JC Master Legal News Issue 827

Key Takeaways for This Issue
Guiding Opinions of the CPC Central Committee and the State Council on Improving the Management of State-owned Financial Capital
The CPC Central Committee and the State Council recently issued the Guiding Opinions on Improving the Management of State‑Owned Financial Capital. The document sets out the overarching requirements, fundamental principles, and key objectives for enhancing the management of state‑owned financial capital, and lays out specific measures to refine the institutional framework, optimize governance mechanisms, and advance related work.

The China Securities Regulatory Commission has released information on the cases of market manipulation it investigated and prosecuted in the first half of the year.
To standardize the use of securities investment advisory services provided by Hong Kong institutions by mainland securities and fund management offices under the Stock Connect program and to safeguard investors’ legitimate rights and interests, the China Securities Regulatory Commission has officially promulgated the Provisional Regulations on the Use of Securities Investment Advisory Services Provided by Hong Kong Institutions by Securities and Fund Management Offices, which shall take effect as of July 1, 2018.

The China Securities Regulatory Commission has issued the revised Rules of Procedure for the M&A and Restructuring Committee.
Recently, the China Securities Regulatory Commission amended the “Work Rules of the Review Committee for Mergers and Reorganizations of Listed Companies of the China Securities Regulatory Commission,” which took effect upon its promulgation.

Shenzhen Stock Exchange: Supports eligible listed companies and their major shareholders in repurchasing and increasing their shareholdings in accordance with the law and regulatory requirements.
Since the beginning of this year, numerous listed companies on the Shenzhen Stock Exchange have issued announcements related to share buybacks and increased holdings by major shareholders. According to preliminary statistics, since June, a total of 41 listed companies on the Shenzhen market have disclosed plans to repurchase shares, with a combined planned repurchase amount of RMB 14.1 billion. Over the past week, 61 listed companies on the Shenzhen market carried out share buybacks, totaling RMB 4.1 billion, with an average repurchase amount of approximately RMB 67 million per company.

Fifteen municipal-level new tax authorities in Jiangsu Province have been officially inaugurated.
On the morning of July 6, all 13 cities in Jiangsu Province held simultaneous unveiling ceremonies. The revamped “Jiangsu Provincial Online Tax Service Platform” has gone live, enabling taxpayers to log in through a unified channel and interface and complete related services in a single step.

Table of Contents
Table of Contents

Finance & Capital Markets
Guiding Opinions of the CPC Central Committee and the State Council on Improving the Management of State-owned Financial Capital
The China Securities Regulatory Commission has released information on the cases of market manipulation it investigated and prosecuted in the first half of the year.
The China Securities Regulatory Commission has issued the revised Rules of Procedure for the M&A and Restructuring Committee.
Shenzhen Stock Exchange: Supports eligible listed companies and their major shareholders in repurchasing and increasing their shareholdings in accordance with the law and regulatory requirements.
Mid-Year Review of M&A and Restructuring Activities Among Shenzhen Stock Exchange–Listed Companies in 2018

Corporate & Commercial
The China Securities Regulatory Commission has issued its first penalty for fraudulent bond issuance, imposing administrative sanctions and market bans on Wuyang Construction and other entities.
The China Securities Regulatory Commission has imposed administrative penalties in four cases, cracking down hard on private‑fund “rat trading.”
IPO Surge Coexists with Price Drops: The Truth Behind Unicorn Listings on the Hong Kong Stock Exchange—Is Funding Running Low?
Signs of a tightening shantytown redevelopment policy: the “de-stocking” target has been met, raising concerns about hidden debt.
In four days, 12 listed companies have announced share buyback plans, involving a total of RMB 7.6 billion.

Taxation
Fifteen municipal-level new tax authorities in Jiangsu Province have been officially inaugurated.
Jiangsu: Tax Authority Reform Continues to Advance

Litigation & Arbitration
The official website of the International Commercial Court of the Supreme People’s Court has officially gone live.
The Central Supervision Group No. 1 for the nationwide special campaign against organized crime and evil forces has arrived in Hebei Province.

Other
Ministry of Commerce: China’s service trade imports and exports rose 12% year-on-year in the first five months.
The National Development and Reform Commission has issued Opinions on Innovating and Improving the Price Mechanism for Promoting Green Development.
Finance & Capital Markets
Guiding Opinions of the CPC Central Committee and the State Council on Improving the Management of State-owned Financial Capital
On July 8, it was reported that the CPC Central Committee and the State Council recently issued guiding opinions on improving the management of state-owned financial capital.
The Opinions state that state‑owned financial capital is a vital safeguard for advancing national modernization and ensuring national financial security, as well as an important material and political foundation for the development of our Party and country. State‑owned financial institutions serve as key pillars in supporting the real economy, preventing and controlling financial risks, and deepening financial reform, and they play a crucial role in fostering a sound and sustainable cycle between the economy and the financial sector. At present, the management of state‑owned financial capital still faces such challenges as fragmented responsibilities, unclear rights and obligations, ambiguous delegation of authority, suboptimal allocation, low efficiency in resource deployment, and insufficient legal and institutional frameworks. These issues call for further improvements to the institutional mechanisms governing state‑owned financial capital and for the optimization of its governance systems.
The “Opinions” set forth the overarching requirements, fundamental principles, and principal objectives for improving the management of state‑owned financial capital. The main goals are to establish a robust institutional framework—comprising the “four pillars and eight beams”—for managing state‑owned financial capital; optimize the strategic allocation of such capital; streamline the governance system; enhance the vitality and control of state‑owned financial institutions; and ensure the preservation and appreciation of state‑owned financial capital, thereby better fulfilling the three core missions of serving the real economy, preventing and controlling financial risks, and deepening financial reform. In addition, the aim is to further strengthen the legal and regulatory framework for managing state‑owned financial capital, achieve a more rational capital allocation, refine capital management practices, and reinforce Party building within state‑owned financial institutions.
The Opinions also set forth specific requirements for improving the management system of state‑owned financial capital, optimizing the institutional framework for managing state‑owned financial capital, promoting the sustained and sound operations of state‑owned financial institutions, strengthening the Party’s leadership over these institutions, and coordinating efforts to reinforce implementation.

