JC Master Legal News Issue 824

Key Takeaways for This Issue
The China Securities Regulatory Commission is soliciting public comments on the revision of the “Corporate Governance Code for Listed Companies.”
Recently, the China Securities Regulatory Commission revised the Guidelines on Corporate Governance of Listed Companies and, effective June 15, opened the draft for public consultation.

The Shanghai Stock Exchange has officially released the supporting business rules governing the listing and trading of shares or depositary receipts of pilot innovative enterprises.
Recently, the Shanghai Stock Exchange has formulated the “Measures for the Pilot Implementation of Listing and Trading of Stocks or Depositary Receipts of Innovative Enterprises,” which are hereby promulgated and shall take effect from the date of promulgation.

The Shenzhen Stock Exchange has issued the “Measures for the Implementation of Listing and Trading of Shares or Depositary Receipts of Pilot Innovative Enterprises” and related business rules.
On June 15, the Shenzhen Stock Exchange officially released the “Implementation Measures for the Pilot Listing and Trading of Stocks or Depositary Receipts of Innovative Enterprises,” along with the “Notice on Amending Articles 1.1 and 1.2 of the Shenzhen Stock Exchange Rules for Listing Stocks” and the “Detailed Rules for Online Issuance of Shares in Initial Public Offerings on the Shenzhen Market (Revised in 2018),” among other business rules. All these rules shall take effect from the date of their publication.

The State Council’s Office for Reducing Burdens has deployed the implementation of a survey and evaluation of the burden on enterprises.
To implement the CPC Central Committee and the State Council’s directives on alleviating the burden on enterprises and to gain a clearer understanding of the issues and policy demands in this area, the State Council’s Office for Reducing Burdens recently issued a notice launching a nationwide annual survey and evaluation of enterprise burdens.

The merger of the national and local tax authorities has officially begun, with new provincial-level tax agencies across the country uniformly unveiled.
On the morning of June 15, the national tax bureaus and local tax bureaus at the provincial (autonomous region, municipality directly under the central government) and separately listed city levels were merged and officially rebranded under a unified name, marking a pivotal, stage‑specific step in the reform of the national and local tax collection and administration system.

Table of Contents
Table of Contents

Finance & Capital Markets
The China Securities Regulatory Commission is soliciting public comments on the revision of the “Corporate Governance Code for Listed Companies.”
The CSRC spokesperson answered questions from reporters on the principles of stringent review and prudent pricing requirements for pilot enterprises.
The Shanghai Stock Exchange has officially released the supporting business rules governing the listing and trading of shares or depositary receipts of pilot innovative enterprises.
The Shenzhen Stock Exchange has issued the “Measures for the Implementation of Listing and Trading of Shares or Depositary Receipts of Pilot Innovative Enterprises” and related business rules.
The Guangdong Province Training Conference on the Restructuring and Listing of High-Tech Enterprises was held at the Guangdong Financial High-Tech Zone.

Corporate & Commercial
CSRC: Operational preparations for the Shanghai–London Stock Connect are being vigorously advanced.
NDRC: Plans to adopt a “three‑warning” approach for enterprises that violate regulations in issuing bonds overseas.
The State Council’s Office for Reducing Burdens has deployed a survey and evaluation of the burden on enterprises.
The central bank: Gradually lift restrictions on shareholding ratios and business licenses in accordance with the principle of national treatment.
China Youth Travel Service Industry has entered into a Debt Restructuring Advisory Agreement with CICC Capital.

Taxation
The merger of the national and local tax authorities has officially begun, with new provincial-level tax agencies across the country uniformly unveiled.
The Lianyungang Municipal Tax and Local Tax Authorities jointly held a press conference titled “Optimizing the Tax Business Environment to Support Lianyungang’s High-Quality Development and Achieve Latecomer Advantages.”

Litigation & Arbitration
The Supreme People’s Court has issued the “Guiding Opinions on Strengthening and Standardizing Legal Interpretation and Reasoning in Judicial Documents.”
The Guangdong procuratorial organs have instituted public prosecution, in accordance with the law, against Yang Qingfang on suspicion of accepting bribes.

