JC Master Legal News Issue 828

Key Takeaways for This Issue
The China Securities Regulatory Commission has issued the “Opinions on the Application of Relevant Provisions in Articles 15 and 22 of the Regulations on the Procedures for Implementing Administrative Licenses of the China Securities Regulatory Commission—Legal Application Opinions on Securities and Futures No. 13.”
Recently, the China Securities Regulatory Commission (CSRC) issued the “Decision on Amending the Regulations on the Procedures for Implementing Administrative Licenses of the China Securities Regulatory Commission,” which took effect on April 23, 2018. In line with the requirement of comprehensive, stringent, and law-based regulation, the CSRC has continuously strengthened its regulatory enforcement, rectified market irregularities, investigated and prosecuted a number of cases involving violations of laws and regulations, and initiated formal investigations against several accounting offices implicated in such matters.

The China Securities Regulatory Commission has imposed administrative penalties in six cases.
Recently, the China Securities Regulatory Commission (CSRC) imposed administrative penalties in accordance with the law on six market manipulation cases. Adhering to the principle of prudent regulation, the CSRC will continue to strengthen market monitoring and surveillance, ensure that futures companies comply with regulatory requirements, enhance internal controls, and guide the futures industry toward stable and sustainable development.

The Shanghai and Shenzhen Stock Exchanges have made corresponding arrangements for adjusting the scope of Hong Kong‑listed stocks eligible under the mutual market access mechanism.
As of the end of June 2018, the cumulative trading value under the Shanghai–Hong Kong Stock Connect and the Shenzhen–Hong Kong Stock Connect had reached RMB 11.67 trillion. Since their launch, the number of eligible Hong Kong stocks under the Shanghai–Hong Kong Stock Connect has steadily expanded, increasing from 268 at inception to 317 today, while the number of eligible Hong Kong stocks under the Shenzhen–Hong Kong Stock Connect has grown from 417 to 462.

The Shenzhen Stock Exchange has officially launched its bond‑pledge‑based tripartite repo business.
On July 13, 2018, the Shenzhen Stock Exchange, in collaboration with China Securities Depository & Clearing Corporation, officially issued the “Provisional Measures for Bond Pledge‑Based Tripartite Repo Transactions and Settlement of the Shenzhen Stock Exchange and China Securities Depository & Clearing Corporation,” further refining the repo trading mechanism and better serving market participants.

The Ministry of Finance and the State Taxation Administration have raised the annual taxable income threshold for small and low-profit enterprises to RMB 1 million.
The Ministry of Finance and the State Taxation Administration recently issued the “Notice on Further Expanding the Scope of the Preferential Corporate Income Tax Policy for Small and Low‑Profit Enterprises.” The notice states that, from January 1, 2018, to December 31, 2020, the annual taxable income threshold for small and low‑profit enterprises will be raised from RMB 500,000 to RMB 1 million. For such enterprises with an annual taxable income of RMB 1 million or less (inclusive), their taxable income will be calculated at 50% of the actual amount, and they will pay corporate income tax at a rate of 20%.

Table of Contents
Table of Contents

Finance & Capital Markets
The China Securities Regulatory Commission has imposed administrative penalties in six cases.
The China Securities Regulatory Commission has issued the “Opinions on the Application of Relevant Provisions in Articles 15 and 22 of the Regulations on the Procedures for Implementing Administrative Licenses of the China Securities Regulatory Commission—Legal Application Opinions on Securities and Futures No. 13.”
The China Securities Regulatory Commission convened a symposium on listed companies.
The Shanghai and Shenzhen Stock Exchanges have made corresponding arrangements for adjusting the scope of Hong Kong‑listed stocks eligible under the mutual market access mechanism.
Shanghai-listed companies’ investment appeal has become more pronounced in the first half of the year, with share buybacks and increased holdings underscoring their confidence.

Corporate & Commercial
The China Securities Regulatory Commission has launched the third batch of cases under its 2018 special enforcement campaign, rigorously investigating and prosecuting violations involving failure to disclose annual reports on time.
The Shenzhen Stock Exchange has officially launched its bond‑pledge‑based tripartite repo business.
Improvement in the Professional Quality of Lead Underwriters on the New Third Board; Negative Conduct in June Declined Compared with the Previous Month
Mainland Chinese internet companies are flocking to Hong Kong to ring the opening bell.
In the first half of the year, the number of PPP projects launched in Hubei Province increased by 70%, and the province’s cumulative contracted investment ranked fourth nationwide.

