JC Master Legal News Issue 1071

Key Takeaways for This Issue

Attracting medium- and long-term capital into the market: Regulators are focusing on optimizing reforms on the investment side.
Reform on the investment side of the capital market is gaining momentum. The China Securities Regulatory Commission is currently drafting the “Action Plan for Investment‑Side Reform in the Capital Market,” adopting a range of measures to strengthen the capacity of professional institutional investors and, by optimizing the capital market ecosystem, fostering an environment that attracts and retains investors. These efforts aim to encourage various types of medium- and long-term capital to increase the actual share of equity investments.
Seven departments have officially released the Provisional Measures for the Administration of Generative Artificial Intelligence Services.
On July 13, China’s Cyberspace Administration of China published the Provisional Measures for the Administration of Generative Artificial Intelligence Services, which will take effect on August 15.
The National Development and Reform Commission has issued the Measures for the Administration of Demonstration Zones for Undertaking Industrial Relocation.
To further standardize the establishment, development, and evaluation of demonstration zones for undertaking industrial transfer, and to strengthen full‑cycle management, the National Development and Reform Commission has recently formulated and issued the Measures for the Administration of Demonstration Zones for Undertaking Industrial Transfer, in accordance with relevant requirements.
The first normative guideline on procuratorial investigation and evidence collection has been published.
Recently, the “Guidance on Investigation and Evidence Collection in Cases of Official Crimes Committed by Judicial Personnel in the New Era” (hereinafter referred to as the “Guidance”), compiled under the auspices of the Fifth Procuratorial Office of the Supreme People’s Procuratorate, has been published. This is the first normative guidance on the investigation and evidence collection related to official crimes committed by judicial personnel.
Finance & Capital Markets
Attracting medium- and long-term capital into the market: Regulators are focusing on optimizing reforms on the investment side.
Reform on the investment side of the capital market is gaining momentum. The China Securities Regulatory Commission is currently drafting the “Action Plan for Investment‑Side Reform in the Capital Market,” adopting a range of measures to strengthen the capacity of professional institutional investors and, by optimizing the capital market ecosystem, fostering an environment that attracts and retains investors. These efforts aim to encourage various types of medium- and long-term capital to increase the actual share of equity investments.
Tian Lihui, Dean of the Institute for Financial Development at Nankai University, stated that, against the backdrop of the registration‑based reform, with financing channels becoming increasingly unimpeded, the need to strengthen the investment side has grown ever more pronounced. It is imperative to advance investment‑side reforms on multiple fronts, fostering a new landscape in which capital market functions are fully leveraged, diverse sources of capital preserve and enhance their value, and high‑quality development of the real economy is efficiently supported through coordinated efforts.
Investment‑side reforms are poised to take effect.
The implementation of the comprehensive registration‑based reform has strengthened the financing function, normalized IPOs and secondary offerings, and improved the structure of social financing. Both on an incremental and a stock basis, the share of direct financing has risen. According to the Research Institute of Shenwan Hongyuan (000166) Securities, since the launch of the registration‑based pilot program, small and medium‑sized enterprises as well as offices in emerging industries have increasingly become issuers, while unprofitable or low‑profit companies and early‑stage startups have gained easier access to equity financing in the secondary market. The market’s capacity to provide financing services supporting the technological innovation and green transformation of real‑economy enterprises has been significantly enhanced. Under the registration system, the capital market is fostering a virtuous cycle among capital, technology, and industry by welcoming more science‑and‑technology‑driven offices and bolstering its ability to serve them.
The financing and investment sides are two inseparable facets of the capital market’s functions, mutually reinforcing one another. To foster a virtuous cycle in both financing and investment, it is essential to begin with reforms on the financing side and progressively advance reforms on the investment side, thereby cultivating an ecosystem that sustains such a dynamic interplay.
At present, the China Securities Regulatory Commission is formulating the “Action Plan for Reform on the Investment Side of the Capital Market,” upholding balanced development between the investment and financing sides. Guided by a problem‑oriented approach, it will adopt tailored policies based on the distinct characteristics of various institutional investors, and work to improve supporting systems and mechanisms—such as long‑term performance evaluation, tax incentives, and accounting standards—for diverse medium- and long‑term capital sources, including insurance funds, wealth management products, and pension funds.
“Policies related to taxation, accounting, and other areas have dampened the enthusiasm of corporate pension funds and similar capital sources to enter the market,” said Tian Xuan, Vice Dean of the Guanghua School of Management at Tsinghua University, in an interview with the Securities Times. He noted that currently, the operation of corporate pension schemes in China is quite complex, with significant variations across regions and enterprises, while personal income tax administration faces numerous challenges. For instance, existing pension plans are subject to relatively high income taxes, effectively imposing an additional capital gains tax, which has a negative impact on the investment‑driven growth of corporate pension assets.
In addition, investment‑allocation caps and other restrictions also constrain the entry of medium- and long-term capital into the market. “At present, social security funds, banks, and insurance institutions face numerous constraints on their equity‑allocation ratios, while within the public‑fund industry, equity‑oriented funds still lack sufficient expertise in investment research and robust risk‑management capabilities. These factors represent key bottlenecks, challenges, and pain points that hinder the participation of medium- and long-term capital, and they urgently require resolution,” said Tian Xuan.
Cultivating institutional investors
Attracting medium- and long-term capital into the market
In fact, on the policy front of the capital market, the China Securities Regulatory Commission has recently employed a range of measures to encourage various medium- and long-term investors to increase the actual allocation to equity investments, thereby enhancing investment stability. On June 9, the “Administrative Provisions on the Investment Advisory Business of Publicly Offered Mutual Funds” were released for public comment, further fostering a robust buy-side intermediary ecosystem in the capital market and improving investor services and returns. On July 8, the CSRC formulated a work plan for fee‑rate reform in the public fund industry, providing guidance to ensure that fee‑rate mechanism reforms are carried out in a prudent and orderly manner.
At present, the total assets under management of public mutual funds exceed RMB 27 trillion, and the share of A‑share free‑float market capitalization held by various professional institutions has increased by approximately 5 percentage points compared with early 2019. Notably, the proportion of equity‑oriented funds has risen markedly. In the first half of this year, the equity fund issuance market has undergone positive changes: 299 new equity funds were launched, raising a total of RMB 151.3 billion—on par with the same period last year. The average fundraising size per product stood at RMB 506 million, up from RMB 447 million in the same period last year, signaling a clear marginal improvement.
In addition to fund companies’ vigorous efforts to expand equity‑oriented funds, the China Securities Regulatory Commission, in coordination with relevant authorities, is working to reduce the investment costs for medium- and long‑term capital sources such as pension funds, bank wealth‑management products, and insurance funds. This aims to encourage a broader range of medium‑ and long‑term investors to increase their allocation to equity assets through public mutual funds, thereby fostering the growth of equity‑focused funds and providing ample funding and a conducive environment for the public fund industry to better support national strategic priorities and meet residents’ wealth‑management needs, while promoting the stable and sound development of the capital market.
In the view of industry insiders, equity‑type funds still have considerable room for growth. At present, such funds account for less than one‑third of China’s public‑fund assets, whereas globally they already comprise more than 40% of the overall public‑fund landscape. CSRC Chairman Yi Huiman has repeatedly stressed the need to vigorously develop equity‑focused funds and to drive the public‑fund sector toward “overall scale expansion and structural optimization.” It is expected that the share of equity‑type funds within the broader public‑fund universe will continue to rise, aligning with the future trajectory of China’s economy.
Continuously optimize the market environment.
The “Action Plan for Reform on the Investment Side of the Capital Market” states that it is necessary to continuously optimize the capital market ecosystem, enhance the quality of listed companies, strengthen the market’s attractiveness, and steadily foster a market environment that is both inviting and conducive to long-term retention.
At present, the number of A-share listed companies has exceeded 5,000. As a cornerstone of the national economy, further enhancing the quality of listed companies and thoroughly implementing the new three-year action plan to improve their quality are among the key priorities for this year’s capital markets.
Tian Xuan stated that, guided by the three-year action plan, it is essential to consolidate the foundations of listed companies’ development and enhance their dynamism, thereby providing solid support for the economy’s high-quality transformation and upgrading. Externally, regulators must adhere to the principle of “establishing sound systems, refraining from unnecessary intervention, and maintaining zero tolerance,” further optimizing the supply of financing while rigorously managing market access and ensuring an appropriate balance between government and market roles. Internally, listed companies should adopt targeted measures, proactively strengthen their core competencies, focus on their principal businesses, improve corporate governance, and boost their innovation capacity.
At the same time, it is also necessary to accelerate the pace of market “cleansing.” Since the beginning of this year, the number of delisted companies has reached a new record. To date, nine companies have been delisted from the A-share market for triggering various delisting criteria, and 20 others are undergoing the delisting reorganization period. Tian Lihui argues that diversified, normalized delisting is an essential institutional mechanism for a fully registered‑capital‑based market; it serves as the institutional cornerstone for high‑quality corporate development and provides a safeguard for value‑oriented and professional investing. Only by ensuring that all companies that should be delisted are indeed delisted can we achieve survival of the fittest and optimize resource allocation.