The China Securities Regulatory Commission has released information on the cases of market manipulation it investigated and prosecuted in the first half of the year.
Manipulating the market to create false supply-and-demand conditions, undermining the market’s price‑discovery function, and misleading investors’ decision‑making can easily trigger systemic risks, making such practices a longstanding priority for regulatory enforcement. Since the beginning of this year, the CSRC’s inspection authorities, in line with the policy of comprehensive, stringent, and law‑based regulation, have adhered to the enforcement principles of “precise case initiation, precise investigation and prosecution, and precise crackdown,” targeting a wide range of market‑manipulation activities that erode the foundations of market operations, accumulate significant systemic risks, and draw strong public concern, thereby maintaining a sustained high‑pressure enforcement stance. In the first half of the year, the Commission initiated investigations into 40 market‑manipulation cases, accounting for 15% of all newly filed cases during the same period; it concluded 17 cases, representing 42% of the new market‑manipulation cases filed in that timeframe; and it substantiated 14 cases, achieving an 82% case‑closure rate.
In the first half of the year, market manipulation primarily manifested in the following ways: First, insiders of listed companies engaged in misleading statements and fabricated false information, constituting suspected information manipulation. Some colluded with external entities to control the timing of disclosures such as “high‑ratio stock dividends and share transfers” or “pre‑announced earnings growth,” or deliberately employed misleading rhetoric to shape investor expectations, thereby orchestrating coordinated market manipulation under the guise of “market capitalization management.” Second, individuals involved illegally pooled massive sums of capital, abused leveraged trading, and employed a variety of tactics—including false order submissions and continuous trading—to manipulate stock prices, luring the market into following suit and triggering sharp price swings that accumulated substantial risks. Third, so‑called “black mouths” in the market abused their social influence to publicly issue evaluations, forecasts, or investment recommendations on securities or related listed companies; they would buy heavily before recommending stocks and secretly sell afterward to reap illicit profits. Some unlawful actors even conducted “one‑on‑one” stock‑picking via QQ groups or WeChat groups, inducing investors to trade in the same direction around the same time to create artificial price and volume volatility in target securities, profiting from their preemptive buying and selling. Fourth, cases of cross‑border market manipulation leveraging the mutual market access mechanisms continued to occur. Following the 2016 investigation into Tang Hanbo’s use of the Shanghai–Hong Kong Stock Connect to manipulate the market, this year’s first half saw another case involving private‑fund professionals who opened Shanghai‑Hong Kong Stock Connect accounts in Hong Kong to accumulate shares, then carried out manipulative activities on the mainland to cash in on their overseas holdings.
These cases exhibit the following characteristics: First, short‑term manipulation is increasingly prevalent. Traditional long‑term manipulation cases have declined, with short‑term trading now dominating. Some perpetrators place false orders before the market opens to create a concentrated buying pressure, lure others into participating, and then cancel their orders; others engage in wash trades or rapidly drive up stock prices during the session before selling back to lock in profits. Second, the sums involved are substantial. In the first half of the year, the average transaction value in substantiated cases approached RMB 3.2 billion, with average illicit gains exceeding RMB 52.7 million. Many participants raise trading capital through private margin financing, private equity trusts, and other channels, and more than 70% of market‑manipulation cases employ leveraged funds. Third, the motives for illegal conduct are diverse. Some manipulators do not seek profits directly from secondary‑market transactions; instead, they exploit the interdependencies among prices of related financial products and across different markets, manipulating prices to influence the net asset values of associated funds and trust products, thereby capturing excess returns across markets. Fourth, the perpetrators are increasingly organized. The scale and sophistication of manipulative groups have persisted since last year: in the first half of the year, seven cases involved corporate entities or multiple individuals acting in concert, accounting for 50% of all such cases. Some groups assemble family members and fellow townsmen into well‑structured trading teams that operate remotely via online communication to execute orders; others rent dedicated premises, deploying hundreds of computers to monitor markets and place trades, with clearly defined roles—account management, margin‑financing introductions, stock selection, and operational coordination—all handled by distinct personnel, sometimes even resembling an assembly line.
Going forward, the China Securities Regulatory Commission will officely uphold the political nature of inspection and enforcement, resolutely implement the CPC Central Committee and the State Council’s decisions and arrangements on capital market regulation and law enforcement, closely align with the overarching requirements of the battle to prevent and defuse financial risks, maintain close vigilance over market developments, scrutinize abnormal trading activities, and monitor linked account behavior. The Commission will further intensify its inspection and enforcement efforts, decisively crack down on market manipulation in all periods, across all sectors, and in all forms, and steadfastly safeguard the healthy and stable development of the capital market.

The China Securities Regulatory Commission has issued the revised Rules of Procedure for the M&A and Restructuring Committee.
Recently, the China Securities Regulatory Commission amended the “Work Rules of the Review Committee for Mergers and Acquisitions and Restructuring of Listed Companies of the China Securities Regulatory Commission” (hereinafter referred to as the “M&A and Restructuring Review Committee Work Rules”), which shall take effect from the date of its promulgation.

In recent years, the China Securities Regulatory Commission (CSRC), guided by the principles of “openness, transparency, and efficiency,” has continuously strengthened the institutional framework of the M&A and Restructuring Review Committee, enhanced oversight and checks on committee members’ performance of duties, and effectively placed power within an institutional framework. To date, the Committee has operated smoothly and in an orderly manner, with members fulfilling their responsibilities diligently and review processes conducted in a transparent and efficient manner, thereby playing a positive role in safeguarding the expert‑review function, enhancing the independence of reviews, and bolstering the credibility of the review process. However, as the external environment evolves, the Committee’s institutional framework also requires further refinement. Accordingly, in light of recent developments in the Committee’s review work and the challenges it faces, the CSRC has undertaken additional revisions to the “Rules of Procedure for the M&A and Restructuring Review Committee,” improving the selection and appointment mechanism, moderately expanding the Committee’s size, optimizing its membership composition, and strengthening oversight of members’履职, so as to effectively mitigate integrity risks and promote clean and impartial review practices.
This revision of the “Work Rules of the M&A and Restructuring Committee” primarily covers eight areas:
First, the principle of safeguarding investors’ legitimate rights and interests is reinforced. Building on efforts to enhance the quality and transparency of review processes, the emphasis on protecting investors’ lawful rights and interests is further strengthened, with such protection integrated throughout the entire review procedure. Second, the mechanism for selecting and appointing committee members is optimized. The selection system is continuously refined, and a Nomination Committee for the M&A and Restructuring Review Committee has been established to recruit its members in accordance with the principles of openness, fairness, and impartiality. Third, a dedicated oversight mechanism has been put in place. To further strengthen supervision and checks and balances, the China Securities Regulatory Commission has set up an Issuance and M&A/Restructuring Review Oversight Committee to conduct independent oversight of the Review Committee’s work. Fourth, the size of the Committee is appropriately expanded. To meet review demands and ensure the smooth and orderly conduct of review activities, the total number of members has been increased from 35 to 40, with no more than 11 internal members. Fifth, the term of office for committee members is shortened. To strengthen management and establish a sound rotation mechanism, the term of each member is reduced from two years to one year, with a maximum of two consecutive terms. Sixth, the qualifications for serving as a committee member are improved. Standards for selecting and appointing members have been raised; in addition to existing requirements regarding integrity, professional competence, and compliance with laws and regulations, candidates are now expected to possess high political awareness, theoretical grounding, and strong moral character. Seventh, recusal provisions have been refined. In recent years, to prevent conflicts of interest, in addition to adhering to existing recusal rules, any committee member whose employer holds securities or shares related to the subject matter of an M&A or restructuring application must strictly recuse themselves. Eighth, the responsibilities of committee members’ employing organizations are strengthened. If a member of the M&A and Restructuring Review Committee is dismissed for violations of laws or regulations, their employer will be barred from nominating another candidate to the Committee for five years. Furthermore, if a committee member is an employee of a state organ or public institution, their employer will be notified, and appropriate disciplinary measures will be imposed by that employer.
Following the promulgation and implementation of the new “Rules of Procedure for the M&A and Restructuring Committee,” the China Securities Regulatory Commission will commence the selection process for members of the next term of the committee. The sixth-term M&A and Restructuring Committee will remain in office until the newly elected committee is established.