Other
Ninety percent of AI companies are operating at a loss: Artificial intelligence is grappling with the challenges of commercial deployment.
Ministry of Finance: As of the end of May, the outstanding balance of local government debt nationwide stood at RMB 16.6 trillion.
Finance & Capital Markets
The China Securities Regulatory Commission is soliciting public comments on the revision of the “Corporate Governance Code for Listed Companies.”
Recently, the China Securities Regulatory Commission has revised the Guidelines on Corporate Governance of Listed Companies (hereinafter referred to as the “Guidelines”) and, effective June 15, has opened the draft for public consultation.
Since the issuance and implementation of the Guidelines in 2002, they have played a vital role in advancing the establishment of a modern corporate system, guiding listed companies to operate in a standardized manner, and fostering their development. In recent years, the number of listed companies in China has grown steadily, their types have become increasingly diverse, and the investor base has grown more varied. Meanwhile, the regulatory framework for listed companies—anchored in the Company Law and the Securities Law—has been continuously refined. At the same time, new circumstances and challenges have emerged in corporate governance, making it both necessary and feasible to revise and improve the Guidelines, supported by a solid legal and practical foundation. Concurrently, the Organization for Economic Cooperation and Development’s (OECD) Principles of Corporate Governance, first adopted in 1999, has undergone two revisions—in 2004 and 2015. Accordingly, it is imperative to amend the Guidelines, draw on international best practices in corporate governance, and further align them with global standards.
The main revisions to the Guidelines are as follows: First, aligning closely with the themes of the new era, the Guidelines have added requirements to implement the new development philosophy in corporate governance, strengthen Party building within listed companies, and encourage listed companies to participate in ecological civilization initiatives and fulfill their social responsibilities, including poverty alleviation. Second, based on China’s national conditions and the characteristics of its capital market investor structure, the Guidelines further refine provisions on investor protection—particularly for small and medium-sized investors—and reinforce constraints on controlling shareholders, actual controllers, and their affiliated parties. Third, drawing on international best practices, the Guidelines introduce provisions governing institutional investors’ participation in corporate governance, emphasize the proactive role of intermediary institutions in corporate governance, strengthen the functions of board audit committees, and establish a basic framework for environmental, social, and governance (ESG) information disclosure. Fourth, the Guidelines address emerging issues in corporate governance by reinforcing the obligation of all stakeholders to maintain governance stability during changes in control of listed companies, enhancing the powers and standardizing the duties of independent directors, improving evaluation and incentive mechanisms for listed companies, refining information disclosure requirements, and increasing transparency.
We welcome valuable feedback from all sectors. The China Securities Regulatory Commission will, based on the responses to the public consultation, further revise and refine the measures and, after completing the relevant procedures, issue and implement them.

The CSRC spokesperson answered questions from reporters on the principles of stringent review and prudent pricing requirements for pilot enterprises.
1. Question: We have noticed that the review process for already‑registered innovative pilot enterprises is very fast. Does this mean that the standards and procedures are being applied more leniently?
Answer: Whether it is a conventional IPO applicant or an enterprise applying for the pilot program, the CSRC consistently upholds the principle of comprehensive, stringent, and law-based regulation. In accordance with the provisions of the Securities Law, the Company Law, the Measures for the Administration of Initial Public Offerings and Listings, the Measures for the Administration of the Issuance and Trading of Depositary Receipts, and other relevant laws, regulations, and normative documents, the Commission conducts rigorous reviews and maintains strict gatekeeping to prevent “diseases from entering through the mouth.”
It is important to emphasize that, although pilot enterprises are subject to separate queueing and expedited review due to the experimental nature of the program, both the CSRC’s preliminary review departments and the Issuance Review Committee conduct their review processes in strict accordance with laws and regulations. They maintain rigorous standards without compromise and ensure that no procedural steps are omitted, conducting comprehensive, multi‑dimensional reviews from both financial and non‑financial perspectives. In terms of review rigor, the requirements for pilot enterprises are even more stringent than those for ordinary IPO applicants. Not only must pilot enterprises strictly meet the issuance and listing criteria stipulated by applicable laws, regulations, and supervisory rules, but they are also required, in the interest of protecting investor interests, to disclose information truthfully, accurately, and comprehensively in strict compliance with relevant provisions—particularly taking into account the characteristics of innovative enterprises, such as substantial upfront investments, high risks, and susceptibility to disruptive change, so as to fully disclose potential risks to investors.
In addition, during the review process, the CSRC has rigorously urged sponsoring institutions, lawyers, and accountants to fulfill their duties and responsibilities, ensuring that they conduct due diligence and maintain robust quality controls for pilot‑listed companies in accordance with the pilot rules and information‑disclosure requirements. The CSRC will continue to strengthen oversight of issuers and intermediary institutions, and will impose strict legal penalties on any fraudulent issuance or violations of information‑disclosure regulations that arise in the course of such activities.
2. Question: Recently, the media has been reporting extensively on the IPOs of innovative companies, with some perspectives being quite optimistic and numerous comments and speculations circulating regarding the valuations of these offices. How does the China Securities Regulatory Commission view this situation?
A: Whether pilot enterprises can gain market acceptance and investor confidence depends largely on their sustained, long-term performance after listing, on their ability to deliver stable, enduring returns to a broad base of investors, and, in particular, on the reasonableness of their offering price. A sound valuation and pricing framework is not only the foundation for investors to obtain appropriate returns but also the cornerstone of stable market functioning. If the offering price is set at an unreasonably high level, it could trigger post‑listing price declines and a host of other issues, tarnish the reputation of innovative pilot companies, and harm the interests of investors and all market participants.
Innovative enterprises are characterized by substantial upfront investments, high risks, and a susceptibility to disruptive disruption. Coupled with the longstanding tendency in the A-share market to hype new listings and speculative themes, these companies may face the risk of sharp pullbacks after being artificially inflated in their early trading stages. Recently, similar cases have emerged in both domestic and overseas markets, leaving many investors exposed to losses.
It is particularly important to emphasize that the China Securities Regulatory Commission has set forth clear requirements for the pricing of offerings by innovative pilot enterprises: First, issuers and their lead underwriters are required to design offering structures in a scientifically sound manner, tailored to each enterprise’s specific circumstances, and to establish reasonable and effective incentive and risk‑mitigation mechanisms for institutional investors participating in the bookbuilding process, thereby encouraging professional institutional investors to engage actively, conduct thorough research, and submit prudent bids. Second, institutional investors are expected to fully exercise their roles in the bookbuilding process, leverage their professional expertise, maintain due independence, objectivity, and prudence, and ensure appropriate valuation and pricing for the pilot innovative enterprises, thereby effectively safeguarding investors’ legitimate rights and interests and upholding market stability.