Taxation
The Ministry of Finance and the State Taxation Administration have raised the annual taxable income threshold for small and low-profit enterprises to RMB 1 million.
Jiangsu Tax Enforcement “Applies a Single Standard Across the Board”

Litigation & Arbitration
The “Winning the Battle Against Enforcement Difficulties” all-media live broadcast was held at the Jiaozuo People’s Court in Henan Province.
The Jiangsu procuratorial organs have instituted public prosecution, in accordance with the law, against Xi Tongfu on suspicion of accepting bribes.

Other
China’s trade surplus has narrowed year-on-year for eight consecutive quarters, as foreign trade continues to improve in quality and efficiency.
In the first half of the year, newly established foreign-invested enterprises increased by more than 90 percent.
Finance & Capital Markets
The China Securities Regulatory Commission has imposed administrative penalties in six cases.
Recently, the China Securities Regulatory Commission (CSRC) imposed administrative penalties in accordance with the law on one case of market manipulation; the Shanghai Securities Regulatory Bureau imposed administrative penalties in accordance with the law on one case of insider trading; the Guangdong Securities Regulatory Bureau imposed administrative penalties in accordance with the law on one case of violations of information disclosure regulations; the Shaanxi Securities Regulatory Bureau imposed administrative penalties in accordance with the law on one case of insider trading; the Hunan Securities Regulatory Bureau imposed administrative penalties in accordance with the law on one case of violations of information disclosure regulations; and the Shanxi Securities Regulatory Bureau imposed administrative penalties in accordance with the law on one case of a futures company’s violation of risk‑management regulatory indicators. (Details of the administrative penalty decisions can be found on the websites of the CSRC and the relevant securities regulatory bureaus.)
In the aforementioned cases, two involved violations of information disclosure requirements. In one case, investigated by the Guangdong Securities Regulatory Bureau, the controlling shareholder of Zhuhai Zhongfu Industrial Co., Ltd. (hereinafter “Zhuhai Zhongfu”), Shenzhen Jieande Industrial Co., Ltd. (hereinafter “Jieande”), pledged a total of 146,473,200 shares it held in Zhuhai Zhongfu to Jiangsu Bank as collateral for two loans. Due to the default on these debts, Jiangsu Bank enforced its pledge rights through judicial proceedings, which could substantially lead to a change in Zhuhai Zhongfu’s controlling shareholder and significantly affect the company’s actual control. Jieande failed to promptly disclose this matter to the listed company, thereby violating Article 2 and Paragraph 3 of Article 35 of the Measures for the Administration of Information Disclosure by Listed Companies. In another case, investigated by the Hunan Securities Regulatory Bureau, Hunan Erkang Pharmaceutical Co., Ltd. (hereinafter “Erkang Pharmaceutical”) artificially inflated its operating revenue by approximately RMB 273 million and its net profit by approximately RMB 248 million in 2015 and 2016 through indirect internal sales and the failure to recognize sales returns. These practices by Erkang Pharmaceutical contravened Articles 63 and 68 of the Securities Law. All of the aforementioned violations were subject to corresponding administrative penalties imposed by the relevant branch agencies in accordance with Article 193 of the Securities Law.
The information disclosure system is one of the key mechanisms through which China’s securities legal framework regulates and manages issuers, listed companies, and other entities obligated to disclose information. It serves as a fundamental pillar of China’s capital market. When relevant information‑disclosure obligors comply with the law by providing information that is truthful, accurate, complete, and timely, it is of paramount importance for investors to assess the value of securities investments and evaluate investment risks. Some listed companies, driven by motives such as window‑dressing their financial performance or inflating stock prices, disclose false operational and financial information; others conceal material matters, thereby infringing upon the right of minority shareholders to be informed. Such practices gravely violate the principles of fairness, justice, and openness in the market, undermine the legitimate rights and interests of the broad base of small and medium‑sized investors, erode the integrity underpinning the healthy development of the capital market, and have a profoundly adverse impact. The China Securities Regulatory Commission maintains an unwaveringly stringent stance toward violations of information‑disclosure laws. Upon detection, it will resolutely take decisive action, impose severe penalties, and rigorously investigate and prosecute such violations, holding all responsible parties accountable in accordance with the law.
In the aforementioned case involving a futures company’s violation of risk‑monitoring indicators, Hehe Futures Co., Ltd. (hereinafter “Hehe Futures”) failed, from October 26, 2016, to June 12, 2017, to maintain a net capital‑to‑total equity ratio that complied with the risk‑monitoring standards set forth in the Measures for the Administration of Risk‑Monitoring Indicators for Futures Companies (as amended by CSRC Announcement [2013] No. 12). Such conduct by Hehe Futures violated Article 66 of the Regulations on the Administration of Futures Trading. Accordingly, pursuant to Article 66 of the Regulations on the Administration of Futures Trading, the Shanxi Securities Regulatory Bureau has issued a warning to Hehe Futures and imposed a fine of RMB 300,000; issued a warning and a fine of RMB 50,000 to one directly responsible senior manager; and issued warnings and fines of RMB 40,000 each to three other persons directly liable.
The futures industry is a high-risk sector engaged in the trading of financial derivatives. Maintaining an appropriate level of net capital helps futures offices preserve adequate liquidity, effectively manage risks, and pursue sound operations. The net capital regulatory framework for futures companies is one of the core pillars of their oversight. To meet the demands of law-based, comprehensive, and stringent regulation, futures offices should proactively comply with all risk‑related regulatory metrics tied to net capital and further strengthen the organic linkages between their capital base and various business lines. In line with the principle of prudent supervision, the China Securities Regulatory Commission will continue to enhance market monitoring and surveillance, ensure that futures offices adhere to regulatory requirements, reinforce internal controls, and guide the futures industry toward stable and sustainable development.