Shenzhen Stock Exchange: Supports eligible listed companies and their major shareholders in repurchasing and increasing their shareholdings in accordance with the law and regulatory requirements.
Since the beginning of this year, numerous listed companies on the Shenzhen Stock Exchange have issued announcements related to share buybacks and increased holdings by major shareholders. According to preliminary statistics, since June, a total of 41 Shenzhen‑listed companies have disclosed plans to repurchase shares, with a combined planned repurchase value of RMB 14.1 billion. Over the past week, 61 Shenzhen‑listed companies carried out share buybacks, totaling RMB 4.1 billion, with an average buyback amount of approximately RMB 67 million per company. Year-to-date, 270 Shenzhen‑listed companies have undertaken share repurchases, amounting to RMB 10.4 billion, or an average of about RMB 39 million per company. Meanwhile, as of July 5, 274 Shenzhen‑listed companies had announced 430 instances of increased holdings by major shareholders and directors, supervisors, and senior executives, with cumulative pledged增持 amounts reaching RMB 44.8 billion. In the most recent week, major shareholders of 26 Shenzhen‑listed companies increased their stakes, with an average增持 amount exceeding RMB 30 million. Year-to-date, the total actual增持 by major shareholders of Shenzhen‑listed companies stands at RMB 16.7 billion.
According to the information disclosed by listed companies, Midea Group, driven by confidence in the company’s development and recognition of its intrinsic value, has decided to repurchase up to RMB 4 billion of its own shares using internal funds. Qidi Sande, China Railway Shares, and Oriental Rainbow have each announced plans to repurchase shares worth no more than RMB 1 billion. Meanwhile, Wanxiang Group, the controlling shareholder of Wanxiang Qianchao, together with its concerted actors, citing their belief in the company’s long-term investment prospects and confidence in its sustained, stable future growth, have cumulatively increased their holdings by 4.98% of the company’s total share capital, with the total purchase amount reaching RMB 1.4 billion.
Share buybacks by listed companies and share increases by major shareholders demonstrate their strong confidence in the company’s operating performance, profitability, and future prospects. These actions help bolster investor sentiment, stabilize market expectations, and contribute positively to the healthy development of the capital market. The Shenzhen Stock Exchange supports eligible listed companies, as well as their major shareholders, directors, supervisors, and senior management, in conducting share repurchases and additional share purchases in compliance with applicable laws and regulations, thereby strengthening market confidence and safeguarding the legitimate rights and interests of investors.
At present, China’s economy remains on a solid footing. Listed companies on the Shenzhen Stock Exchange have posted steady earnings growth, and their transformation and upgrading efforts have yielded positive results. Judging from both corporate performance and valuation levels, the market is well positioned to operate steadily. Going forward, the Shenzhen Stock Exchange will earnestly assume its frontline regulatory responsibilities, further strengthen dynamic market monitoring and analysis, resolutely fight the tough battle of preventing and defusing major risks, and promote the healthy and stable development of the capital market.

Mid-Year Review of M&A and Restructuring Activities Among Shenzhen Stock Exchange Listed Companies in 2018
As comprehensive, stringent, and law-based regulation continues to deepen, market irregularities in the M&A and restructuring sector have been brought under control, market order has been effectively standardized, and the platform’s role in optimizing resource allocation has been fully realized, underscoring the capital market’s critical function in supporting national strategic priorities and the real economy. The Shenzhen Stock Exchange’s M&A and restructuring market, with a focus on serving the real economy, has prioritized fostering new growth drivers, promoting industrial transformation and upgrading, advancing state‑owned enterprise reform, and supporting the Belt and Road Initiative, thereby demonstrating a robust overall performance.
In the first half of 2018, M&A and restructuring activities among Shenzhen‑listed companies maintained a strong momentum, with marked improvements in quality and efficiency and a more balanced mix of deal types. As of June 30, a total of 206 instances of trading suspensions were recorded among Shenzhen‑listed offices as they planned major asset restructurings—significantly fewer than in the same periods of 2015 and 2016. Some companies advanced their restructuring in accordance with the principle of phased disclosure, without seeking stock suspension. A total of 82 major restructuring plans were disclosed, involving transaction values of RMB 248.3 billion—roughly on par with the same period last year. The average size of each deal was approximately RMB 3 billion, up 22% from the prior year. Although the overall number of restructurings did not increase markedly, both the quality and structure of these transactions showed substantial improvement compared with previous periods. At the same time, a number of landmark cases emerged—characterized by clear industry logic, value orientation, and exemplary reform dynamics—largely reflecting the shifts underway in China’s economy toward higher quality, greater efficiency, and stronger growth drivers.
In recent years, a new wave of technological and industrial revolution—led by information technology—has been gaining momentum, giving rise to an increasing number of innovative enterprises that embody cutting-edge technologies, emerging industries, novel business models, and new forms of economic activity. Listed companies on the Shenzhen Stock Exchange have actively embraced the new economy. In the first half of 2018, nearly one-third of M&A targets in the Shenzhen market were in sectors such as the internet, big data, cloud computing, artificial intelligence, software and integrated circuits, high-end equipment manufacturing, and biopharmaceuticals, with total transaction value reaching approximately RMB 41.5 billion—a substantial year-on-year increase. For example, Harbin Institute of Technology Intelligent Equipment Co., Ltd. acquired an automotive welding‑automation equipment provider, thereby strengthening its technological capabilities and talent pool in the high‑end intelligent equipment space and enhancing its flexible production capacity for multiple vehicle models on the same assembly line.
In recent years, the adverse consequences of “three-high” restructurings and copycat M&A deals have become increasingly apparent, with instances of acquired assets slipping out of control occurring with growing frequency. In the first half of 2018, the quality of the M&A market continued to improve: among the 84 disclosed transactions, 48 were industry-chain‑driven integrations, signaling that sector‑focused industrial M&A is gradually becoming the dominant trend. Meanwhile, the premium multiples applied in valuations for M&A targets of companies listed on the Shenzhen Stock Exchange’s Main Board, SME Board, and ChiNext have all declined by roughly 30% compared with the same period last year, indicating that M&A valuations are moving toward a more balanced and normalized level. For example, Aerospace Development acquired three providers of information security and big‑data technology services, strengthening its footprint in the information security segment and enhancing its capabilities in building advanced equipment‑based information systems; Longping High‑Tech purchased a company specializing in hybrid corn seed R&D, extending its presence in China’s corn seed industry and achieving strategic synergies. Amid the wave of a new round of technological revolution and industrial transformation, listed companies are intensifying upstream and downstream restructuring and M&A activities, driving their expansion into higher‑end value chains and facilitating transformation and upgrading, thereby striving to build competitive advantages across the entire industrial chain.
In 2018, the deepening reform of state-owned enterprises accelerated from “design” to “implementation.” In the first half of the year, Shenzhen‑listed companies with state‑controlled shareholdings completed 22 M&A and restructuring deals, totaling RMB 95.6 billion—accounting for 38% of the total transaction value in the Shenzhen market. Compared with private offices, SOE‑led M&A transactions tend to be fewer in number but larger in scale. There has been a steady emergence of asset injections into listed companies characterized by large state‑owned enterprises and smaller platform‑type entities. For example, China Merchants Group injected high‑quality port assets into Shenzhen Chiwan, consolidating its port‑related holdings within the group and establishing an arrangement whereby its domestic listing platform controls its overseas listing entity. This move addressed structural imbalances between onshore and offshore capital platforms and advanced supply‑side structural reform at the Port of Shenzhen. Similarly, COFCO Group injected fuel ethanol, starch, and corn‑deep‑processing R&D businesses into COFCO Bio, transforming it into the group’s sole integrated corn‑deep‑processing company that combines research and production, thereby enhancing operational efficiency.
In addition to asset injections from the parent group, some state-owned enterprises have issued shares to private entities in exchange for assets, thereby enhancing profitability while attracting private capital and boosting corporate dynamism. For example, Fengle Seed Industry acquired equity stakes in a corn‑seed company held by 34 individual investors, expanding its market share in the Southwest region and achieving resource sharing and complementary strengths within the seed industry. As state‑owned enterprise reform continues to deepen, mergers and acquisitions will serve as a central pillar of this reform process, with an increasing number of restructuring and integration cases emerging—ranging from strategic alliances between leading offices and mixed‑ownership investments to internal reorganizations.
In the first half of 2018, 15 listed companies on the Shenzhen Stock Exchange undertook restructuring plans involving asset disposals, spanning sectors such as chemicals, minerals, manufacturing, real estate, and retail. By shutting down, consolidating, or divesting loss-making assets, these offices optimized the allocation of production factors and took substantive steps toward clearing excess capacity. For example, International Medical spun off its department-store retail business to focus on developing the healthcare services sector, concentrating high‑quality resources to enhance the competitiveness of its medical services. In addition, some companies simultaneously sold assets while acquiring new ones, effectively “replacing old birds with new ones” to achieve leapfrog growth. A case in point is Zhongyuan Special Steel, which divested its long‑loss‑making industrial‑specialized equipment and high‑grade special steel billet businesses, while acquiring 100% equity in COFCO Capital—a group whose operations span trust, futures, insurance, banking, and other financial services—thereby transforming into an investment holding platform with a distinctive focus on agricultural finance.
More than 450 Shenzhen‑listed companies operate in countries along the Belt and Road. Over the past five years, their cumulative investment in Belt and Road regions has reached RMB 70.6 billion, while M&A deal value has totaled RMB 48.4 billion, signaling the growing leadership and spillover effects of the Belt and Road Initiative. In the last two years, M&A activity involving traditional sectors such as real estate has gradually declined, while acquisitions of technology‑ and service‑oriented enterprises have risen markedly. For example, in the first half of 2018, Hangxin Technology acquired MMRO, an Estonian provider of aircraft maintenance support solutions, in a cash transaction, thereby strengthening its footprint in aviation maintenance, expanding its service scope, market reach, and customer base. Meanwhile, Core International acquired Investigo, a UK‑based human resources services office, using this acquisition as a strategic foothold to aggressively expand into the UK and broader European markets, with the aim of building a global HR service ecosystem for China’s human capital.
A relevant official from the Shenzhen Stock Exchange stated that, going forward, under the unified leadership of the China Securities Regulatory Commission, the Exchange will continue to earnestly fulfill its frontline regulatory duties, proactively assume responsibility, and actively promote M&A and restructuring activities among listed companies across five key areas: first, optimizing the suspension regime for restructuring to curb arbitrary, indiscriminate, and prolonged suspensions while strengthening oversight of abnormal stock price movements; second, tightening regulation of performance‑guarantee commitments to impose stricter constraints on M&A and restructuring transactions; third, fully leveraging market mechanisms to advance the market‑oriented reform of M&A and restructuring; fourth, urging intermediary institutions to exercise due diligence and effectively serve as gatekeepers; and fifth, enhancing information disclosure in restructuring matters to safeguard investors’ right to know.