The Shanghai Stock Exchange has officially released the supporting business rules governing the listing and trading of shares or depositary receipts of pilot innovative enterprises.
In order to standardize the listing and trading of shares and depositary receipts of pilot innovative enterprises on the Shanghai Stock Exchange, maintain market order, and protect the legitimate rights and interests of investors, and in accordance with the “Several Opinions on Launching a Pilot Program for Domestic Issuance of Shares or Depositary Receipts by Innovative Enterprises,” the “Administrative Measures for the Issuance and Trading of Depositary Receipts (Trial),” as well as other relevant laws, administrative regulations, departmental rules, normative documents, and the “Shanghai Stock Exchange Rules for Listing of Stocks” and the “Shanghai Stock Exchange Trading Rules,” the Shanghai Stock Exchange has formulated the “Implementation Measures for the Listing and Trading of Shares or Depositary Receipts of Pilot Innovative Enterprises on the Shanghai Stock Exchange,” which are hereby promulgated and shall take effect from the date of promulgation.

The Shenzhen Stock Exchange has issued the “Measures for the Implementation of Listing and Trading of Stocks or Depositary Receipts of Pilot Innovative Enterprises” along with related business rules.
In accordance with the “Notice of the General Office of the State Council Forwarding the CSRC’s Several Opinions on Piloting the Issuance of Shares or Depositary Receipts by Innovative Enterprises in China” (hereinafter referred to as the “Several Opinions”), as well as relevant departmental regulations and normative documents such as the China Securities Regulatory Commission’s “Administrative Measures for the Issuance and Trading of Depositary Receipts (Trial),” on June 15, the Shenzhen Stock Exchange officially promulgated the “Implementation Measures of the Shenzhen Stock Exchange for the Pilot Listing and Trading of Shares or Depositary Receipts of Innovative Enterprises” (hereinafter referred to as the “Implementation Measures”), together with the “Notice on Amending Articles 1.1 and 1.2 of the Shenzhen Stock Exchange Rules for Listing Stocks,” the “Detailed Rules for Online Public Offering of Shares in the Shenzhen Market (Revised in 2018),” the “Detailed Rules for Offline Public Offering of Shares in the Shenzhen Market (Revised in 2018),” the “Guidelines on the Content and Format of the Prospectus for the Listing of Depositary Receipts of Red-Chip Companies on the Shenzhen Stock Exchange,” the “Mandatory Clauses of the Risk Disclosure Statement for Trading Shares or Depositary Receipts of Pilot Innovative Enterprises,” and the “Detailed Rules of Procedure of the Listing Committee of the Shenzhen Stock Exchange (Revised in 2018).” All these rules shall take effect from the date of their publication.
The “Implementation Measures” constitute the Shenzhen Stock Exchange’s fundamental business rules governing the listing and trading of shares or depositary receipts issued by pilot innovative enterprises. Within the framework of the existing Securities Law, these measures aim to standardize the listing and trading of such enterprises, uphold the order of the securities market, and prioritize risk prevention and investor protection. They set out specific institutional arrangements for matters including the listing, trading, and information disclosure of shares or depositary receipts of pilot innovative enterprises. As a significant institutional innovation in the capital market designed to serve the real economy, the drafting process of the “Implementation Measures” adhered rigorously to the following principles:
First, we will adhere to a combination of rigorous, law-based regulation and prudent, differentiated oversight. While strictly complying with the Securities Law, the Several Opinions, and other relevant laws and regulations, we will carefully take into account the differences between pilot innovative enterprises and conventional companies in areas such as legal application and corporate governance. We will coordinate and align regulatory requirements for both ordinary listed companies and pilot innovative enterprises, striking an appropriate balance between investor protection and the legitimate needs of business operations and development. Within the existing legal and regulatory framework, we will adopt differentiated regulatory arrangements tailored to the specific characteristics of pilot innovative enterprises.
Second, we have adhered to the principle of aligning international best practices with China’s national realities. The institutional framework for depositary receipts draws extensively on international norms; in particular, the trading regime is modeled after that of A‑shares, and overseas issuers of underlying securities assume the obligations of listed companies under the Securities Law. At the same time, to balance the interim needs of the pilot program with the long-term requirements of market development, the Implementation Measures, taking into account China’s market conditions and regulatory practices, have established mechanism arrangements—such as conversion requirements and information disclosure—that are tailored to the national context.
Third, we will continue to integrate strengthened information disclosure with the protection of investors’ legitimate rights and interests. In light of the potential specific operational risks faced by pilot innovative enterprises, as well as the special arrangements adopted by red-chip companies—such as weighted voting rights and contractual control structures—we will reinforce the information-disclosure obligations and risk‑disclosure requirements of these pilot offices, ensuring that investor‑protection measures are embedded across all stages of the listing process, trading activities, and ongoing information‑disclosure obligations.
Alongside the issuance of the Implementation Measures, the Shenzhen Stock Exchange also, in line with the needs of the pilot program, concurrently formulated and revised a series of supporting regulations. On the one hand, it extended the scope of application of relevant rules to include shares or depositary receipts of pilot innovative enterprises, ensuring seamless integration with the existing framework of related business rules and guaranteeing that all stages—listing, trading, and information disclosure—are conducted in accordance with established provisions. On the other hand, it introduced special arrangements to address the differences between shares and depositary receipts of pilot innovative enterprises and those of ordinary shares, issued targeted risk warnings, and brought these securities under the purview of the Shenzhen Stock Exchange’s frontline regulatory oversight, thereby reinforcing member obligations, prioritizing risk prevention and control, and strengthening investor protection.