This year, banks have launched more than 200 ESG-themed wealth management products, and the variety and scale of such offerings are expected to continue expanding.
In recent years, amid the “dual carbon” goals and the broader push for green development, banks and asset management offices have actively advanced innovative green financial services, launching ESG‑focused (environmental, social, and governance) products to support the achievement of these objectives, with the number of such offerings increasing year by year.
Statistical analysis shows that, to date, more than 200 ESG‑themed wealth management products have been launched. Among the existing product categories, fixed‑income and hybrid funds continue to dominate, while equity‑oriented products remain relatively scarce.
Li Yifan, a postdoctoral researcher at the Bank of China Research Institute, stated that, as China’s economy continues to pursue high-quality development, ESG principles will increasingly take root across society. It is expected that more companies will integrate ESG considerations into their business strategies, which should further diversify the investment scope of ESG‑focused bank wealth management products. At the same time, banks are accelerating the refinement of their research and investment frameworks in this area, thereby maturing the design and operation of ESG‑themed wealth management products and paving the way for continued growth in both the variety and scale of such offerings.
Expansion of ESG-themed wealth management products
Since Huaxia Bank launched the first ESG‑themed wealth management product in 2019, bank‑issued ESG‑focused products have been evolving for nearly five years. According to data compiled by Puyi Standard, from 2019 to 2022, the number of institutions participating in the issuance of ESG‑related wealth management products steadily increased; in 2021, the total number of such products rose by 66% year over year to 73. In 2022, as the concept of sustainable development gained further traction and amid multiple factors—including climate change—investors and financial institutions placed greater emphasis on selecting products aligned with sustainable development. Consequently, bank‑issued ESG‑themed wealth management products entered a new phase of growth, with the pace of issuance accelerating markedly: the number surged by 89% quarter over quarter to 138 offerings.
A search on China Wealth Management Network using “ESG” as the keyword reveals that, to date, more than 200 ESG‑focused bank wealth management products have been launched in China. Issuers include a number of wealth management subsidiaries, such as Qingyin Wealth Management, Suyin Wealth Management, Huaxia Wealth Management, Nongyin Wealth Management, Jianxin Wealth Management, Guangda Wealth Management, and Bank of China Wealth Management.
Commenting on the reasons behind the steady increase in the number of ESG‑focused wealth management products, Mingming, Chief Economist at CITIC Securities, noted that as China’s economy has entered a stage of high‑quality development, the demand for sustainable and green growth among various economic entities continues to rise. ESG‑themed bank wealth management products represent an important avenue for financial institutions to advance sustainable and green development; they effectively enhance investors’ sense of social responsibility and align with regulators’ requirements for promoting sustainability within the financial sector, thereby driving rapid growth.
From a product‑feature perspective, ESG‑themed wealth management products currently on the market typically have investment terms of one year or longer, with risk ratings predominantly at medium and medium‑low levels. Their benchmark returns range from 3.1% to 6%, slightly higher than those of non‑ESG‑themed products with comparable maturities.
From the perspective of product investment characteristics, currently issued ESG‑themed wealth management products are predominantly fixed‑income and hybrid in nature, with no equity‑based offerings to date. Since the inception of ESG‑focused wealth management products, institutions have been reluctant to develop equity‑oriented ESG products, largely because managing risk in such products presents significant challenges.
Mingming pointed out that, on the one hand, Chinese listed companies still fall short of adequately disclosing ESG‑related information, posing significant challenges for ESG products when allocating to equity assets. On the other hand, ESG research at some Chinese banks remains in a phase of rapid growth, with room to further strengthen their talent pools; meanwhile, developing fixed‑income and hybrid ESG products is relatively less demanding and better aligns with the current stage of ESG investment in China.
“Banks can enhance their expertise in ESG investing through internal training or by recruiting external specialists, while also stepping up investor education on ESG-related topics to boost investors’ acceptance of ESG products,” Mingming suggested.
ESG-themed wealth management products face challenges.
Although the issuance of ESG‑themed wealth management products has been steadily gaining momentum, they also face certain challenges. According to Li Yifan, these challenges can be summarized as follows: First, compared with other types of wealth management products, ESG‑focused offerings are still in their early stages of development, and some financial institutions continue to lack sufficient expertise and robust investment‑research capabilities in the ESG space. Second, as a relatively new concept, ESG may not yet be fully understood by market participants; moreover, since ESG‑oriented products typically aim for long‑term, sustainable returns, they may fail to appeal to investors who prioritize short‑term gains.
Li Yifan believes that, in the design and operation of ESG‑themed wealth management products, banks should, while remaining compliant with regulatory requirements, continue to accelerate the recruitment of talent from relevant specialized fields, leverage technological innovation to steadily enhance their product investment research capabilities, and consistently strengthen investor education and outreach to drive the marketing of ESG‑focused wealth management offerings.
Mingming stated that banks can, based on their own needs, establish proprietary databases and scoring frameworks, and, in line with the risk-return preferences of different investors, develop multi-tiered, specialized ESG products, thereby enhancing the appeal of such offerings.
Regarding future trends and recommendations for the issuance of ESG‑themed products, Mingming believes that, as corporate information disclosure continues to improve, policy support strengthens, and demand for ESG investing rises across various economic entities, the scale of ESG‑focused wealth management products is expected to grow steadily. To meet the diverse needs of investors, banks are likely to introduce a broader array of ESG product types and strategies, and China’s ESG‑themed wealth management market is poised to become more diversified and richer in offerings.