Commercial & Corporate
The China Securities Regulatory Commission has issued its first penalty for fraudulent bond issuance, imposing administrative sanctions and market bans on Wuyang Construction and other entities.
Recently, the China Securities Regulatory Commission has concluded the hearing and review procedures in the case involving Wuyang Construction Group Co., Ltd. (hereinafter referred to as Wuyang Construction) for alleged fraudulent issuance of corporate bonds and violations of information disclosure requirements, and has imposed administrative penalties and market‑entry bans on Wuyang Construction and 20 individuals held accountable.
Despite the fact that Wuyang Construction’s average distributable profits over the most recent three years were clearly insufficient to cover even one year’s interest on its outstanding corporate bonds, and thus it did not meet the conditions for a public offering of such bonds, it nonetheless violated accounting standards by offsetting accounts receivable and accounts payable arising from construction projects. This practice resulted in an artificial reduction of both receivables and payables, leading to an understatement of provisions for bad debts. In July 2015, Wuyang Construction fraudulently obtained approval from the China Securities Regulatory Commission for the public issuance of corporate bonds by submitting false application materials. Subsequently, in August 2015 and again in August 2015, it issued corporate bonds totaling RMB 1.36 billion in two tranches—RMB 800 million and RMB 560 million—to qualified investors.
After fraudulently obtaining a public offering of corporate bonds, Wuyang Construction, in November 2015, again prepared a prospectus for a private placement of corporate bonds based on the same false financial data and disclosed it to qualified investors. In December 2015 and April 2016, it privately placed corporate bonds totaling RMB 130 million and RMB 250 million, respectively, on the Shanghai Stock Exchange and the Shenzhen Stock Exchange. Furthermore, Wuyang Construction engaged in other unlawful acts, including failing to disclose relevant information in a timely manner as required by law.
Through financial manipulation that artificially embellished its financial statements, Wuyang Construction misrepresented the company as a high‑quality asset, prepared false application materials to fraudulently obtain approval for the issuance of public bonds, and engaged in unlawful conduct—including disclosing false information to investors during the private placement of bonds and failing to disclose information as required. The amounts involved are substantial, the methods employed were egregious, and the resulting failure to redeem the issued bonds has had grave consequences. Our Commission has decided to order Wuyang Construction to make corrections, issue a warning, and impose a fine of RMB 41.4 million; to issue warnings to the relevant persons held accountable and levy aggregate fines totaling RMB 2.54 million; and to impose a lifetime ban from the securities market on Chen Zhizhang, the directly responsible senior manager. Where any of the aforementioned entities are suspected of criminal offenses, our Commission will, in accordance with the law, refer the matter to the public security authorities for criminal prosecution. Any securities service institutions that provided intermediary services to Wuyang Construction in connection with these unlawful acts, if found to have engaged in violations, will be subject to strict legal sanctions upon verification.
The exchange‑traded bond market provides a convenient channel for corporate direct financing and helps reduce companies’ funding costs. The Commission will continue to uphold the principle of prudent regulation and promote the sound development of the exchange‑traded bond market. It is important to reiterate that any enterprise seeking financing through the exchange‑traded bond market must respect the law, operate in compliance with legal requirements, and act with integrity; it must not disrupt the orderly functioning of the bond market or arbitrarily infringe upon the rights and interests of bondholders. Issuers engaging in fraudulent issuance, false disclosures, or other malicious acts that deceive investors will be severely punished under the law. The CSRC will remain committed to the principles of law‑based, comprehensive, and stringent regulation, adopting a zero‑tolerance stance toward serious violations—such as fraudulent issuance—that undermine the very foundations of the capital market. We will take decisive enforcement actions, investigating and prosecuting every case without exception, showing no leniency, and ensuring that the capital market remains open, fair, and just, while officely safeguarding against systemic financial risks.