The China Securities Regulatory Commission has issued the “Opinions on the Application of Relevant Provisions in Articles 15 and 22 of the Regulations on the Procedures for Implementing Administrative Licenses of the China Securities Regulatory Commission—Legal Application Opinions on Securities and Futures No. 13.”
Recently, the China Securities Regulatory Commission (CSRC) issued the “Decision on Amending the Regulations on the Procedures for Implementing Administrative Licenses of the China Securities Regulatory Commission” (hereinafter referred to as the “Regulations on the Procedures for Implementing Administrative Licenses”), which took effect on April 23, 2018. In line with the requirement of comprehensive, stringent, and law-based regulation, the CSRC has continuously strengthened its regulatory enforcement, rectified market irregularities, investigated and prosecuted a number of cases involving violations of laws and regulations, and initiated formal investigations against several accounting offices implicated in such cases. Pursuant to Articles 15 and 22 of the Regulations on the Procedures for Implementing Administrative Licenses, when a securities service institution or its practitioners are subject to an investigation—either by the CSRC or its local branches, or by judicial authorities—for suspected violations of laws or regulations, and the case remains pending, provided that the alleged conduct falls within the same category of business as the services they rendered to the applicant, the CSRC shall decide not to accept the relevant application materials or to suspend the review thereof. Recently, certain accounting offices have consulted the CSRC regarding how accounting offices and other securities service institutions should apply the provisions on “the same category of business” set forth in the aforementioned articles.
In response, the China Securities Regulatory Commission (CSRC) has attached great importance to this matter and organized a dedicated team to conduct a thorough review. Drawing on considerations from the earlier amendment to the Regulations on the Procedures for Implementing Administrative Licenses, the CSRC has issued “Opinions on the Application of Relevant Provisions in Articles 15 and 22 of the Regulations on the Procedures for Implementing Administrative Licenses of the China Securities Regulatory Commission—Legal Application Opinion No. 13 on Securities and Futures,” thereby standardizing the interpretation and application of the concept of “similar business” under Articles 15 and 22 of the Regulations. Specifically: first, the provision of services by securities service institutions in non‑administrative licensing matters falls outside the scope of adjustment of the Regulations and is not subject to the relevant provisions on “similar business” set forth in Articles 15 and 22; second, when such institutions provide services in various administrative licensing matters, their activities shall be treated as “similar business” and governed by the corresponding provisions of Articles 15 and 22 of the Regulations.
Securities offices and securities service institutions shall, in the course of their professional activities, exercise due diligence, uphold professional ethics and compliance with practice standards, strictly fulfill their statutory duties, and ensure the authenticity, accuracy, and completeness of the documents they issue. It should be emphasized that, pursuant to the Regulations on the Procedures for Implementing Administrative Licenses, if a securities office, a securities service institution, or its practitioners is subject to an investigation for suspected violations of laws or regulations, or is under investigation by judicial authorities, and the case has not yet been concluded— even where the alleged misconduct does not fall within the same category of business as the services provided to the applicant but nonetheless has a significant impact on the market—the CSRC will, in accordance with the law, refuse to accept or suspend the review of any administrative license application documents submitted by such entities. Going forward, the CSRC will continue to implement the principle of comprehensive, stringent, and law-based enforcement, further strengthen regulatory oversight and enforcement, effectively safeguard market order, and protect the legitimate rights and interests of investors.