The fervor for early mortgage repayments has cooled slightly compared with the beginning of the year, and the strong growth momentum of medium- and long-term household loans may be difficult to sustain.
Recently, the People’s Bank of China released June financial data that were notably strong, with new RMB loans totaling 3.05 trillion yuan—exceeding market expectations. Notably, medium- and long-term household loans increased by 463 billion yuan, marking the second-highest level so far this year and up 46.3 billion yuan year over year. Some market observers attribute the improvement in household medium- and long-term lending, in part, to a easing of early loan repayments.
Overall, the recent surge in early mortgage repayments has indeed cooled somewhat compared to the beginning of the year, but it has not entirely subsided; applicants still face waiting lists when seeking to make early repayments.
Mingming, Chief Economist at CITIC Securities, believes that as household risk appetite recovers and investment and consumption sectors offer more diversified avenues for household savings, the wave of early mortgage repayments is likely to ease gradually. Moreover, if more robust policies are introduced going forward, property sales are expected to improve further.
The wave of early mortgage repayments has “cooled down.”
Rather than “stalling”
Data released by the central bank show that in the first half of this year, medium- and long-term household loans increased by RMB 1.46 trillion, with RMB 463 billion added in June—exceeding market expectations.
A research report by Zhejiang Securities notes that the year-on-year growth in new medium- and long-term household loans has exceeded expectations, primarily due to a moderation in early mortgage repayments in June, which has helped narrow the year-on-year decline—and even turn it into year-on-year growth—in medium- and long-term consumer loans (with medium- and long-term consumer loans largely consisting of mortgages).
Regarding whether the situation of early mortgage repayments has truly eased, our reporter consulted several banks and learned that, since June, such cases have declined slightly. However, this represents only a relative cooling from the “red-hot” pace seen at the beginning of the year—not a complete halt.
I called the customer service of a major state-owned bank under the pretext of arranging an early repayment. The representative informed me that, at present, processing early repayments on personal commercial housing loans still requires queuing, and the specific queue duration can be checked when completing the online application. Following the detailed steps provided by the customer service agent, I logged into the bank’s mobile app on the afternoon of July 13 and accessed the appointment‑booking page, where I found that the earliest available debit date was September 1.
Compared with the queue times of more than three months at the beginning of the year, the waiting period has now been significantly shortened. Regarding the recent temporary slowdown in early mortgage repayments, Wang Qing, Chief Macro Analyst at Orient Golden Credit, pointed out that there are likely two main reasons: first, the wealth management market has recently rebounded, boosting risk appetite and thereby reducing demand for early loan repayment; second, regulatory authorities have frequently issued risk warnings, cautioning that practices such as refinancing mortgages into business loans to cut interest rates may conceal risks of default and illegal activity, which has also helped cool the wave of early repayments to some extent.
Mingming noted that, recently, the slowdown in early mortgage repayments may be linked to banks’ proactive measures to curb early mortgage prepayments at the end of the quarter. Additionally, improved performance in fixed-income and equity markets has drawn some funds into investment rather than being used for early mortgage repayment.
Household medium- and long-term loans
Significant growth is unlikely to be sustained.
Generally speaking, mortgages constitute the bulk of household debt, and medium- to long-term household loans typically move in tandem with housing sales data. However, in June, medium- to long-term household loans diverged from housing sales trends.
According to recently released data from the CRIC Research Center, the top 100 real estate developers recorded sales of RMB 526.74 billion in June, a year-on-year decline of 28.1%. Meanwhile, data from the China Index Academy show that the top 100 developers’ monthly sales in June fell 29.4% year over year and 19.0% month over month.
Regarding the divergence between residential medium- and long-term loan data and housing sales figures, Wang Qing believes that, in addition to the recent cooling of the wave of early mortgage repayments, there are likely two other factors driving the increase in such loans: first, some regions have strengthened support for first-time homebuyers by lowering down-payment requirements, which has boosted the overall volume of medium- and long-term household lending; second, amid an intensified push to expand credit supply, it cannot be ruled out that certain banks may have concentrated on disbursing a portion of mortgage loans before the end of June—a pattern that also emerged in March this year.
According to Zhang Yu, Assistant Director and Chief Macro Analyst at Huachuang Securities Research Institute, the divergence between medium- and long-term household loans and property sales reflects a shift in the drivers behind the former: from 2017 to 2021, roughly 73% of medium- and long-term household loans were for residential mortgages, about 11% were non‑housing consumer loans, and around 16% were medium‑ and long‑term business loans. Since the beginning of this year, however, approximately 70% of such loans have been for business purposes, roughly 15% are residential mortgages, and another 15% are non‑housing consumer loans.
“Although medium- and long-term household loans increased year-on-year in June, this does not necessarily reflect a recovery in home‑buying expectations; it may instead simply reflect the impact of pro‑inclusive financial policies,” said Zhang Yu.
Looking ahead, Mingming believes that, until housing sales pick up, medium- and long-term household loans are unlikely to see a sustained improvement, and the momentum for substantial growth going forward remains uncertain.
Wang Qing expects that, in the short term, medium- and long-term household loans will be markedly influenced by seasonal factors, making it unlikely that the sharp growth seen in June will persist in July; at the same time, a return to the substantial year-on-year contraction observed in April is also unlikely. From a year-on-year perspective, medium- and long-term household lending could trend steadily upward in the second half of the year.

Strengthening the Foundations of Economic Recovery: A Coordinated Policy Package Will Continue to Deliver Results
The first-half economic performance report will be released shortly. Industry insiders believe that the economy got off to a strong start in the first quarter and maintained its recovery momentum in the second quarter, with expectations that economic activity will return to a normal growth trajectory in the third and fourth quarters, gradually settling into a steady recovery phase.
Judging from the policy signals emanating from multiple departments, a package of stronger, more targeted measures is poised to consolidate the foundations of economic recovery.
Release of consumer demand
Regarding the economic growth rate for the first half of the year, a report released at the quarterly forum of the China Macroeconomic Forum (CMF) at Renmin University of China projects that China’s economy will grow by 6.2% in the first half.
The Institute of Finance at the Chinese Academy of Social Sciences recently released a report arguing that, given the slowing momentum of economic recovery and the low-base effect, second-quarter GDP growth could reach around 7%, marking the year’s peak. Lian Ping, Chief Economist and Dean of the Research Institute at Zhixin Investment, believes that second-quarter GDP growth will rebound sharply, likely reaching 6.7%, with consumption serving as the primary driver.
“GDP growth is expected to be around 7.0% in the second quarter, with first-half growth at 5.9%,” said Wen Bin, chief economist at China Minsheng Bank. He added that the economy continues to recover, driven primarily by the rebound in offline contact‑based services and the release of pent-up demand for traditional consumption. In April and May, China’s consumer spending posted year-on-year growth exceeding 10%, with catering services particularly maintaining strong expansion thanks to last year’s low base effect.
Consolidate the recovery momentum
After the base-effect effect fades in the second half of the year, the economy’s year-on-year growth rate will likely moderate.
Wen Bin believes that, as the effects of policy measures continue to unfold, the economy is expected to bottom out and rebound, with GDP growth projected at around 4.8% in the third quarter and 5.8% in the fourth quarter. Wang Tao, Head of Asia Economic Research and Chief China Economist at UBS, forecasts that consumption will see a further moderate recovery in the third quarter, the property market may stabilize, and economic growth in the second half of the year could rebound to 4%–4.5%.
“In the third and fourth quarters, as the base effect strengthens, economic growth will return to its normal trajectory,” said Fu Linghui, spokesperson for the National Bureau of Statistics, recently. Looking ahead to the full year, he added, there are numerous strong factors supporting the achievement of the economy’s annual growth targets. The role of consumption in driving growth is steadily increasing, innovation‑driven momentum is picking up, and the benefits of reform and opening-up continue to unfold, paving the way for a gradual and steady recovery.
Regarding the drivers of economic growth in the second half of the year, Lu Zhengwei, Chief Economist at Industrial Bank, believes that the pace of local government bond issuance will accelerate, providing a certain degree of support to the economy in areas related to government investment.
Policies are expected to continue being strengthened.
To consolidate the foundation for the economy’s steady recovery, it is imperative that policies be further strengthened. Industry experts anticipate that macroeconomic policies—including fiscal, monetary, and industrial policies—will continue to deliver targeted support on fronts such as stabilizing growth, safeguarding employment, and managing risks, thereby delivering a coordinated policy package.
From a fiscal policy perspective, Lian Ping expects that in the second half of the year, the proactive fiscal policy will continue to be strengthened and made more effective, with a sharper focus on targeted measures, unwavering continuity, and enhanced coordination and integration with other policies.
Wang Qing, Chief Macro Analyst at Orient Securities, believes that in the third quarter, the pace of issuing new local government special bonds may be accelerated, with enhanced policy support for new-energy vehicles, green home appliances, and household consumption. Additionally, local governments will be encouraged to issue larger-scale consumption vouchers and subsidies. At the same time, policy-based financial instruments will continue to serve as quasi-fiscal tools, providing comprehensive support for expanding investment and boosting consumption.
From a monetary policy perspective, Wu Chaoming, deputy director of the Caixin Institute, stated that monetary policy is expected to enter a phase of marginal easing in the second half of the year, with the possibility of further reductions in the reserve requirement ratio and interest rates. Meanwhile, structural monetary policy tools remain key instruments for supporting broader monetary and credit conditions domestically, with anticipated focus on priority areas for high-quality development—such as technology and green initiatives—as well as on vulnerable sectors like real estate and inclusive small and micro enterprises.
Moreover, bolstering the confidence of market entities and restoring private enterprises’ willingness to invest are crucial steps for sustaining the growth rate of fixed‑asset investment going forward. Cheng Shi, Chief Economist at ICBC International, expects that government authorities will continue to ramp up investment, using public spending as a catalyst to stimulate private‑sector investment.