The China Securities Regulatory Commission has imposed administrative penalties in four cases, cracking down hard on private‑fund “rat trading.”
Recently, the China Securities Regulatory Commission (CSRC) imposed administrative penalties in accordance with the law on Liu Xiaodong and others for trading based on non‑public information, ordering Liu Xiaodong, Yang Wei, and Li Rubo to make corrections. Specifically, Liu Xiaodong was fined RMB 700,000, Yang Wei RMB 200,000, and Li Rubo RMB 100,000. Meanwhile, the Shanghai Securities Regulatory Bureau, acting under the law, issued an administrative penalty against securities practitioner Zhong Jiasun for privately accepting clients’ instructions to buy or sell securities, requiring him to rectify his conduct, issuing a warning, confiscating illegal gains of approximately RMB 30,000, and imposing a fine of RMB 100,000. The Shenzhen Securities Regulatory Bureau likewise imposed an administrative penalty on securities practitioner Xie Min for illegally trading stocks, mandating that Xie Min dispose of the illegally held shares in accordance with the law, confiscating illegal gains of about RMB 136,000, and levying a fine of RMB 300,000. In addition, the Anhui Securities Regulatory Bureau, pursuant to the law, sanctioned securities practitioner Du Yi for privately accepting clients’ instructions to trade securities and for using another person’s account to engage in stock transactions, ordering Du Yi to correct his practice of accepting client instructions and issuing a warning, along with a fine of RMB 100,000; for his use of another person’s account to trade stocks, Du Yi was fined RMB 60,000. (Detailed administrative penalty decisions are available on the websites of the CSRC and the relevant local securities regulatory bureaus.)

In the aforementioned private‑fund “rat trading” case, Liu Xiaodong, the de facto controller of Shenzhen Fande Fund Management Co., Ltd. (hereinafter “Fande Fund”), together with investment manager Yang Wei and trader Li Rubai, exploited non‑public information obtained through their official positions to trade stocks and engage in related trading activities. Such conduct violated Article 123, Paragraph 1 of the Securities Investment Fund Law of the People’s Republic of China (hereinafter “the Securities Investment Fund Law”) and Item (5) of Article 23 of the Interim Measures for the Supervision and Administration of Private Investment Funds (hereinafter “the Private Fund Measures”) (CSRC Order No. 105). Accordingly, our Commission imposed administrative penalties pursuant to Article 123, Paragraph 1 of the Securities Investment Fund Law. In recent years, as the private‑fund industry has expanded rapidly, the number of “rat trading” cases involving private funds has steadily increased. This misconduct breaches the fiduciary duties of fund managers and is more concealed than that of public funds. Effectively combating and curbing such illegal behavior has thus become a key focus of the CSRC’s enforcement efforts. Current laws and regulations clearly set out the regulatory framework for “rat trading” by private funds. Under Article 2 of the Securities Investment Fund Law, the law applies equally to both public and private funds. Moreover, in accordance with the authorization granted by Article 31 of the Securities Investment Fund Law, the Private Fund Measures, in Article 23, Item (5), expressly prohibit private fund managers and their practitioners from using non‑public information to engage in related trading activities. Furthermore, Article 40 stipulates that if a private securities fund manager or its practitioners violate the relevant provisions of the Securities Investment Fund Law, they shall be subject to penalties under that same law. The sanctions prescribed in Article 123 of the Securities Investment Fund Law apply equally to both public and private fund managers and their practitioners.
The China Securities Regulatory Commission will continue to uphold the principles of law-based, comprehensive, and stringent regulation, and will rigorously crack down on “rat trading” violations—whether committed by public‑offering funds or private‑offering funds—in accordance with the aforementioned provisions.

IPO Surge Coexists with Price Drops: The Truth Behind Unicorn Listings on the Hong Kong Stock Exchange—Is Funding Running Low?
The concentrated wave of new‑economy companies listing in Hong Kong became a hallmark of 2018, with unicorns such as Xiaomi and Meituan, along with Didi—which is reportedly set to list in the second half of the year—drawing intense market attention to the Hong Kong stock exchange. According to PwC’s latest report released on July 3, an estimated 220 companies are expected to list in Hong Kong throughout 2018, raising a total of HK$200 billion to HK$250 billion, positioning Hong Kong once again as the world’s largest IPO market.
The Hong Kong Stock Exchange’s reform to introduce a “dual-class share” structure has prompted internet unicorns to vie for an early advantage in capitalizing on the policy boost. Amid this trend, Xiaomi is taking on a pilot role; its performance following its July 9 IPO will likely shape Chinese new‑economy companies’ choices of listing venues, and market participants are closely watching how things unfold. In addition, our reporter has learned that, as the country pursues deleveraging, the primary‑market ecosystem as a whole is facing challenges in securing funding. “Most RMB‑denominated venture funds rely on strategic investors, fund‑of‑funds, and government‑guided funds for their capital. If there’s a liquidity crunch at the source, it will naturally ripple through downstream investment offices,” said an industry veteran with more than a decade of experience. While the impact of such liquidity constraints has yet to reach the better‑known funds, smaller or lesser‑known funds may feel it more acutely.
On April 24, the Hong Kong Stock Exchange officially unveiled the “Listing Regime for Emerging and Innovative Companies,” which took effect on April 30.
Under the new IPO regulations, companies with dual-class share structures are permitted to list, provided that, when applying to list under a “one share, different voting rights” structure, the company’s minimum expected market capitalization must be no less than HK$40 billion. If the expected market cap falls short of HK$40 billion, the applicant must have reported revenue of at least HK$1 billion in its most recent fiscal year. Hong Kong stocks previously missed out on Alibaba due to the principle of “one share, one vote”; in the view of Dr. Ding Huiren, a seasoned financial analyst, Hong Kong now seeks to avoid losing these emerging unicorns.
“Dual-class share structures” are seen as a hallmark of Hong Kong’s open, flexible, and inclusive stock market. In practice, however, after many internet companies complete multiple rounds of financing, the founding teams’ equity stakes often become diluted, and under the “one share, one vote” principle, they may lose their decision‑making control. Historically, the HKEX’s adherence to this principle has prompted numerous unicorns to hit roadblocks and list on U.S. exchanges. With recent regulatory reforms, the question now is whether these companies will head to the U.S. or stay in Hong Kong. Capitalizing on favorable policies and seizing a first‑mover advantage have been cited by various respondents as key reasons why unicorns are flocking to list in Hong Kong.
It is worth noting that, as China’s internet sector has grown, some Chinese companies have begun to rival their U.S. counterparts, while others have developed business models uniquely tailored to the domestic market. However, from the perspective of U.S. investors—who evaluate companies through the lens of U.S.-based benchmarks—such simplistic comparisons can lead to misunderstandings about Chinese offices’ business models and even to underestimation of their potential. Several interviewees pointed out that the Hong Kong market tends to assess company value more readily by aligning it with market demand and consumer sentiment, making valuations there potentially clearer and more accurate than in the U.S. market.
According to reports, the introduction of the new asset‑management regulations has restricted banks’ access to wealth‑management funds and imposed limitations on certain conduit‑type business lines—key sources of capital for market‑oriented fund‑of‑funds.