The Guangdong Province Training Conference on the Restructuring and Listing of High-Tech Enterprises was held in the Guangdong Financial High-Tech Zone.
On June 14, the Guangdong Province Training Conference on the Restructuring and Listing of High-Tech Enterprises was held at the Guangdong Financial High-Tech Zone. Co-hosted by the Shenzhen Stock Exchange, the Guangdong Provincial Department of Science and Technology, the Guangdong Provincial Financial Office, and the Guangdong Securities Regulatory Bureau, the event was attended by Peng Ming, Deputy General Manager of the Shenzhen Stock Exchange, who delivered a speech. More than 300 participants—including officials from science and technology and finance departments across prefecture-level and above cities in Guangdong, management committees of national high-tech industrial parks, and heads of over 160 high-tech enterprises—attended the conference.
At the conference, numerous industry experts from the Shenzhen Stock Exchange and securities offices delivered specialized presentations on key topics, including policies supporting the development of the new economy within China’s multi-tiered capital market, an overview of recent corporate public offerings and listings along with the basic procedures involved, and strategic planning for corporate restructuring and IPO preparation. In response to the keen interest of participating companies in issues such as the issuance regime, information disclosure, and capital‑market operations, the experts also conducted case‑based analyses, offering insights from multiple perspectives on how to strengthen corporate governance, ensure compliant operations, and implement employee equity‑incentive schemes prior to going public, thereby providing concrete guidance for these companies’ listing strategies.
In recent years, the capital market has supported the innovation-driven development strategy, fostering technological innovation and continuously refining policies and measures to back pioneering, demonstration‑type enterprises. High‑tech offices have become the mainstay of IPOs in Guangdong Province. Over the past five years, 221 companies in Guangdong have completed their initial public offerings on the A‑share market, accounting for 20% of all new listings nationwide and ranking first in the country for four consecutive years. Among them, 196 were high‑tech enterprises, raising a total of RMB 120.89 billion through their IPOs. The capital market has provided offices with a comprehensive platform for leveraging capital instruments to secure low‑cost financing, playing a particularly significant role in encouraging high‑tech companies to increase R&D investment and accelerate growth. According to statistics, among Guangdong’s 379 listed manufacturing companies, 305 hold high‑tech enterprise status; in 2017, their combined R&D expenditures reached RMB 90.17 billion, representing 37.9% of the province’s total R&D spending, with an R&D intensity of 4.37%, 1.72 percentage points above the provincial average.
At present, Guangdong Province is home to 33,000 national high-tech enterprises, including 16,738 large-scale high-tech offices, and boasts a robust pool of companies poised for IPOs. Moving forward, the Shenzhen Stock Exchange will proactively offer comprehensive, end-to-end corporate development services, aligning more closely with Guangdong’s strategic priorities for the new era. By supporting an increasing number of innovative Guangdong-based enterprises in accessing the multi-tiered capital market—through private equity financing, public listings, mergers and acquisitions, and restructuring—the Exchange aims to accelerate their growth and contribute further to Guangdong’s economic transformation and upgrading, thereby advancing high-quality development.
Commercial & Corporate
CSRC: Operational preparations for the Shanghai–London Stock Connect are being vigorously advanced.
On June 14, Fang Xinghai, Vice Chairman of the China Securities Regulatory Commission, stated at the 10th Lujiazui Forum (2018) that, in the new era and at this new stage, the capital market bears the important responsibility of fostering high-quality economic development in China. The launch of depositary receipts—a new type of security—represents a significant innovation for China’s capital market. He also emphasized that the capital market’s institutional framework must be reformed to meet the stringent standards of qualified investors and mature markets, thereby embodying the principle of using openness to drive reform and development and enhancing both the quality and international competitiveness of China’s capital market.
Fang Xinghai stated that the China Securities Regulatory Commission is accelerating a new round of reforms and opening-up in the capital market, continuously enhancing its ability to support technological innovation. “We are keenly aware that we must remain problem‑oriented, expedite reforms to address institutional and systemic shortcomings that hinder the growth of the real economy, strive to make the issuance and listing regime more inclusive and adaptable, and step up support for new technologies and emerging industries.”
The China Securities Regulatory Commission has intensified efforts to open up the capital market, leveraging openness to drive reform and development, and striving to forge a new landscape of comprehensive market liberalization. It has continuously refined the rules and mechanisms governing the Shanghai–Shenzhen–Hong Kong Stock Connect, expanding the scope of eligible stocks and increasing daily quotas; as a result, the scale of these programs has maintained steady growth, with cumulative trading volume now reaching RMB 10 trillion. The Commission has also carefully heeded feedback from international institutional investors on improving the QFII and RQFII regulatory framework, coordinating closely with relevant authorities to further facilitate cross-border investment by international investors through these channels. Meanwhile, the overarching institutional framework for the Shanghai–London Stock Connect is now in place, and operational preparations are well underway, with an anticipated official launch within the year.
Since A-shares were included in the MSCI Index, as of June 11, the average daily net inflow under the Shanghai–Hong Kong Stock Connect and Shenzhen–Hong Kong Stock Connect schemes reached RMB 3.61 billion, a 167% increase compared with the average daily net inflow during the first five months of this year. The China Securities Regulatory Commission, together with relevant authorities and the Shanghai and Shenzhen stock exchanges, has already begun studying new institutional frameworks and policy tools, including reforms to the mechanism for determining the closing price of stocks, standardization of the suspension and resumption of trading regime, and enhancements to instruments such as stock index futures, with the aim of promptly raising the current inclusion factor for A-shares from 5% to around 15%.
Policies to lift shareholding‑ratio restrictions in the securities industry have already been implemented. To date, three foreign‑invested institutions have submitted their applications to the China Securities Regulatory Commission, and numerous other foreign offices are actively engaging in consultations. This year, further measures will be introduced to allow overseas traders to access commodity and financial futures markets, thereby better supporting international commodity trade, industrial upgrading and restructuring, and risk management for both real‑economy enterprises and financial institutions.