The National Administration of Financial Regulation has issued a risk warning to guard against frauds that impersonate financial regulatory authorities.
On July 12, the website of the National Administration of Financial Regulation published the “Risk Alert on Preventing Fraudulent Activities Exploiting the Name of Financial Regulation.”
The notice states that recently, illegal actors have been impersonating financial regulators or their staff, using such pretenses as “P2P repayment clearance,” “removal of adverse credit records,” and “handling complaints” to carry out fraud. The National Administration of Financial Regulation cautions that financial regulators do not directly handle financial transactions nor engage in any monetary dealings with consumers. Consumers are urged to choose legitimate financial services offered by authorized institutions, strengthen the protection of their personal information to prevent leaks, seek redress through official channels in a lawful and reasonable manner, and promptly report any criminal leads or losses they encounter.

Commercial & Corporate
Seven departments have officially released the Provisional Measures for the Administration of Generative Artificial Intelligence Services.
On July 13, China’s Cyberspace Administration of China published the Provisional Measures for the Administration of Generative Artificial Intelligence Services, which will take effect on August 15.
The Measures comprise five chapters and twenty-four articles. Compared with the draft for public comment, the final version is organized into five sections—General Provisions, Technological Development and Governance, Service Standards, Supervision and Inspection, and Legal Liability, as well as Supplementary Provisions—while revising numerous provisions and adding three new articles. Overall, the document leans toward establishing a regulatory framework that, while broadly supporting the development of generative artificial intelligence technologies, also sets forth appropriate oversight mechanisms. The Measures set out specific measures to foster the advancement of generative AI technologies, clarify requirements for training data processing and data annotation, and lay down service standards for generative AI. They further stipulate that providers of generative AI services must implement effective measures to prevent underage users from becoming overly reliant on or addicted to such services, and establish systems for safety assessments, algorithm registration, and the handling of complaints and reports, while also defining corresponding legal liabilities.

The Cyberspace Administration of China has released the 12th batch of filing numbers for domestic blockchain information services.
On July 12, China Internet Information Office published the “Announcement on the Release of Registration Numbers for the Twelfth Batch of Domestic Blockchain Information Services.”
The Announcement has released the twelfth batch of 250 domestic blockchain information service names and their corresponding filing numbers, which notably include the People’s Daily National Party Media Platform Blockchain Operation System developed by People’s Daily Media Technology Co., Ltd., the CCTV Chain operated by China Central Radio and Television Mainstream Media Development Co., Ltd., Zhongshu Collections offered by China Digital Culture Group Co., Ltd., and the Bank of Agriculture of China’s blockchain-based precious metals marketplace service, among others.

The National Energy Administration plans to issue the Measures for the Administration of Credit Information Remediation for Discredited Entities in the Energy Sector.
On July 12, the website of the National Energy Administration published the “Notice on Public Solicitation of Comments on the Measures for the Management of Credit Information Remediation for Discredited Entities in the Energy Sector (Draft for Comments).” The deadline for submitting comments is 30 days from the date of the notice’s issuance.
The Measures consist of six chapters and twenty-two articles, clearly defining the principal methods of credit restoration, the conditions for such restoration, the relevant procedures, as well as oversight and management and integrity‑education measures. The Measures stipulate that early termination of the public disclosure of administrative penalty information and removal from the list of seriously untrustworthy entities shall be subject to the following conditions: (1) full compliance with the obligations set forth in the administrative penalty decision and rectification of the unlawful conduct; (2) public issuance of a credit commitment, the content of which shall include an assurance that all submitted materials are true and valid, together with an explicit willingness to assume any corresponding liabilities arising from a breach of such commitment; (3) fulfillment of the minimum prescribed period of public disclosure; and (4) in cases of removal from the list of seriously untrustworthy entities, no further administrative penalties of a relatively severe or serious nature have been imposed by this Bureau.

Li Qiang: Reduce the costs of compliant business operations and promote the standardized, healthy, and sustainable development of the platform economy.
On the afternoon of July 12, Li Qiang, Member of the Standing Committee of the Political Bureau of the CPC Central Committee and Premier of the State Council, presided over a symposium with platform enterprises to hear their views and suggestions on further promoting the standardized, sound, and sustainable development of the platform economy.
Ding Xuexiang, a member of the Standing Committee of the Political Bureau of the CPC Central Committee and Vice Premier of the State Council, attended.
At the symposium, executives from Meituan, Xiaohongshu, Haizhi Online, Huolala, Alibaba Cloud, XCMG HanYun, Douyin, and Zhaopin Inc. delivered remarks in turn, while leaders from Pinduoduo, JD.com, Ouye Cloud Commerce, BOSS Zhipin, CAS Space Cloud Network, and COSMOPlat submitted written statements.
After carefully listening to the remarks of all participants, Premier Li Qiang pointed out that the platform economy has emerged in the tide of epochal development, opening up new avenues for expanding demand, providing a fresh impetus for innovation and development, creating new channels for employment and entrepreneurship, and offering new support for public services. Its status and role in the broader landscape of development are becoming increasingly prominent.
Li Qiang pointed out that, as China embarks on a new journey to build a modern socialist country in all respects, the platform economy holds tremendous potential. He urged platform enterprises to remain confident, look ahead, strengthen their core competencies, and work tirelessly to address the challenges of growth, thereby playing a leading role in driving development, creating jobs, and enhancing international competitiveness. It is essential to continuously foster innovation, ramp up R&D investment in critical core technologies—particularly those underpinning foundational systems—and pioneer new fields and tracks. Platforms should empower the real economy by optimizing consumer‑oriented internet platforms to unlock domestic demand, while vigorously developing industrial‑internet platforms to catalyze collaborative innovation among small and medium‑sized enterprises. At the same time, platform offices must actively fulfill their social responsibilities: reinforcing industry self‑regulation and compliant operations to maintain a healthy ecosystem, expanding new forms of employment based on platforms, and engaging proactively in public‑interest initiatives. Furthermore, they should accelerate efforts to enhance their global competitiveness, boldly compete on the international stage, and help Chinese-made products and services go global. Li Qiang called on all stakeholders to vigorously promote the spirit of outstanding entrepreneurs—maintaining a keen market sense and an enterprising, pioneering drive—to write new chapters in corporate development.
Li Qiang emphasized that governments at all levels must strive to foster a fair‑competition market environment, refine policies on investment access and safety assessments for new technologies and business models, and establish a transparent, predictable, and normalized regulatory framework. These measures will help reduce compliance costs for enterprises and promote the sound development of industries. Furthermore, it is essential to put in place a regular communication and dialogue mechanism with platform enterprises, promptly identify their challenges and concerns, improve relevant policies and measures, and ensure the standardized, healthy, and sustainable growth of the platform economy.

The State Administration for Market Regulation has issued the “Administrative Measures for the Tiered Cultivation of Standard-Innovative Enterprises.”
Recently, the website of the State Administration for Market Regulation published the “Notice on Issuing the Measures for the Hierarchical Cultivation and Management of Standard-Driven Innovative Enterprises (Trial).”