Signs of a tightening shantytown redevelopment policy: the “de-stocking” target has been met, raising concerns about hidden debt.
Data released by the People’s Bank of China on July 2 show that in June, the central bank provided a net PSL injection of RMB 60.5 billion to the three policy banks—the China Development Bank, the Export-Import Bank of China, and the Agricultural Development Bank of China. This was nearly RMB 20 billion less than the amount disbursed in May. The pledged supplementary lending (PSL) is the primary source of funding for the monetized resettlement component of shantytown redevelopment. “Shantytown redevelopment,” or “shangai qu gai zao,” refers to the renovation of dilapidated urban areas characterized by makeshift housing and temporary sheds. According to the State Council’s 2013 “Opinions on Accelerating Shantytown Redevelopment,” such projects constitute major initiatives addressing both people’s livelihoods and economic development. Since 2008, shantytown redevelopment has been integrated into the national affordable housing program and has been implemented on a large scale across the country.
There are two main approaches to resettlement in urban renewal projects: monetary compensation and in-kind housing. In‑kind resettlement involves the government providing replacement housing to residents whose homes have been demolished, while monetary resettlement entails the government disbursing funds to eligible households so they can purchase their own homes. The primary providers of monetary resettlement funds are the China Development Bank, the Agricultural Development Bank of China, and certain commercial banks.
A policymaker told a reporter from the Economic Observer that the tightening of shantytown redevelopment policies stems from the leadership’s concerns about the hidden local government debt accumulated over years of such programs. In fact, whether through physical relocation or monetary compensation, the fiscal burden on local governments remains essentially the same. At present, agencies involved in shantytown redevelopment are examining the link between these projects and local government debt, with some even requesting the China Development Bank to provide data on spending for shantytown‑redevelopment initiatives over the past few years. “Right now, both central and local authorities are calling for deleveraging, but shantytown redevelopment cannot be halted, nor can it be addressed with a one‑size‑fits‑all approach. Previously, residents who were relocated under the program received cash compensation; if future residents are no longer offered this option, the public will surely be dissatisfied,” an official in charge of shantytown‑redevelopment projects at the local finance bureau told the reporter.
Since June 25, rumors that the China Development Bank has centralized approval authority for slum‑redevelopment contract signings at its head office—effectively halting the review of new projects at branch levels—have drawn widespread attention. According to reports, the bank’s tightening of slum‑redevelopment lending is only the beginning; other financial institutions are also expected to follow suit.
A branch president at the Agricultural Bank of China told reporters that, at present, slum‑redevelopment loans are typically included in the provincial government’s project database; projects not listed in that database are ineligible for commercial bank financing. The branch president added that, although its slum‑redevelopment lending falls short of that offered by the local China Development Bank, it nonetheless covers nearly all counties and districts in the city.
According to the website of the China Development Bank, in the first quarter of 2018, the bank disbursed 257.5 billion yuan in shantytown renovation loans. On April 16, 2018, the China Development Bank convened a first-quarter work conference in Beijing, stating that progress in destocking has been smooth. By tailoring policies to local conditions and issuing monetary‑based resettlement loans for shantytown redevelopment, the bank has both improved residents’ living conditions and helped reduce and revitalize real estate inventory.
Wen Laicheng, Executive Director of the China Finance–Pengyuan Local Government Investment and Financing Research Institute, has for years focused on studying local government debt. He argues that urban shantytown redevelopment generates hidden liabilities for local governments, and the tightening of such programs aligns with the government’s efforts to manage these off‑balance‑sheet obligations. Once the goal of reducing housing inventory has been achieved, a more cautious approach is entirely reasonable.

In four days, 12 listed companies have announced share buyback plans, involving a total of RMB 7.6 billion.
Recently, listed companies in the A-share market have been collectively disclosing share‑repurchase plans. According to data from Eastmoney.com, as of yesterday’s publication, during this week’s four trading days, 12 companies—including Midea Group, Guanghui Auto, and Suoling Shares—have announced repurchase proposals, with a combined maximum funding cap of RMB 7.6 billion.
Data show that, since June and as of the 5th, approximately 85 listed companies have disclosed share‑repurchase plans or updates on their buyback programs, with total funds committed exceeding RMB 10 billion. Year-to-date, some 320 listed offices have spent nearly RMB 13.5 billion on share repurchases, surpassing last year’s full‑year level; the number of companies engaging in buybacks is also approaching last year’s annual total.
Liu Zhe, President of Wanbo Brothers Asset Management, stated that major shareholders are typically the most familiar with the company’s core business, financial condition, and other operational matters. When a listed company repurchases its own shares, it not only demonstrates the major shareholders’ confidence in the company’s future prospects but also suggests, by implication, that the stock price may have diverged to some extent from the company’s intrinsic value, signaling potential oversold conditions in the market.
On July 5, Midea Group revised its share‑repurchase plan, adjusting the maximum number of shares to be repurchased from “no more than 80 million shares” to “not less than 80 million shares.” Amid ongoing market corrections, Midea’s stock has underperformed, with a cumulative decline of nearly 15% from the start of June through the close on July 4. On July 4, Midea announced it intends to use RMB 4 billion of its own funds to repurchase shares at a price not exceeding RMB 50 per share. Regarding the purpose of the buyback, Midea stated that, in light of the company’s recent secondary‑market performance, it has decided to repurchase shares using its own funds to align the stock price with the company’s intrinsic value, bolster investor confidence, and safeguard shareholder interests.
Liu Zhe stated that share buybacks by listed companies help bolster stock prices and, against the backdrop of a panic-driven market plunge, can play a role in stabilizing market expectations. However, it cannot be ruled out that some companies with weak financial performance use buyback announcements to artificially inflate their stock prices, thereby misleading investors. Moreover, within the prescribed timeframe, the actual amount repurchased often falls significantly short of the figure announced. For such companies, he recommends that regulatory authorities exercise close oversight and issue timely warnings, requiring them to promptly disclose the reasons for any unfulfilled buybacks and other relevant details, so as to safeguard a sound market‑wide reputation.

Taxation TAXATATION
Fifteen municipal-level new tax authorities in Jiangsu Province have been officially inaugurated.
On the morning of July 6, the 13 cities of Jiangsu Province held a series of unveiling ceremonies. Members of the Joint Party Committee of the Jiangsu Provincial Tax Service Bureau of the State Taxation Administration attended the unveiling ceremonies for the newly established municipal tax bureaus across the province. Relevant officials from the city-level Party committees and governments, as well as the leadership teams of the new municipal tax bureaus and heads of their internal departments, participated in the local unveiling events.
The State Taxation Administration has clarified that, following the launch of the new tax authority, in order to facilitate taxpayers, the vast majority of tax service halls will retain their existing premises and locations. With the merger of the national and local tax authorities, taxpayers can now handle all tax-related matters through integrated tax service halls and online tax‑filing systems, enjoying high‑quality services such as “one‑stop service” and “one‑stop online processing.” Meanwhile, the 12366 taxpayer service hotline has been upgraded to provide “one‑click consultation” for tax‑related inquiries, further enhancing the convenience of tax administration. Prior to this, the revamped “Jiangsu Provincial Online Tax Bureau” was already launched, enabling taxpayers to log in via a unified channel and interface and complete related transactions in a single step.