NDRC: Plans to adopt a “three‑warning” approach for enterprises that violate regulations in issuing bonds overseas.
According to the National Development and Reform Commission’s official website, in response to reports that the NDRC had held talks with eight overseas bond‑issuing enterprises that had failed to file their offerings, a responsible official stated that, to further standardize market conduct, encourage enterprises to comply with filing and registration requirements, strengthen ongoing and post‑event supervision, and mitigate external debt risks, the NDRC is currently drafting relevant administrative measures. Under these measures, it plans to adopt a “three‑warning” approach for enterprises that violate regulations in issuing bonds abroad.
The official stated that, recently, it has been discovered that some enterprises have issued foreign‑denominated debt without completing the required prior filing and registration. In response, the authorities held talks with several enterprises and their related intermediary institutions, pointing out the violations in their issuance of foreign‑denominated debt and demanding that such issuances strictly comply with the relevant provisions of Document No. 2044. They also urged the pertinent intermediaries to assume their responsibilities, providing guidance and oversight to ensure that enterprises duly complete the pre‑issuance filing and registration procedures. On May 18, the NDRC’s official website published “Notice of the National Development and Reform Commission on Holding Talks with Enterprises and Intermediary Institutions Involved in Improper Issuance of Foreign‑Denominated Debt,” announcing the details of these consultations.
The official stated that, to further standardize market conduct, encourage enterprises to comply with filing and registration requirements, strengthen ongoing and post‑event supervision, and mitigate external debt risks, the National Development and Reform Commission is currently drafting relevant administrative measures. Under these measures, a “three‑warning” approach is proposed for enterprises that violate regulations in issuing bonds overseas: if, upon initial review, an enterprise is found to have engaged in violations—such as failing to file in advance—in contravention of the provisions of Document No. 2044, the enterprise, along with its underwriters, law offices, and other intermediary institutions, will be summoned for talks, and a corresponding warning notice will be published on the Commission’s official website; if similar violations are detected again, the Commission will publicly name and warn the offending enterprise and the relevant intermediaries, and disclose the nature of the violations; and if such violations occur a third time, the Commission, in coordination with relevant departments, will hold the implicated enterprises and intermediaries accountable, suspending the overseas bond‑issuance filing and registration of the concerned enterprises and barring the implicated intermediaries from participating in future overseas bond issuances.

The State Council’s Office for Reducing Burdens has deployed the implementation of a survey and evaluation of the burden on enterprises.
According to the website of the Ministry of Industry and Information Technology, in order to implement the CPC Central Committee and the State Council’s directives on reducing the burden on enterprises and to gain a clearer understanding of the issues and policy demands related to this burden, the State Council’s Office for Reducing Burdens recently issued a notice launching a nationwide annual survey and assessment of enterprise burdens.
The notice specifies that the survey on the burden borne by enterprises covers areas such as cost burdens, enterprise‑related fees, the business environment, and policy‑related demands. It requires the leading groups (joint conferences) for alleviating the burden on enterprises in each region to organize no fewer than 150 enterprises—spanning diverse sizes and industries—to participate in the survey, conduct relevant training, and complete online data submission. The evaluation of the enterprise burden includes assessments of tax and fee burdens, financing costs, labor costs, energy costs, and institutional costs across regions, which are to be collected and reported by the respective regional leading groups (joint conferences). In addition, third‑party institutions are requested to undertake related index‑based research and publish the findings based on these data.
The notice emphasizes that the leading groups (joint conferences) for reducing the burden on enterprises in each region must strengthen organizational leadership, treat enterprise burden surveys and evaluations as a crucial foundation for this work, and ensure that all survey and evaluation data are accurate and reliable. They are also required to promptly report the results of their regional surveys and evaluations to the Party committees and governments of the respective provinces, autonomous regions, and municipalities directly under the central government, put forward policy recommendations for improving efforts to alleviate the burden on enterprises, and seek support for such initiatives. Furthermore, they should establish oversight and feedback mechanisms to address the burden-related issues raised by local enterprises during the surveys, and respond promptly to enterprises’ concerns.