The Measures comprise five chapters and twenty-three articles, categorizing standard‑innovation‑driven enterprises into three progressive tiers—beginner, intermediate, and advanced. Depending on the tier, management approaches are implemented either through “self‑declaration plus public disclosure” or “voluntary application plus certification,” with a primary focus on assessing enterprises’ capabilities in standardization across the dimensions of development, application, integration, and performance. The evaluation and certification criteria for the three tiers follow a “4+3+2” framework; for indicators closely tied to enterprise size, separate requirements are established for large enterprises and for small, medium, and micro enterprises. Moreover, distinct certification standards are applied to enterprises in the industrial, agricultural, and service sectors.

The Ministry of Commerce has initiated an expiry review investigation into the anti-dumping measures applicable to certain imported optical fiber preforms.
On July 10, the Ministry of Commerce website published the “Announcement on Initiating an Expiry Review Investigation into the Anti-Dumping Measures Applicable to Imports of Optical Fiber Preforms Originating in Japan and the United States.”
The Notice clarifies that, effective July 11, 2023, the Ministry of Commerce has decided to initiate a sunset review investigation into the anti-dumping measures applicable to imported optical fiber preforms originating in Japan and the United States. During the period of this sunset review, anti-dumping duties will continue to be levied on such imports from Japan and the United States in accordance with the product scope and duty rates set forth in the Ministry of Commerce’s Announcements No. 25 of 2015, No. 57 of 2018, and No. 39 of 2020. This investigation commenced on July 11, 2023, and is scheduled to conclude no later than July 11, 2024.

The State Administration for Market Regulation has issued the Measures for the Administration of Food Business Licensing and Filing.
On July 12, the website of the State Administration for Market Regulation published the Measures for the Administration of Food Business Licensing and Filing.
The Measures comprise nine chapters and sixty-six articles, with a dedicated chapter specifying the detailed requirements for the filing of prepackaged food sales only. They further streamline the food business licensing process, shorten the processing time for licenses, and reclassify certain circumstances previously subject to licensing as reporting requirements. The Measures also clarify the scope of food business licensing and the specific situations in which no license is required, bringing chain headquarters and catering service management within the purview of licensing. Additionally, they expand and refine the food safety responsibilities of entities such as operators of contracted institutional canteens and organizers of food fairs.

The National Development and Reform Commission has issued the Measures for the Administration of Demonstration Zones for Undertaking Industrial Relocation.
To further standardize the establishment, development, and evaluation of demonstration zones for undertaking industrial transfer, and to strengthen full‑cycle management, in accordance with the “Administrative Measures for the Establishment of Demonstration Activities (Trial)” issued by the General Office of the CPC Central Committee and the General Office of the State Council, as well as the “Guiding Opinions of the State Council on Undertaking Industrial Transfer in the Central and Western Regions” and the “Opinions of the State Council on Several Major Policies and Measures to Support the Revitalization of Northeast China in the Near Term,” the National Development and Reform Commission recently formulated and promulgated the “Administrative Measures for Demonstration Zones for Undertaking Industrial Transfer” (hereinafter referred to as the “Measures”).
The Measures comprise six chapters and 22 articles, covering general provisions, application for establishment, approval of establishment, construction management, assessment and evaluation, and supplementary provisions, as well as two annexes: the Guidelines for Drafting the Overall Plan of Demonstration Zones for Undertaking Industrial Transfer, and the Evaluation Indicator System for Such Demonstration Zones.
The Measures comprehensively implement the latest regulations issued by the CPC Central Committee and the State Council on the standardized management of demonstration‑initiative activities. They standardize the requirements for establishing, developing, and evaluating industrial transfer demonstration zones, and refine the relevant procedures. The Measures clarify the division of responsibilities among the National Development and Reform Commission, provincial development and reform commissions, and the people’s governments of the cities where the demonstration zones are located, thereby reinforcing accountability at all levels. Furthermore, building on annual summaries and evaluations, they introduce an incentive‑and‑penalty mechanism and a dynamic management system that allows for both entry and exit, thus establishing full‑cycle, closed‑loop management for the demonstration zones. In addition, the Measures have formulated guidelines for drafting overall plans for demonstration zones and a set of assessment and evaluation indicators, further specifying the requirements for applying to establish such zones and for conducting their assessment and appraisal.
The issuance and implementation of the Administrative Measures will further standardize the construction and development of demonstration zones for industrial transfer, fully leverage their role as models to drive broader progress, and facilitate the robust, orderly, and effective absorption of domestic and international industrial relocation in the central, western, and northeastern regions, thereby enhancing the resilience and security of industrial and supply chains.

Shanghai has issued 20 measures to support enterprises in “going global” at a high level.
On July 12, the Shanghai Municipal Government website published the “Notice on Issuing the ‘Several Measures of Shanghai Municipality to Enhance Comprehensive Service Capabilities and Support Enterprises in Pursuing High-Level International Expansion.’”
The “Several Measures” comprise 20 items across three key areas, proposing to enhance the innovation capacity of cross-border financial services and to strengthen financial support for enterprises expanding overseas in such areas as RMB‑denominated cross‑border settlement, overseas lending, and financial advisory services. They also call for bolstering foreign‑related legal service capabilities by supporting local law offices in accelerating their global footprint, facilitating joint ventures between Chinese and foreign law offices within the Shanghai Pilot Free Trade Zone, and encouraging renowned international arbitration and dispute‑resolution institutions to establish operations in Shanghai. Additionally, the measures aim to intensify protection of intellectual property rights abroad, enhance the global reach of financial advisory services, promote the optimization and innovation of foreign‑related insurance offerings, and strengthen cross‑border logistics capabilities, among other initiatives.

Shanghai has issued an action plan to further enhance the quality of products, engineering, and services.
On July 12, the website of the Shanghai Administration for Market Regulation published the “Notice on Issuing the Action Plan of Shanghai for Further Enhancing the Quality of Products, Projects, and Services (2023–2025).”
The Plan comprises seven key areas and twenty-two specific measures, aiming to upgrade the quality of consumer goods and services, strengthen the competitiveness of industrial foundational quality, guide the high‑quality development of new technologies, new products, and new business models, and significantly enhance service standards—thereby driving continuous quality improvement through transformative innovation. The Plan also calls for focusing on critical bottlenecks in the “3+6” priority industries, intensifying research and application of metrology, testing, and evaluation technologies for electronic chemicals, lightweight automotive materials, and new‑energy battery materials; elevating the safety and reliability of electronic equipment, CNC machine tools, and industrial robots; reinforcing the promotion and implementation of data security management certification; conducting specialized cybersecurity inspections; issuing guidelines for the testing and demonstration of intelligent connected vehicles on expressways; and formulating detailed rules for the testing of driverless intelligent connected vehicles, among other initiatives.

Beijing has issued ten measures to further foster and support unicorn enterprises.
On July 10, the website of the Beijing Municipal Science & Technology Commission published an announcement soliciting public comments on the “Several Measures for Further Fostering and Supporting Unicorn Enterprises (Draft for Comments).” The deadline for submitting feedback is July 14.
The “Several Measures” comprise ten key provisions, proposing the establishment of a service roster for unicorn enterprises. This initiative will focus on identifying and nurturing unicorns and potential unicorns that possess proprietary expertise and cutting-edge technologies, integrating them into the city-level enterprise “service package.” A mechanism will be put in place for regular oversight by city leaders and for industry‑specific dedicated support to ensure ongoing assistance. The measures also explicitly support unicorns in undertaking major national and municipal science‑and‑technology projects; for companies tasked with pioneering original innovation or tackling critical core technologies, the city and district governments will jointly provide funding, up to a maximum of RMB 100 million in principle. Furthermore, unicorn enterprises will be included in the “Computing Power Partnership Program,” receiving diversified, high‑quality, and universally accessible computing resources. Finally, banking and financial institutions will be encouraged to collaborate with venture capital offices and other investors to offer “loans plus direct external equity investments” to unicorn companies, among other initiatives.