Jiangsu: Tax Authority Reform Continues to Advance
Following the provincial tax authorities, on July 5, Jiangsu Province’s 15 new municipal tax agencies—covering 13 prefecture-level cities as well as the Suzhou Industrial Park and the Zhangjiagang Free Trade Zone—also officially unveiled their signs, marking the formal merger of the former municipal national tax bureaus and local tax bureaus across the province. In less than a month, what measures has the Jiangsu tax administration rolled out, and how have taxpayers responded in terms of their perceptions and experiences?
On June 15, the Jiangsu Provincial Tax Service of the State Taxation Administration issued an announcement on the “Full‑Online Processing” and “At Most One Visit” lists for tax‑related matters, streamlining and consolidating the previously published lists from both the national and local tax authorities. The scope of “full‑online processing” covers seven major categories—reporting, invoicing, filing, record‑keeping, certification, bundled services, and other—totaling 110 items. Provided that all required documents are complete and meet the statutory acceptance criteria, taxpayers can complete these matters entirely online through channels such as the Jiangsu Provincial Online Tax Bureau, the Jiangsu Provincial Government Services Website’s “Jiangsu Tax Flagship Store,” the “My Jiangsu Tax” mobile app, and the new VAT invoice management system.
Within the scope of the “At Most One Visit” List for Tax‑Related Matters, provided that all required documents are complete and meet the statutory acceptance criteria, taxpayers need to visit the tax authority no more than once. The list covers five major categories—reporting, invoice management, filing, record‑keeping, and certification—comprising a total of 16 items. Taxpayers may consult the official website of the Jiangsu Provincial Tax Service Bureau of the State Taxation Administration or the Jiangsu Provincial Online Tax Service Platform to access relevant tax‑administration guidelines, including the documentation required, eligibility criteria, processing time limits, and procedural steps for both “entirely online processing” and “at most one visit” services.
On June 15, the Jiangsu Provincial Tax Service of the State Taxation Administration issued the “Measures for the Exercise of Discretionary Powers in Tax Administrative Penalties of Jiangsu Province” (hereinafter referred to as the “Measures”) and the “Benchmark for Discretionary Powers in Tax Administrative Penalties of Jiangsu Province” (hereinafter referred to as the “Benchmark”). The Measures represent the first-ever unified framework for both national and local tax authorities, while the Benchmark builds on the 2014 initial unification by further refining its provisions. As a result, taxpayers in Jiangsu will benefit from more consistent and equitable enforcement, with administrative penalties applied according to a single, standardized set of principles and criteria.
The “Implementation Measures” and “Discretionary Standards” issued by the former State and Local Tax Authorities differ in several respects—such as the scope of application of the “no penalty for first-time violations,” the criteria for determining whether a single violation triggers double penalties, the procedures for ordering corrective action within a specified time limit, and the level of reasoning required in official documents—and they also vary in the circumstances under which penalties are waived or mitigated. In the context of “one-stop service,” it is imperative to eliminate these existing disparities, even if they are minor.
As of now, all 241 tax service halls across Jiangsu Province have fully implemented the “one‑stop” service model: taxpayers need only visit a single hall to complete all their matters in one go. An increasing number of taxpayers are already experiencing the convenience brought by the merger of the national and local tax authorities. With the new institutions officially launched, the longstanding issue of taxpayers having to make repeated visits to two different agencies has been fundamentally resolved. According to Zhang Yue, an accounting agent at Wuxi Liangrui Beauty Co., Ltd., previously, when deregistering for tax purposes, taxpayers first had to submit the required documents to the national tax authority; after completing the liquidation and obtaining the national tax cancellation certificate, they then had to return to the local tax authority to file the necessary paperwork. Only once the local tax department finalized the liquidation and cancellation could the taxpayer’s tax deregistration be considered truly completed.
Litigation & Arbitration
The official website of the International Commercial Court of the Supreme People’s Court has officially gone live.
On the morning and afternoon of June 29, the First and Second International Commercial Courts of the Supreme People’s Court were officially inaugurated in Shenzhen and Xi’an, respectively, and commenced formal operations.
To enhance the transparency of the International Commercial Court, facilitate dispute resolution for parties both within and outside the region, and establish an international commercial dispute‑resolution mechanism based on consultation, joint development, and shared benefits, the Supreme People’s Court has launched a Chinese‑English website for the International Commercial Court (http://cicc.court.gov.cn), which recently went live.
The website features sections on an overview of the International Commercial Court, recent developments, legal resources, court‑support services, and judicial documents. It promptly publishes relevant information and media coverage about the International Commercial Court, provides details on its organizational structure, judicial composition, and case‑handling procedures, and offers a wealth of legal resources—including statutes, judicial interpretations, international conventions and agreements, scholarly articles, and landmark cases—pertinent to the resolution of international commercial disputes. In addition, it furnishes parties with information on ancillary services such as case scheduling and the ascertainment of foreign law.