The central bank: Gradually lift restrictions on shareholding ratios and business licenses in accordance with the principle of national treatment.
On June 14, at the 10th Lujiazui Forum (2018), PBOC Governor Yi Gang stated that the People’s Bank of China has consistently attached great importance to and supported the development of Shanghai as an international financial center. Going forward, in line with the decisions and arrangements of the CPC Central Committee and the State Council, the PBOC will implement effective measures to continue backing Shanghai’s efforts to take the lead in piloting financial opening-up.
In his address, he stated that China will adhere to market‑driven principles to advance the internationalization of the renminbi, support Shanghai in innovating and piloting cross‑border renminbi‑denominated transactions and products, and fully leverage the renminbi’s role in pricing and settling commodity trades. He also emphasized making the most of Shanghai’s advantages as an international financial center to provide investment and financing support for the Belt and Road Initiative. At the same time, China will steadily move forward with capital account convertibility, encourage Shanghai to take the lead in piloting foreign‑exchange‑management reforms, expand the functions of free‑trade accounts within the Shanghai Free Trade Zone, and further facilitate capital‑account management and enhance convertibility. In addition, efforts will be intensified to improve the financial market and related services. Going forward, China will strengthen infrastructure—covering market breadth and depth, trading convenience and efficiency, the legal framework and market environment, as well as custody and clearing systems—to better harness Shanghai’s market‑making capabilities and position the city as a global financial and market hub.
Yi Gang stated that, going forward, the overarching principle guiding China’s financial sector opening-up will be to progressively lift restrictions on shareholding ratios and business licensing, in line with the national treatment principle.
During his speech, Yi Gang outlined several key perspectives on financing for small and micro enterprises. He emphasized that these businesses play a vital role in economic development and that formal financial institutions should expand their lending to them, fostering a collaborative, “multi‑stakeholder” approach across society. He also noted that the central bank should leverage monetary policy tools—such as reserve requirements, relending, rediscounting, and interest rates—to bolster banks’ support for small and micro enterprises; that regulatory authorities should adopt differentiated supervisory measures, fully accounting for the risk premiums associated with such loans; and that fiscal authorities should provide targeted tax incentives for small‑and‑micro‑enterprise lending. Furthermore, commercial banks themselves must remain committed to serving these enterprises on all fronts. He disclosed that, in joint consultation with the Ministry of Finance, the central bank will introduce more favorable tax policies going forward for small‑and‑micro‑enterprise loans with individual credit lines below RMB 5 million.

China Youth Travel Service Industry has entered into a Debt Restructuring Advisory Agreement with CICC Capital.
With the approval of the shareholders’ meeting of China Youth Travel Service Industrial Development Co., Ltd. (hereinafter referred to as “CYTS Industrial”), on June 11, CYTS Industrial entered into a Debt Restructuring Advisory Agreement with CICC Capital Operations Co., Ltd. (hereinafter referred to as “CICC Capital”). CICC Capital will be responsible for coordinating all aspects of CYTS Industrial’s debt restructuring, conducting a comprehensive review of its business operations, assets, and liabilities, leading the development of debt‑restructuring and asset‑reorganization plans, and spearheading communications and negotiations with the government, regulatory authorities, creditors, investors, and other stakeholders. Additionally, CICC Capital will coordinate the work of intermediary agencies, including accounting offices, law offices, and asset‑valuation institutions, while assisting CYTS Industrial in attracting strategic and financial investors to accelerate efforts to mitigate liquidity risks. According to earlier reports, Beijing Gold Exchange Center Co., Ltd., a subsidiary of CYTS Industrial, encountered defaults on trust‑related debts in May 2018.
Public records show that CICC Capital is the sole private‑equity investment platform of China International Capital Corporation, focusing on direct investments and investment advisory services across various industries. To date, it manages total assets of RMB 240 billion. Against the backdrop of China’s ongoing implementation of the “Three Reductions, One Cut, and One Supplement” policy, CICC Capital has consistently prioritized debt restructuring and investment opportunities in distressed enterprises. It has now become one of the largest specialized capital‑management platforms in the country.
According to reports, China Youth Travel Service Industrial Co., Ltd. has undertaken numerous promising initiatives in recent years across sectors such as health care, cultural tourism, and financial services, with several of its investment projects already demonstrating substantial market value and significant growth potential. Through this collaboration, the company will work in close coordination with CICC Capital’s professional institutions and teams. Under the expert guidance and robust support of CICC Capital, and guided by a strong sense of responsibility toward all stakeholders—including the government, regulatory authorities, creditors, partner organizations, shareholders, investors, and employees—the company will diligently carry out all tasks related to debt restructuring and the mitigation of liquidity risks.