Taxation
Transform convenience into satisfaction, and enhance a sense of fulfillment through an improved experience.
The tax authorities continue to advance cross-provincial electronic tax payment.
“Convenient and fast—no need to leave home!” Zhai Zihui, a finance professional at China Machinery Industry Corporation, clicked the conofficeation button in the e‑tax bureau’s tax‑payment module from his headquarters office, thereby completing the tax remittance for the Ningbo project team. With these eight characters, he summed up the cross‑provincial, out‑of‑province electronic tax‑payment service.
According to reports, in recent years, tax authorities have focused on addressing taxpayers’ most pressing concerns and challenges, vigorously advancing cross-provincial electronic tax payment. Following pilot programs launched in multiple regions to refine and enhance this functionality, the service has been systematically rolled out nationwide, successfully establishing an electronic channel for cross-provincial tax payments and ensuring that geographical distance no longer poses a barrier to tax administration.
Zhai Zihui stated: “As a construction and installation company, the launch of cross‑jurisdictional electronic tax payment has paved a convenient path for nationwide enterprises like ours. Prepayment of taxes at each project site is now remarkably streamlined, with one‑click access and real‑time remittance to the treasury, significantly reducing the time and costs associated with tax compliance.”
“This year, we conducted a special survey focused on cross‑province electronic tax payment. During the survey, taxpayers noted that both the number of commercial banks supporting cross‑province electronic tax payments and the scope of related tax‑payment services still require further expansion,” said a responsible official from the Revenue Planning and Accounting Department of the State Taxation Administration. In response to this demand, the tax authorities have built on the achievements of nationwide efforts to promote cross‑province electronic tax payment, working to broaden the coverage of participating commercial banks and extend the range of tax‑payment services, thereby meeting the diversified tax‑payment needs of taxpayers operating across provinces.
Since the beginning of this year, PetroChina Southwest Oil and Gas Field Materials Branch has processed 32 interprovincial electronic tax payments. Tax‑filing personnel report that, on the Electronic Tax Bureau platform, they can complete the entire process—filing, payment deduction, and downloading the tax payment certificate—and that using the system for cross‑province, out‑of‑jurisdiction electronic tax payments has become increasingly convenient.
Meanwhile, further expanding the nationwide rollout of cross‑provincial electronic tax payment is also a key priority of this year’s “Spring Breeze Action” to facilitate tax services. With “list‑based” services and “point‑to‑point” guidance, the tax authorities are focusing on enhancing the convenience of cross‑provincial tax payments, continuously refining their precision‑targeted guidance lists, promptly updating the roster of commercial banks that support cross‑provincial electronic tax payments, and ensuring efficient implementation to help taxpayers and payers understand the procedures and master the operations.
Further advancing inter‑provincial electronic tax payment services has effectively addressed longstanding challenges such as the need for taxpayers to make multiple in-person visits and the inconvenience of handling tax payments across regions—for example, when providing construction and installation services or making advance tax payments at non‑independent accounting branch offices. By enabling information to flow seamlessly instead of requiring taxpayers to travel, this initiative allows them to complete tax payments without leaving their homes, with faster processing, a superior user experience, and enhanced security of tax funds. As a result, taxpayer satisfaction and sense of gain have been significantly improved.
Since the beginning of this year and through the end of June, nationwide cross‑provincial electronic tax payments have exceeded 270,000 transactions, totaling over RMB 38 billion—representing more than 85% of the 2022 full‑year transaction volume and 65% of the 2022 total tax collection. A total of 197 commercial banks have launched cross‑provincial electronic tax‑payment services, an increase of 43 compared with 2022. Meanwhile, 180 commercial banks now support real‑time tax debiting and bank‑side inquiry and payment processing, accounting for more than 90% of the total.
A relevant official from the Revenue Planning and Accounting Department of the State Taxation Administration stated that the tax authorities will continue to prioritize addressing bottlenecks and pain points in taxpayers’ and payers’ tax filing and payment processes. They will strengthen research and investigation, actively explore innovative practices, further expand the achievements of nationwide cross-provincial electronic tax payment, and steadily enhance the quality and efficiency of tax filing and payment services. By delivering measures that improve people’s livelihoods, win public support, and align with public aspirations, they aim to ensure that their work truly resonates with the people and to gauge the effectiveness of thematic education through taxpayer and payer satisfaction.

Leveraging tax‑related big data to facilitate connections and help enterprises ensure the smooth flow of industrial and supply chains.
In the first half of this year, tax authorities helped struggling enterprises achieve over RMB 10 billion in purchases and sales.
General Secretary Xi Jinping has emphasized that the security and stability of industrial and supply chains are the foundation for building a new development paradigm, and that we must not falter at critical moments. In response, the tax authorities have thoroughly implemented the spirit of General Secretary Xi Jinping’s important remarks, carried out thematic education in a solid and pragmatic manner, and vigorously conducted field research. They have engaged deeply with enterprises to understand their circumstances and identify their needs, focusing on the challenges faced by businesses whose operations are hampered by disruptions in industrial and supply chains. By continuously strengthening efforts to “strengthen chains and support enterprises,” and while respecting the wishes of businesses, they have leveraged the power of tax‑related big data to facilitate connections, helping enterprises expand their sources of upstream raw materials and open up downstream sales channels, thereby fostering effective matching between supply and demand.
Data show that in the first half of this year, the national tax system collected information on 4,262 enterprises facing raw-material shortages, used the “National Taxpayer Supply Chain Inquiry” function to match them with 15,626 suppliers, and helped 3,670 enterprises secure effective procurement and sales transactions totaling RMB 10.502 billion. Among these, 3,041 manufacturing enterprises were assisted in securing such transactions, amounting to RMB 8.448 billion.
Yantai Hengyuanlong Auto Parts Co., Ltd. is a private enterprise based in Yantai, Shandong Province, with over seventy years of experience in manufacturing automotive components such as engine bearing shells, bearing sleeves, and brakes and related parts. Since the beginning of this year, the company has faced tight supplies of raw materials, particularly specialty copper, due to rising prices. After learning of this situation during a site visit, staff from the Yantai Municipal Tax Service promptly assigned a dedicated officer to identify suitable suppliers. Ultimately, they successfully connected the company with a steel supplier in Jiangsu, who entered into a copper‑material procurement contract worth RMB 877,300 and established a long‑term cooperation agreement, thereby alleviating the company’s urgent need for raw materials.
Recently, Liaoning Yisheng Biopharmaceutical Co., Ltd. urgently needed to procure a batch of medical-grade oxygen that meets national standards, but after searching through numerous channels, it was unable to identify any suppliers that met the company’s requirements. Upon learning of the situation, the local tax authorities provided targeted assistance by configuring search criteria on the “National Taxpayer Supply Chain Inquiry” platform to match the company’s needs and screen eligible suppliers. Following discussions to gauge mutual interest in collaboration, they shared a list of matched suppliers with the company. The two parties promptly established a cooperative relationship, signed a procurement contract, and ensured the continued smooth operation of the business.
An official from the Taxpayer Services Department of the State Taxation Administration stated that the Administration has incorporated “supply-chain supplementation and enterprise support” into this year’s “Spring Breeze Action for Convenient Tax Services.” To this end, it has optimized the data platform supporting these efforts—the “National Taxpayer Supply Chain Inquiry” platform—enriching and refining enterprise information to further enhance demand‑supply matching. Following the upgrade, the platform’s query response time has improved, making targeted assistance more efficient and enabling more precise tailoring of “customized lists” for individual enterprises and the implementation of tailored, case‑by‑case services, thereby achieving both supply-chain supplementation and strengthening.