The China Securities Regulatory Commission convened a symposium on listed companies.
On July 8 and 9, Chairman Liu Shiyu and Vice Chairman Yan Qingmin respectively chaired symposiums with heads of listed companies. The meetings aimed to: first, solicit their views on the current economic and financial landscape; second, gather their recommendations for safeguarding capital market stability and promoting the sound development of both the capital market and listed companies; and third, elicit their feedback on the work of the China Securities Regulatory Commission.
Going forward, the CSRC will continue to convene a series of symposiums with listed companies.

Shanghai-listed companies’ investment appeal has become more pronounced in the first half of the year, with share buybacks and increased holdings underscoring their confidence.
In the first half of the year, China’s economy maintained steady progress with improving fundamentals. Shanghai‑listed companies, as key drivers of national economic development, have proactively aligned themselves with major national strategies, focused on their core businesses and real‑economy operations, and pursued prudent management and sound corporate governance. As a result, the quality of listed companies has steadily improved, and their profitability has continued to strengthen. At present, the overall valuation levels of Shanghai‑listed offices are at relatively low levels, highlighting their investment appeal. Indeed, numerous companies on the Shanghai Stock Exchange have already announced share‑repurchase or shareholder‑increase plans, underscoring the office confidence of both the companies and their shareholders in the listed offices’ operational performance, earnings capacity, and future prospects.
Overall, both the Shanghai market as a whole and large-cap blue-chip stocks are trading at reasonably low valuations relative to other major economies. Following this round of risk digestion, their investment appeal is beginning to emerge. Historically, as of July 6, the Shanghai Composite Index’s price-to-earnings ratio stood at 13.1 times, roughly on par with its level at 2,638 points—though, factoring in earnings growth, current valuation levels are even lower than back then. The median P/E ratio of 28.2 times is broadly consistent with the early stages of the previous bull market in July 2014 (when the index hovered between 2,000 and 2,200 points) and close to the level seen in June 2013, when the index hit a low of 1,850 points and the median P/E was around 26 times. Compared with international markets, from a comparable perspective, the SSE 50 Index—which represents large-cap blue chips in Shanghai—has an overall P/E ratio of 9.9 times, placing it among the lowest globally and significantly below that of U.S. large-cap indices (both the Dow Jones Industrial Average and the S&P 500 trade at nearly 24 times). In terms of trading below book value, 162 listed companies in Shanghai currently have closing prices below their per-share net asset values, the highest level since 2009. Given that market expectations for 2018 earnings growth remain moderate, the current index and blue-chip valuations enjoy some underlying earnings support, suggesting that the investment attractiveness of A‑shares is starting to become evident.
The resilience of listed companies’ earnings growth has strengthened, and the drivers of growth are shifting at an accelerated pace. In 2017, Shanghai‑listed companies reported total operating revenue of RMB 27.97 trillion and net profit of RMB 2.62 trillion, up 14.46% and 18.55% year over year, respectively—both marking new highs in recent years. In the first half of 2018, based on preliminary earnings forecasts, Shanghai‑listed offices continued to post steady growth. As of July 6, 2018, 128 Shanghai‑listed companies had disclosed their first‑half results; the majority issued positive outlooks, with 71 forecasting earnings increases, 10 turning from losses to profits, and 34 projecting growth of 50% or more, including 18 with year‑on‑year gains exceeding 100%.
From an industry perspective, the majority of earnings upgrades are concentrated in the chemical and pharmaceutical sectors. In the chemical products segment, Hualu Hengsheng forecasts a net profit of RMB 1.6 billion to RMB 1.7 billion, representing a year-on-year increase of 202% to 211%; Zhejiang Longsheng expects a net profit of RMB 2.2 billion to RMB 2.4 billion, up 120% to 140% year over year. Emerging industries, led by the computer, communications, and other electronic equipment manufacturing sectors, continue to perform strongly. Huoju Electronics projects a net profit of RMB 170 million to RMB 190 million, up 50% to 65% year over year; Foxconn Industrial Internet anticipates a first-half net profit ceiling of RMB 5.6 billion, reflecting a 5% year-on-year growth. Among traditional industries, Anyang Iron & Steel has forecast a first-half net profit of RMB 900 million to RMB 1.05 billion, a year-on-year surge of 31 to 37 times; PetroChina also expects a substantial year-on-year increase in first-half net profit. Looking at newly listed companies this year, more than 80% of those that have issued performance forecasts anticipate year-on-year growth in their half-year results.