Taxation TAXATATION
The merger of the national and local tax authorities has officially begun, with new provincial-level tax agencies across the country uniformly unveiled.
On the morning of June 15, in accordance with the decisions and arrangements of the CPC Central Committee and the State Council on the reform of the national and local tax collection and administration system, and building on earlier efforts to align thinking, conduct top-level design, and carry out mobilization and deployment, the national tax bureaus and local tax bureaus at the provincial (autonomous region, municipality directly under the central government) level and in cities separately listed in the national plan were merged and officially rebranded. This marked a pivotal, stage‑specific step forward in the reform of the national and local tax collection and administration system.
In accordance with the overall plan for reforming the national and local tax collection and administration system, the institutional reform of the tax system will proceed in the following sequence: first, establish new signage and finalize the “three designations”; second, ensure the provincial-level reforms are carried out steadily before advancing the city- and county-level reforms; and third, merge the national and local tax agencies before transferring responsibilities for the collection and administration of social security contributions and non-tax revenues. Following the unveiling of the new provincial tax bureaus, by the end of July, city- and county-level tax bureaus will, step by step and at each level, complete reform measures such as centralized office operations and the official launch of the new institutions.
To ensure the reform is advanced in a robust, orderly, and effective manner, the State Taxation Administration has established a comprehensive organizational framework centered on the “Administration Party Leadership Group, various working groups, liaison and supervision teams, and disciplinary inspection teams.” It has also formulated a three-tiered system of institutional norms—comprising “reform plans, supporting measures, and operational guidelines”—and strengthened an information‑sharing mechanism that facilitates communication and coordination across all levels of tax officials. Through channels such as the 12366 hotline dedicated to institutional reform and the launch of a special column titled “I Offer Suggestions for Reform,” the Administration has actively solicited input and built broad consensus. Together, these three major systems will fully safeguard the smooth advancement and meticulous implementation of the reform.
The State Taxation Administration has consistently placed taxpayer service at the forefront of its efforts to advance tax‑administration reform, striving to anticipate taxpayers’ needs and address their concerns. It has issued a series of regulatory documents, including the “Announcement on Matters Relating to Tax‑Administration Reform” and the “Notice on Ensuring Smooth Tax Collection and Administration During the Transitional Period of the National and Local Tax‑Administration System Reform,” while introducing a range of measures—such as “one‑stop service,” “one‑click consultation,” and “online processing”—to better serve and facilitate taxpayers, thereby continuously enhancing the quality of tax services. In accordance with the law, it has reviewed and revised tax department rules and normative documents that no longer aligned with the requirements of the national‑local tax‑administration system reform, standardized policy implementation guidelines and enforcement criteria, and strengthened the predictability of tax policies. To date, with the exception of specialized tax service halls, all 9,365 tax service halls nationwide have achieved “one‑stop service,” and the 12366 taxpayer service hotline now offers “one‑click consultation,” laying a solid foundation for steadily enhancing the sense of gain among the public and taxpayers.
The Lianyungang Municipal Tax and Local Tax Authorities jointly held a press conference titled “Optimizing the Tax Business Environment to Support Lianyungang’s High-Quality Development and Achieve Latecomer Advantages.”
On the morning of May 9, the Lianyungang Municipal State Taxation Bureau and the Local Taxation Bureau jointly held a press conference titled “Optimizing the Tax Business Environment to Help Lianyungang Achieve High-Quality Development by Leaping Ahead” at the Lianyungang Press Conference Hall.
Shen Hu, a member of the Party Leadership Group and head of the Discipline Inspection Commission of the Municipal State Taxation Bureau, announced the efforts undertaken by the Lianyungang tax authorities to optimize the tax-related business environment and support the port city’s goal of achieving high-quality development through late‑comer advantage. Wang Zhongming, a member of the Party Leadership Group and chief economist of the Municipal Local Taxation Bureau, chaired the press conference. The event also addressed reporters’ questions on topics such as the list of tax‑related services available entirely online, the list of services requiring no more than one in-person visit, “no‑in‑person‑meeting” tax services, and the taxpayer credit rating system.

Litigation & Arbitration
The Supreme People’s Court has issued the “Guiding Opinions on Strengthening and Standardizing Legal Interpretation and Reasoning in Judicial Documents.”
The Supreme People’s Court recently issued the “Guiding Opinions on Strengthening and Standardizing Legal Interpretation and Reasoning in Judicial Documents.” These Opinions represent an important measure by the people’s courts to implement the spirit of the 19th National Congress of the Communist Party of China, deepen the comprehensive and coordinated reform of the judicial system, and enhance legal interpretation and reasoning in judicial documents. They also serve as a guiding document for reforming judicial documents across the country over the coming period. Reforming legal interpretation and reasoning in judicial documents is a foundational undertaking for deepening the practice of governing the country according to law and enhancing judicial capacity. It is of great significance for improving the quality and efficiency of judicial work, promoting judicial transparency, showcasing the people’s courts’ image of impartial justice, and strengthening the public’s sense of fairness and justice.
The Opinions emphasize that the purpose of providing legal reasoning in judicial documents is to enhance the acceptability of judgments by elucidating the process through which the adjudicative conclusions are reached and the justifications for their validity, thereby achieving an organic unity of legal and social outcomes. The principal values of this approach lie in strengthening the fairness and transparency of judicial decisions, standardizing the exercise of judicial power, bolstering public trust in and the authority of the judiciary, enabling judgments to resolve disputes and guide societal values, promoting the core socialist values, ensuring that the people can feel fairness and justice in every judicial case, effectively safeguarding the legitimate rights and interests of the parties involved, and fostering social harmony and stability.
The “Opinions” stipulate that judicial documents must elucidate the rationale, clarify the legal principles, address emotional considerations, and adhere to proper literary style, while setting forth specific requirements regarding reasoning in the examination and evaluation of evidence, the ascertainment of facts, the application of law, and the exercise of discretionary power.
The Opinions stipulate that, depending on factors such as the gravity and complexity of the case, the degree of dispute among the parties, the type of trial procedure, the extent of the case’s social impact, and the category of the judicial document, reasoning should be tailored to an appropriate level of detail. They further specify concrete circumstances in which “legal interpretation and reasoning should be strengthened” or “may be simplified,” while adhering to technical formatting standards and linguistic norms for document preparation. Guided by the need to ensure the systematic, holistic, and coordinated nature of reform, the Opinions set forth supporting measures—including mechanisms for guidance, performance assessment, evaluation, and review and oversight—thereby fostering a favorable environment in which judges are motivated to provide reasoned judgments, dare to do so, know how to do it, and deliver well-reasoned decisions.