Five tax-related cases have been made public! Uphold national tax laws and never cross the legal red line.
On July 13, tax authorities in Beijing, Shanghai, Anhui, Fujian, Qinghai, and other regions disclosed five typical tax-related cases. Specifically: the Third Inspection Bureau of the Beijing Municipal Tax Service investigated and handled a case involving failure to file the annual individual income tax settlement for comprehensive income as required by law; the Fifth Inspection Bureau of the Shanghai Municipal Tax Service likewise investigated and handled a similar case; the Inspection Bureau of the Suzhou Municipal Tax Service in Anhui Province legally processed a case involving underpayment of taxes by online streamer Wu Sihao; the Second Inspection Bureau of the Longyan Municipal Tax Service in Fujian Province, in coordination with the court, enforced the payment of additional taxes in a case where the annual individual income tax settlement for comprehensive income had not been filed as required; and the Inspection Bureau of the Xining Economic and Technological Development Zone Tax Service in Qinghai Province investigated and handled a case involving failure to file the annual individual income tax settlement for comprehensive income as mandated by law.
The five cases reported this time include instances where individual taxpayers, despite being reminded and urged by the tax authorities, failed to file their annual individual income tax settlement and pay any outstanding taxes within the statutory deadline, or submitted false information on their comprehensive income and underreported deductions, resulting in penalties. They also encompass cases of online streamers who, for three consecutive years, failed to file tax returns as required by law, thereby underpaying taxes, and were subsequently investigated and prosecuted.
Individual income tax is one of the key taxes in China’s tax system. In terms of the annual individual income tax settlement and finalization, the tax authorities have implemented a range of service measures—such as appointment-based processing and priority refunds for specific groups—as well as robust oversight mechanisms, including ongoing reviews, post‑event spot checks, and public disclosure of violations. Together, these efforts have given rise to a “five‑step working approach” that balances responsiveness with officeness: first, issuing reminders and prompts; second, urging corrective action; third, conducting cautionary interviews; and finally, if compliance remains lacking after such interventions, initiating formal investigations in accordance with the law and, for cases deemed particularly serious or highly detrimental, publicly exposing the findings following enforcement. This comprehensive approach not only reflects the tax authorities’ commitment to timely guidance and tolerance toward taxpayers who correct their errors but also underscores their unwavering resolve to impose strict penalties on those who violate tax laws and refuse to rectify their conduct.
Notably, in the case reported this time—where the Second Inspection Bureau of the Longyan Municipal Tax Service in Fujian Province, in conjunction with the court, enforced the payment of additional individual income tax following a failure to file and settle taxes as required by law—the taxpayer, Lai, continued to refuse to pay despite the tax authorities’ lawful service of the “Tax Handling Decision” and the “Tax Administrative Penalty Decision.” Consequently, the tax authorities referred the case to the court for compulsory enforcement. The local court subsequently froze all of Lai’s bank accounts, as well as his WeChat and Alipay accounts and other financial holdings, and issued a consumption restriction order. This serves as a stark warning to taxpayers who harbor侥幸 (ill‑fated) hopes of evading their obligations.
In recent years, tax authorities have continuously strengthened tax oversight in the cultural and entertainment sectors as well as the online livestreaming industry, rigorously investigating and prosecuting tax-related violations in accordance with the law. They have publicly disclosed a number of cases involving celebrities and online streamers evading or underpaying taxes, thereby establishing a strong deterrent against such misconduct. Experts note that the latest action—where tax authorities have imposed lawful penalties on an online streamer for underpaying taxes—is not only a punishment for the violator but also helps foster a fair and equitable tax environment for law-abiding taxpayers, thus contributing to the healthy development of the online livestreaming sector.
The tax authorities remind taxpayers to review prior years for any instances of failing to file annual tax reconciliation and settlement when required, submitting inaccurate or non‑compliant returns, or failing to declare taxable income, and to promptly rectify such issues. If tax‑related problems are identified, the tax authorities will issue reminders, urge corrective action, and conduct cautionary interviews to prompt taxpayers to address the deficiencies. For taxpayers who refuse to comply or fail to make adequate corrections, the tax authorities will, in accordance with the law, recover unpaid taxes and late payment penalties, place them on a list of key tax‑supervision targets, and subject their return filings for the subsequent three tax years to enhanced scrutiny. In cases of serious violations, the authorities will initiate formal investigations and publicly disclose the findings.
Experts emphasize that paying taxes in accordance with the law and with integrity is a responsibility and obligation incumbent upon every citizen. The cases publicized this time serve as another stark reminder that all citizens must strictly abide by national tax laws and never cross the legal red line.

The additional deduction policy strongly promotes scientific and technological innovation.
Recently, the Income Tax Department of the State Taxation Administration, in collaboration with the Department of Policies, Regulations, and Innovation System Construction of the Ministry of Science and Technology, issued the “Guidance on the Implementation of the Policy for Additional Deduction of R&D Expenses (Version 2.0)” (hereinafter referred to as the “Guidance”). The Guidance provides a comprehensive review of the current policies related to the additional deduction of R&D expenses and offers a thorough interpretation of these policies, covering key provisions, requirements for accounting for R&D expenses, and procedures for filing and subsequent administration.
The additional deduction is a tax‑base‑based tax incentive under the corporate income tax. Generally, it allows taxpayers to add a certain percentage to the actual deductible amount as stipulated by tax law, thereby increasing the deductible amount used in calculating taxable income. When this additional deduction is applied to a company’s research and development expenses, it is referred to as the R&D expense additional deduction.
“The Guidelines are closely aligned with China’s goals of fostering scientific and technological innovation and advancing high-quality development. Tailored to the actual circumstances and operational processes of enterprises, they provide a practical, highly operable, end-to-end management framework for the additional deduction of R&D expenses, which will play a positive role in helping companies intensify their R&D efforts and continuously elevate their technological capabilities,” said Li Xuhong, Director of the Institute of Fiscal and Tax Policies and Applications at the National Accounting Institute, Beijing.
Innovation is the primary driving force behind development. “In recent years, the policy of additional tax deductions for R&D expenses has been continuously refined and improved, characterized by increasingly robust support, expanding coverage, and gradual advancement, playing a crucial role in encouraging enterprises to invest in R&D and fostering scientific and technological innovation,” said an official from the State Taxation Administration. Statistics show that from 2018 to 2022, the annual average growth rate of tax and fee reductions under policies supporting technological innovation reached 28.8%, with total relief amounting to RMB 1.3 trillion in 2022, effectively boosting momentum for innovative development. Moreover, between 2018 and 2022, corporate R&D spending grew at an average annual rate of 25.1%.
This year, the State Council decided to make the policy of increasing the pre‑tax additional deduction rate for R&D expenses of eligible enterprises from 75% to 100% a permanent, institutionalized measure. For example, if a company incurred R&D expenses of RMB 1 million in 2023, it could not only deduct the full RMB 1 million on an actual‑cost basis but also claim an additional RMB 1 million as an extra deduction, resulting in a total deductible R&D expense of RMB 2 million for that year. This reduces the company’s taxable income, thereby lowering its tax liability and improving its cash flow.
“The additional deduction for R&D expenses allows companies to deduct an amount greater than their actual R&D expenditures, thereby reducing their tax liability and delivering a tangible tax benefit. This funding not only alleviates the current tax burden and supports corporate growth but also enables offices to reinvest the savings or expand production,” Li Xuhong explained.
To qualify for the policy of additional deduction for R&D expenses, an enterprise must first determine whether its projects constitute R&D activities. According to relevant regulations, R&D activities refer to systematic, goal‑oriented endeavors undertaken on a continuous basis by enterprises to acquire new scientific and technological knowledge, creatively apply such knowledge, or substantially improve technologies, products (services), or processes.
The Guidelines emphasize that the two core elements for applying the policy of additional deduction for R&D expenses are “determining whether an activity qualifies as R&D” and “accurately accounting for and allocating R&D costs,” both of which must be based on individual R&D projects—namely, assessing whether a given project constitutes an R&D activity and ensuring that R&D expenses are accurately accounted for and allocated on a project-by-project basis. Accordingly, standardized management of R&D projects serves as the foundation and prerequisite for the effective application of the additional R&D expense deduction policy.
It is worth noting that the additional deduction for R&D expenses operates on a “actual occurrence, self-assessment, declaration for benefit, and retention of supporting documentation for record‑keeping” basis. Enterprises calculate the amount of the additional deduction based on their actual R&D expenditures, report the relevant details in the appropriate lines of the tax return, and retain the supporting documents for inspection—without the need for prior filing or approval.
At present, the macroeconomy is in a phase of recovery-driven growth, yet enterprises continue to face significant challenges. Alleviating financial pressures remains one of the key issues in providing relief to businesses. Li Xuhong argues that this policy can help offices secure tax benefits ahead of schedule, thereby easing their fiscal burden and contributing positively to stable economic growth. Given that scientific and technological research and development typically spans lengthy time horizons, some technology‑focused companies may not turn a profit in their early stages. Therefore, the additional deduction for R&D expenses should be integrated with loss‑carryforward provisions to stabilize R&D expectations and enable enterprises to reap tax‑reduction benefits as they pursue sustainable development.
“High-quality development cannot be achieved without scientific and technological innovation, and technological leadership is a key indicator of national strength. Therefore, providing robust tax incentives to support innovation is an important policy direction, which will help China leverage technological progress to build modern industrial clusters, thereby driving economic structural adjustment and industrial upgrading,” said Li Xuhong.

