payment and filing, the “Spring Breeze Tax Service Initiative” has been steadily cultivated for ten consecutive years. During this period, 61 types of tax‑related certification requirements have been abolished, six such requirements are now subject to a notification‑and‑commitment system, and the vast majority of tax incentives are now implemented through self‑assessment, declaration for enjoyment, with relevant documentation retained for record‑keeping purposes.
According to relevant statistics, thanks to the precise delivery of tax and fee preferential policies, the State Taxation Administration has benefited more than one billion taxpayer‑payer instances. The 2022 survey on the business environment conducted by the All-China Federation of Industry and Commerce among 10,000 private enterprises shows that businesses rank tax and fee support policy implementation among the highest in terms of satisfaction, and the ease of paying taxes and fees has remained the most highly rated factor in the assessment of the administrative environment for the third consecutive year.
The participants noted that China’s experience in tax reform and development is worthy of emulation by countries around the world. During the seminar, all parties unanimously agreed that the event has created favorable conditions for further enhancing mutual understanding and expanding areas of cooperation, and that it will play a crucial role in jointly strengthening digital tax administration capabilities and standards.
Furthermore, the meeting discussed and adopted the Joint Statement of the High-Level International Symposium on the Digitalization of Tax Administration, which fully commended the participating parties for their explorations and practical efforts in advancing the digital transformation of tax administration.
The participating parties stated that this seminar has helped countries strengthen mutual trust and build consensus. Moving forward, they will focus on translating this consensus into concrete actions, better aligning with the global trend toward digitalization in tax administration, further deepening international tax cooperation, improving the global tax governance system, facilitating cross-border investment, and promoting global economic recovery and sustainable development.

LITIGATION & ARBITRATION
The Supreme People’s Procuratorate has issued the “Opinions on Fully Performing Procuratorial Functions and Promoting the Development and Growth of the Private Sector,” providing legal safeguards for the development and expansion of the private economy.
On October 23, the Supreme People’s Procuratorate issued the “Opinions on Fully Performing Procuratorial Functions to Promote the Development and Growth of the Private Sector” (hereinafter referred to as the “Opinions”). The document comprises twenty-three articles. With regard to overall requirements, the Opinions emphasize that procuratorial organs must deeply recognize the significant importance of fostering the development and growth of the private sector and earnestly strengthen their sense of responsibility and mission in serving and safeguarding such development. They are also called upon to comprehensively perform all their functions, thereby creating a stable, transparent, standardized, and predictable rule-of-law environment conducive to the high-quality development of all types of market entities.
The “Opinions” set forth clear requirements for fully performing procuratorial functions and providing stronger legal safeguards to support the growth and development of the private sector. They stipulate that, in accordance with the law, crimes that undermine the healthy development of the private economy shall be prosecuted; particular emphasis shall be placed on cracking down on organized‑crime‑related offenses—such as illegal usury, bullying and monopolistic practices, and coercive buying or selling—that infringe upon the legitimate rights and interests of private enterprises. Additionally, crimes that disrupt market order—including financial fraud, contract fraud, and bid‑rigging—shall be punished according to law to uphold a fair and competitive market environment. Furthermore, state functionaries who exploit their official positions—whether in areas such as market access, financial regulation, investment promotion, project approval, land expropriation, or fiscal and tax subsidies—to solicit or accept bribes shall be held accountable under the law. All forms of commercial bribery will be resolutely combated, with both bribe‑takers and bribe‑givers investigated and prosecuted, thereby advancing the comprehensive establishment of clean and close relationships between government and business.
The Opinions also stipulate that, in accordance with the law, crimes that harm corporate interests—such as embezzlement of funds, misappropriation of funds, bribery by non‑state functionaries, and breach of trust to the detriment of listed companies—committed by personnel within private enterprises, particularly those holding key positions in management, finance, procurement, sales, and technology, shall be prosecuted. Furthermore, civil procuratorial oversight of cases involving the private sector will be strengthened to enhance protection for compliant and trustworthy conduct, stabilize investor expectations, and ensure transaction security. Administrative litigation oversight concerning market entities will also be reinforced, with stricter legal supervision of administrative violations—including “multiple enforcement agencies,” “repeated penalties,” “different penalties for the same case,” and “abuse of discretionary power”—to safeguard the property and operational rights of private enterprises.
The “Opinions” set forth clear requirements for improving the methods and approaches of legal supervision and for fostering an optimized environment for the development of the private sector. They emphasize the equal importance of strict adherence to the law and the effective implementation of equality, balancing the use of coercive measures and compulsory investigative actions with the safeguarding of the normal business operations and legitimate rights and interests of private enterprises, and giving equal weight to cracking down on economic and official‑duty crimes and to providing lawful assistance to private enterprises in recovering and mitigating economic losses. In the course of conducting supplementary investigations on their own initiative, utmost efforts shall be made to ensure that enterprises can maintain normal office operations and engage in lawful production and business activities.
The “Opinions” require a precise understanding of the boundaries between law and policy, ensuring the organic integration of the “three effects.” They stipulate that, in cases where private enterprises are suspected of committing crimes or violating laws during their production and business operations, the social harm must be comprehensively, accurately, and reasonably assessed from the perspectives of economic security, public interest, and market order. Furthermore, factors beyond the will of the market entity—such as policy adjustments, poor management, and market risks—should be taken into account, with strict adherence to the line between criminal and non‑criminal conduct. The criteria for determining offenses such as contract fraud and illegal business operations—crimes related to production and business activities—must be applied with precision. At the same time, with regard to commonly occurring crimes in judicial practice—such as illegal fundraising, loan‑related offenses, and tax‑related offenses—strict compliance with the principles of legality, consistency between subjective and objective elements, and proportionality between crime and punishment is required, ensuring that these matters are properly classified and handled in accordance with the law.
The “Opinions” set forth clear requirements for strengthening organizational leadership and enhancing the capacity to provide services and safeguards that support the high-quality development of the private sector. They call for the establishment of a long-term working mechanism to bolster the proactiveness, targeted approach, and effectiveness of measures aimed at fostering the growth and expansion of the private economy; they emphasize the parallel pursuit of punishment and protection, as well as crime prevention and governance, while actively engaging in source‑level dispute resolution. Furthermore, the document underscores the need to intensify public legal education and awareness‑raising efforts, guiding private‑sector entrepreneurs to strengthen their adherence to the rule of law, uphold integrity, and remain mindful of red lines, thereby advancing the development of law‑based and clean private enterprises.
At a press conference held that day by the Supreme People’s Procuratorate on “Fully Performing Procuratorial Functions to Promote the Development and Growth of the Private Sector,” Zhang Xiaojin, Director of the Fourth Procuratorial Office of the Supreme People’s Procuratorate, stated that the Supreme People’s Procuratorate will take the issuance of the “Opinions” as an opportunity to uphold high‑quality, efficient performance of duties and case handling, ensuring that the quality, efficiency, and effectiveness of procuratorial work are organically integrated with fairness and justice. The Supreme People’s Procuratorate will also optimize the rule-of-law environment for the development of private enterprises, introduce innovative service measures, and advance source‑based governance of disputes. Furthermore, it will deepen the compliance reform for enterprises involved in cases, working with relevant departments to strengthen practical exploration and research, further clarifying and standardizing the types of enterprises, the scope of cases, the stages of application, and the procedural steps of the enterprise compliance reform, thereby expanding the institutional framework’s applicability.

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