The Guangdong procuratorial organs have instituted public prosecution, in accordance with the law, against Wang Jianyang on suspicion of accepting bribes.
Recently, the case involving Wang Jianyang, former member of the Standing Committee of the Dongguan Municipal Party Committee and head of the United Front Work Department of Guangdong Province—holding a deputy-department-level rank—on suspicion of accepting bribes, was assigned jurisdiction by the Guangdong Provincial People’s Procuratorate and subsequently prosecuted by the Zhaoqing Municipal People’s Procuratorate before the Zhaoqing Intermediate People’s Court.
During the review-and-prosecution stage, the procuratorial organ duly informed the defendant, Wang Jianyang, of his procedural rights and conducted an interrogation, while also hearing the views of his appointed defense counsel. The indictment filed by the Zhaoqing Municipal People’s Procuratorate alleges that, from 2001 to 2016, while serving as Deputy Secretary-General of the Dongguan Municipal Party Committee, Executive Deputy Director of the Songshan Lake Management Committee, Party Secretary of Guancheng Subdistrict in Dongguan, Party Secretary of Dalang Town, and Member of the Standing Committee and Secretary-General of the Dongguan Municipal Party Committee, the defendant Wang Jianyang took advantage of his official position to seek benefits for others, solicited and illegally accepted property from others in an especially large amount, and should therefore be held criminally liable for the crime of accepting bribes in accordance with the law.
Other
Ninety percent of AI companies are operating at a loss: Artificial intelligence is grappling with the challenges of commercial deployment.
From June 13 to 15, the 2018 Global Smart+ New Business Summit was held in Shanghai. Concurrently, as a key component of the World Artificial Intelligence Conference, the World Artificial Intelligence Innovation Competition was officially launched at the summit.
At the summit, Huang Yuanpu, founder of EIO Group, unveiled the “2018 China Artificial Intelligence Commercialization Report,” noting that over the past year, industry expectations for AI have been sky-high, with a steady stream of applications emerging—yet tangible results have remained scarce. In 2017, Chinese AI startups raised more than RMB 50 billion in cumulative funding; however, the top 100 AI companies in terms of commercial deployment generated less than RMB 10 billion in revenue, and over 90% of AI offices reported losses. The AI sector has made a lot of noise but delivered little substance, and the growing pains of commercial implementation have become a widely shared consensus within the industry.

Ministry of Finance: As of the end of May, the outstanding balance of local government debt nationwide stood at RMB 16.6 trillion.
The Ministry of Finance’s website yesterday released data on the issuance and outstanding balance of local government bonds for May 2018. In May 2018, local governments nationwide issued a total of RMB 355.3 billion in bonds, including RMB 236.6 billion in general bonds and RMB 118.7 billion in special-purpose bonds. By purpose, new bonds amounted to RMB 17.1 billion, while refinancing or swap bonds—used to repay the principal of maturing local government bonds—totaled RMB 338.2 billion.
From January to May, local government bonds issued nationwide totaled RMB 876.6 billion. Of this amount, general bonds accounted for RMB 600.2 billion and special-purpose bonds for RMB 276.4 billion. By purpose, newly issued bonds amounted to RMB 17.1 billion, while bond swaps or refinancing bonds totaled RMB 859.5 billion.
From January to May 2018, the average maturity of local government bonds was 5.8 years, with general bonds at 5.7 years and special-purpose bonds at 5.9 years; the average issuance yield stood at 3.97%, comprising 3.96% for general bonds and 4.01% for special-purpose bonds. With regard to the nationwide outstanding balance of local government debt, as approved at the First Session of the 13th National People’s Congress, the national ceiling for local government debt in 2018 was set at RMB 20,997.43 billion, including a general‑debt ceiling of RMB 12,378.92 billion and a special‑purpose‑debt ceiling of RMB 8,618.51 billion.
As of the end of May 2018, the outstanding balance of local government debt nationwide stood at RMB 16.6272 trillion, remaining within the ceiling approved by the National People’s Congress. This comprised RMB 10.4526 trillion in general-purpose debt and RMB 6.1746 trillion in special-purpose debt; government bonds accounted for RMB 15.6038 trillion, while non‑bond‑based outstanding government liabilities totaled RMB 102.34 billion. As of the end of May 2018, the average remaining maturity of local government bonds was 4.5 years—4.4 years for general‑purpose bonds and 4.7 years for special‑purpose bonds—and the average interest rate was 3.42%, with 3.42% for general‑purpose bonds and 3.41% for special‑purpose bonds.

JC Master Law Office
Address: 9th Floor, National Water Resources Building, No. 70 Qingjiang South Road, Nanjing City
Postal Code: 210036
Phone: 025-84503333
Fax: 025-84505533
Website: www.jcmaster.com
This legal notice is provided solely for informational purposes and does not constitute legal advice or a legal analysis of any specific case. The transmission of this legal notice does not establish an attorney–client relationship between JC Master Law Office and the user or viewer. JC Master Law Office assumes no responsibility for any third-party content accessible via the internet. If you do not wish to receive this legal notice, please notify us by email at jcm@jcmaster.com.
The copyright in this legal information is owned by JC Master Law Office ©. Without written permission, no organization or individual may reproduce, publish, or cite it in any form.