LITIGATION & ARBITRATION
The Supreme People’s Procuratorate has released the 13th batch of typical cases under the “Procuratorial Work for the People: Doing Practical Things” series, focusing on administrative prosecution and its close ties with the public.
On July 11, the Supreme People’s Procuratorate, focusing on the theme of “strengthening oversight of final administrative judgments and promoting an optimized, law-based business environment,” released the thirteenth batch of typical cases under the “Procuratorial Work for the People: Doing Practical Things” series—Administrative Prosecution Walking Hand in Hand with the People.
This batch of typical cases comprises four matters, including: a case of procuratorial supervision concerning the failure of the Water Resources Bureau of a certain city in Sichuan Province to perform its statutory duties, brought by a certain real estate development company; a case of procuratorial supervision over administrative penalties and administrative reconsideration, brought by a certain garment factory against the Market Supervision Administration of a certain county in Hunan Province; a case of procuratorial supervision over administrative penalties and administrative reconsideration, brought by a certain company against the Environmental Protection Bureau of a certain county in Jilin Province and the People’s Government of that county; and a case of procuratorial supervision over administrative disposition, brought by a certain construction group company against the Human Resources and Social Security Bureau of a certain county in Jiangsu Province.
The report to the 20th National Congress of the Communist Party of China emphasized the need to improve fundamental market‑economy institutions—such as property‑rights protection, market access, fair competition, and social credit—and to optimize the business environment. To implement the Congress’s directives on enhancing the business environment, the Supreme People’s Procuratorate, building on the experiences and practices gained during last year’s special campaign “Comprehensively Deepening Administrative Prosecutorial Supervision to Safeguard People’s Livelihoods and Interests in Accordance with Law,” launched this year a targeted “mini‑campaign” under administrative prosecution to foster a law‑based business environment. During this period, administrative prosecution departments across the country strengthened oversight of administrative litigation involving market entities, explored supervision of administrative violations affecting such entities, intensified efforts to achieve substantive resolution of administrative disputes concerning them, and advanced higher‑level source‑based governance to promote more effective social governance. Through high‑quality, efficient performance of their duties, they ensured that all types of market entities enjoy equal legal protection, handled a number of landmark cases, and contributed to creating a business environment grounded in the rule of law.
The head of the Seventh Procuratorial Office of the Supreme People’s Procuratorate stated that oversight of administrative litigation is the cornerstone of administrative procuratorial supervision. By reviewing final administrative judgments, rulings, and mediation agreements rendered by the courts, the procuratorial organs legally examine whether judicial proceedings and administrative actions contain unlawful elements, issue supervisory opinions, and thereby safeguard the legitimate rights and interests of the parties involved. This batch of typical cases focuses on matters concerning the protection of the lawful rights and interests of market entities within the scope of supervising administrative adjudication outcomes. Relying on their function of “safeguarding both sides,” these cases adhere to the principles of penetrating, precise, systematic, and case‑type‑specific supervision, and comprehensively employ methods such as public hearings and procuratorial recommendations. In doing so, they not only promote impartial administration of justice by the courts but also encourage administrative agencies to act in accordance with the law, guide enterprises toward lawful and compliant operations, and pool efforts to create a favorable business environment, thus providing robust support for the sound development of enterprises.
For example, in a case involving an apparel factory’s administrative penalty and administrative reconsideration, as well as procuratorial supervision, the court’s judgment was found to be lawful. Nevertheless, the factory faced severe difficulties due to the administrative sanction, putting 85 workers at risk of losing their jobs. In response, the procuratorial organ integrated efforts to optimize a law-based business environment with initiatives to advance rural revitalization, thereby achieving a substantive resolution of the administrative dispute, bolstering the enterprise’s confidence, and creating additional employment opportunities for local residents left behind. Taking this case as an opportunity, the procuratorate also established a collaborative mechanism with the local market supervision administration, jointly formulating strategies to further foster a law-based business climate.
“Going forward, the administrative prosecution departments of procuratorial organs nationwide will, amid a robust atmosphere of studying and implementing the thematic education on Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era and vigorously advancing investigative research, further study, reflect upon, apply, and internalize Xi Jinping’s thought on the rule of law, earnestly implement the spirit of the 20th National Congress of the Communist Party of China, pursue truth and pragmatism, assume responsibility and deliver concrete results, and uphold the fundamental value of ‘handling every case with high quality and efficiency.’ They will promptly compile and analyze typical cases and matters involving market entities across various fields, continuously distill lessons learned and identify persistent challenges and pain points in practice, strengthen data analysis and assessment, rigorously enforce the ‘three‑pronged investigation’ approach for each case, enhance professional guidance, and make tangible new contributions to advancing the modernization of procuratorial work,” said the official.

The first normative guideline on procuratorial investigation and evidence collection has been published.
Recently, the “Guidance on Investigation and Evidence Collection in Cases of Official Crimes Committed by Judicial Personnel in the New Era” (hereinafter referred to as the “Guidance”), compiled under the auspices of the Fifth Procuratorial Office of the Supreme People’s Procuratorate, has been published. This is the first normative guidance on the investigation and evidence collection related to official crimes committed by judicial personnel.
The 2018 amendment to the Criminal Procedure Law conferred upon the procuratorial organs the investigative authority over official crimes committed by judicial personnel. Over the past four-plus years, prosecutorial investigations have increasingly demonstrated their critical role in combating judicial corruption, safeguarding human rights, and upholding judicial fairness.
“To further fulfill the duties entrusted to the procuratorial organs by the Constitution and the law, and to earnestly implement the Supreme People’s Procuratorate Party Group’s positioning of procuratorial investigation work as ‘two important tasks’—namely, investigating and prosecuting official crimes involving judicial personnel, which constitutes a key function of the procuratorial organs and an essential means of safeguarding judicial fairness—we have organized business experts from across the provinces to jointly draft these Guidelines,” said the head of the Fifth Procuratorial Department.
According to reports, the book is divided into three parts: basic standards for investigation and evidence collection, guidance on evidence‑gathering for specific offenses, and case studies. Guided by Xi Jinping’s thought on the rule of law and driven by the practical needs of investigative work, it aims to address real‑world challenges. By analyzing and substantiating both common issues across 14 categories of crimes and the specific difficulties in gathering evidence for individual offenses, the book seeks to clarify complex legal questions, provide practical guidance for frontline investigators, and enable them to conduct evidence‑collection activities efficiently, in compliance with established procedures, and with targeted precision.
During the preparation of this book, the views of renowned scholars—including Zhang Jianwei, Li Fenfei, Li Yuhua, Hu Ming, and Chen Ruihua—were extensively sought and incorporated. These scholars generally agree that the Guidelines represent a comprehensive summary of best practices in investigative and evidentiary collection by the procuratorial organs, providing scientific and detailed guidance for procuratorial authorities at all levels in handling official‑duty crimes committed by judicial personnel, thereby playing a positive role in enhancing both the quality and efficiency of case handling.

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