The Central Supervision Group No. 1 for the nationwide special campaign against organized crime and evil forces has arrived in Hebei Province.
On the 6th, the Central Supervision Group No. 1 for the nationwide special campaign against organized crime and evil forces arrived in Hebei Province, officially launching comprehensive oversight of the campaign across the province.
At the mobilization meeting for the central supervisory team’s work in Hebei, Zhi Shuping, head of the Central Supervision Group No. 1, pointed out that launching the special campaign to combat organized crime and evil forces is a major decision and deployment made by the Party Central Committee with Comrade Xi Jinping at its core. Conducting supervision of this special campaign is an essential requirement for guiding localities to organize and carry it out with a higher political stance; it is also indispensable for addressing public concerns and enabling the people to enter a moderately prosperous society in all respects with a strong sense of security; moreover, it is crucial for promptly identifying problems, correcting deviations, and ensuring that localities conduct continuous “sweep‑ups,” thereby guaranteeing that all decisions and arrangements related to combating organized crime and evil forces are effectively implemented.
Zhi Shuping stated that it is essential to prioritize listening to the people’s voices and addressing their concerns in all supervisory efforts. With regard to leads involving organized crime and evil forces reported by the public during supervision, these must be promptly investigated and followed up, with stringent protective measures strictly implemented and, in accordance with the law, referred to the competent political and legal authorities. For major, complex, or difficult cases, they should be assigned to the provincial and relevant municipal anti‑organized‑crime offices for focused oversight. Any problems or deviations identified during supervision should be promptly communicated to the relevant authorities in Hebei Province, accompanied by targeted recommendations, ensuring that improvements are made concurrently with supervision. Furthermore, any leads concerning suspected disciplinary violations, official misconduct, or official crimes involving Party members, cadres, and other public officials exercising public authority must be promptly forwarded to the discipline inspection and supervisory organs. In this way, the supervisory process will truly serve as a means of advancing work and building public trust. Chen Guoqing, deputy head of the supervisory team, put forward specific requirements for coordinating and ensuring the effective implementation of supervisory activities.
Wang Dongfeng, Secretary of the Hebei Provincial Party Committee and Director of the Standing Committee of the Hebei Provincial People’s Congress, stated that it is essential to earnestly study and implement the important instructions of General Secretary Xi Jinping and the decisions and arrangements of the CPC Central Committee. He emphasized that the special campaign to combat organized crime and evil forces must be treated as a major political task, with all efforts devoted to supporting and cooperating with the work of the central supervision team. He called for immediate action and prompt rectification, sustained efforts to break through entrenched problems, and resolute victory in this critical battle.
In accordance with the supervision work plan, the central supervisory team will focus on the following areas: first, political stance—assessing how local Party committees and governments have implemented General Secretary Xi Jinping’s important instructions and the central Party and government’s decisions and arrangements; second, strict law-based punishment—evaluating efforts to ensure that illegal and criminal activities involving organized crime and evil forces are effectively and forcefully tackled within the framework of the rule of law; third, thorough investigation and uncovering of hidden networks—examining how anti-organized‑crime and anti‑corruption campaigns, together with grassroots “fly‑swatting” initiatives, have been integrated to expose the “protective umbrellas” behind criminal gangs and evil forces; fourth, comprehensive governance—reviewing measures taken by various departments to strengthen routine oversight and coordinated management in key regions, industries, and sectors; fifth, grassroots organizations—monitoring the rectification of weak and disorganized primary-level Party organizations; and sixth, organizational leadership—assessing how leading groups and their offices at all levels for the special campaign against organized crime and evil forces have fulfilled their functions.
The Central Supervision Team No. 1 will be stationed from July 6 to August 5. During the supervision period, a hotline has been established: 0311-66801186, 66801187, and 66801188 (telephone calls are accepted daily from 8:00 a.m. to 8:00 p.m.). The complaint mailbox is P.O. Box 686, Shijiazhuang City. The Central Supervision Team will carefully review all telephone and written reports concerning organized crime and evil forces in Hebei Province and provide timely feedback.
Other
Ministry of Commerce: China’s service trade imports and exports rose 12% year-on-year in the first five months.
On the 5th, a spokesperson from the Department of Trade in Services of the Ministry of Commerce, while presenting China’s service trade performance for January–May, stated that the country’s total service imports and exports reached RMB 2.10247 trillion, up 12% year on year. Specifically, exports amounted to RMB 691.53 billion, an increase of 13.3%, while imports totaled RMB 1.41094 trillion, up 11.4%. The resulting trade deficit stood at RMB 719.41 billion.
From January to May, China’s trade in services exhibited the following characteristics: the growth rate of service imports and exports reached a new annual high. During this period, the index of service-sector output rose 8.1% year on year, driving service trade growth to a record annual pace—3.2 percentage points higher than the growth rate of merchandise trade over the same period. Service trade accounted for 15.3% of total foreign trade, up 0.7 percentage points from the same period last year. Emerging services recorded rapid expansion. From January to May, China’s imports and exports of emerging services totaled RMB 693.58 billion, an increase of 18.6%, outpacing overall growth by 6.6 percentage points and boosting the share of emerging services by 1.9 percentage points. Meanwhile, traditional services maintained steady growth. In the first five months, the combined value of travel, transport, and construction—three major traditional service sectors—stood at RMB 874.11 billion, RMB 380.11 billion, and RMB 92.8 billion, respectively, with year-on-year increases of 8.2%, 12.5%, and 13.2%.
An official from the Department of Trade in Services of the Ministry of Commerce stated that, as supply-side structural reform and the transformation and upgrading of the manufacturing sector accelerate, China’s international competitiveness is gradually shifting from the manufacturing stage to the services sector. Looking ahead, China’s trade in services is expected to maintain a robust growth trajectory.

The National Development and Reform Commission has issued Opinions on Innovating and Improving the Price Mechanism to Promote Green Development.
Recently, the National Development and Reform Commission issued the “Opinions on Innovating and Improving Price Mechanisms to Promote Green Development” (hereinafter referred to as the “Opinions”).
The Opinions emphasize the need to comprehensively implement the spirit of the 19th National Congress of the Communist Party of China and the Second and Third Plenary Sessions of the 19th CPC Central Committee, guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era. They call for accelerating the establishment and improvement of a resource‑environment pricing mechanism that fully reflects market supply and demand, the degree of resource scarcity, ecological value, and the costs of environmental damage; refining price policies that support green development; incorporating ecological and environmental costs into the overall cost of economic operations; leveraging greater private capital to invest in ecological and environmental protection; and promoting resource conservation, ecological and environmental protection, and pollution prevention and control. These measures aim to foster a spatial pattern, industrial structure, production methods, and lifestyle conducive to green development, thereby continuously meeting the growing public demand for a beautiful ecological environment.
The Opinions stipulate that by 2020, a pricing mechanism and a price policy framework conducive to green development will be essentially in place, with significantly enhanced capacity to promote resource conservation and internalize environmental and ecological costs; by 2025, the pricing mechanisms aligned with the requirements of green development will be further refined and fully implemented across all sectors and stages of society.
The “Opinions” focus on four key areas: wastewater treatment, waste management, water conservation, and energy conservation and environmental protection. First, they aim to refine wastewater‑treatment pricing policies by establishing a dynamic adjustment mechanism for urban wastewater‑treatment fees, a differentiated charging system for industrial wastewater discharges, and a fee structure aligned with wastewater‑treatment standards; they also seek to improve the market‑based formation of urban wastewater‑treatment service fees, gradually ensuring that these fees broadly cover service costs, and explore the introduction of a household‑level payment system for wastewater treatment. Second, they will strengthen solid‑waste‑management pricing mechanisms by instituting robust municipal solid‑waste‑collection charges, refining hazardous‑waste‑disposal fee structures, and comprehensively establishing a pricing regime that covers costs while allowing reasonable profits. They will also enhance incentives for municipal waste sorting and reduction, accelerate the development of incentive‑and‑penalty frameworks that promote waste sorting, reduction, resource recovery, and environmentally sound treatment, and explore the establishment of rural waste‑management fee systems. Third, they will create price mechanisms that encourage water conservation by deepening comprehensive reforms of agricultural water pricing, improving urban water‑supply pricing, fully implementing a tiered, progressive surcharge system for non‑residential water use exceeding allocated quotas, and formulating price policies that support reclaimed‑water utilization—thereby ensuring the efficient operation of water‑supply infrastructure and facilities, and advancing water savings, emission reductions, and the sustainable use of water resources. Fourth, they will refine electricity‑pricing mechanisms that promote energy conservation and environmental protection by improving differentiated tariff policies, the peak‑off‑peak pricing framework, and targeted electricity‑use support measures for certain environmentally sensitive industries. By leveraging the leverage of electricity prices, they seek to drive energy‑intensive sectors to conserve energy and reduce emissions, phase out outdated technologies, guide the optimal allocation of power resources, and foster the upgrading of industrial and energy structures as well as the growth of related environmental‑protection industries. At the same time, localities are encouraged to actively explore various green pricing policies, including mechanisms for setting prices for ecological products.
The Opinions state that innovating and improving the pricing mechanism to promote green development is an important task for price‑related work both now and in the period ahead. Price authorities at all levels are required to strengthen policy implementation, enhance inter‑departmental coordination, safeguard basic living standards, emphasize public communication and guidance, build broad consensus, and jointly advance the construction of a Beautiful China.

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