In the first half of 2018, M&A and restructuring activities among Shanghai‑listed companies continued the favorable trend of recent years, with a more balanced quality profile and a pronounced effect of supporting high‑quality offices while curbing underperforming ones. During this period, 397 M&A transactions were completed, totaling RMB 384.8 billion—up 10.6% and 31.1%, respectively, year over year. In the realm of major asset restructurings, 62 companies initiated such transactions, with aggregate deal values reaching RMB 206.4 billion, representing year‑on‑year increases of 26.5% and 48.8%, respectively.
Overall, in the first half of the year, M&A activity among Shanghai‑listed companies remained closely aligned with national priorities such as supply‑side structural reform and the high‑quality development of the real economy, focusing on core business expansion and transformation. The ongoing restructuring of the industrial landscape has been a key driver of this growth. In the realm of state‑owned enterprise reform, China Aluminum Corporation, China Shipbuilding Group, and CSSC Defense each launched market‑based debt‑to‑equity swap programs, further optimizing their capital structures and providing capital‑market‑based solutions to support deleveraging efforts by central SOEs. On the front of new‑economy development, SST Qianfeng completed the acquisition of BAIC New Energy, one of China’s leading electric‑vehicle manufacturers, while also resolving the long‑standing share‑splitting issue that had plagued the listed company for years. In terms of industry‑wide M&A, Wanhua Chemical acquired BC Company, securing a more comprehensive petrochemical product‑chain footprint and moving its production capacity into the top three in the sector; meanwhile, Qumei Home Furnishings acquired a renowned Norwegian high‑end furniture manufacturer, effectively complementing its existing product portfolio.
Since the beginning of this year, numerous listed companies on the Shanghai Stock Exchange have disclosed announcements related to major shareholders’ share increases and share buybacks. Preliminary statistics show that 201 Shanghai‑listed companies have announced plans for share purchases by major shareholders and directors, supervisors, and senior executives, with total committed purchase amounts exceeding RMB 30 billion. Actual purchases by major shareholders have already reached approximately RMB 16.7 billion. For instance, Longi Green Energy’s major shareholder, Shaanxi Coal Industry, intends to increase its holdings by up to 4.99% of the company’s total share capital, citing confidence in the company’s future prospects and business model. Similarly, China Railway Industry’s controlling shareholder, China Railway Group, plans to acquire shares representing no more than 2% of the company’s total share capital, driven by its recognition of the company’s intrinsic value and belief in its sustained, stable growth going forward. Meanwhile, 21 Shanghai‑listed companies have unveiled share‑repurchase proposals, with a combined planned repurchase amount of RMB 10.1 billion. Among them, Joyson Electronics has stated that, in order to effectively safeguard the interests of its broad investor base and enhance market recognition of the company’s value, it will use its own funds to repurchase shares worth up to RMB 2.2 billion. Likewise, Zhejiang Digital Culture, based on its strong conviction in the company’s value and commitment to protecting the interests of its shareholders, plans to repurchase shares totaling no more than RMB 800 million.
When listed companies and their major shareholders repurchase or increase their holdings of the company’s shares, it typically signals strong confidence in the company’s operations and future prospects, and in most cases also suggests that the current share price offers certain long-term investment value. The Shanghai Stock Exchange will continue to encourage eligible Shanghai‑listed companies to proactively bolster investor confidence and stabilize market expectations through measures such as share buybacks and additional purchases. At present, there is a growing divergence between stock prices and the underlying fundamentals of listed companies. Whether viewed from the perspective of corporate structural transformation and improved profitability, or from the bottoming out of valuations and increased holdings by major shareholders, the investment appeal of A‑shares can no longer be overlooked.

The Shanghai and Shenzhen Stock Exchanges have made corresponding arrangements for adjusting the scope of Hong Kong‑listed stocks eligible under the mutual market access mechanism.
Since the launch of the Stock Connect schemes linking the mainland and Hong Kong stock markets, operations have remained stable and orderly, fostering cooperative development between the two markets and earning positive market feedback. As of the end of June 2018, the cumulative trading value under the Shanghai–Hong Kong Stock Connect and Shenzhen–Hong Kong Stock Connect had reached RMB 11.67 trillion. Specifically, the Shanghai Stock Connect recorded a cumulative trading volume of RMB 4.96 trillion, with an average daily turnover of RMB 5.897 billion and a cumulative net inflow of RMB 281.059 billion; the Shenzhen Stock Connect posted a cumulative trading volume of RMB 1.94 trillion, with an average daily turnover of RMB 5.324 billion and a cumulative net inflow of RMB 226.639 billion; and the Hong Kong Stock Connect—comprising both the Shanghai–Hong Kong and Shenzhen–Hong Kong components—registered a cumulative trading volume of RMB 4.77 trillion, with an average daily turnover of RMB 7.315 billion and a cumulative net inflow of RMB 695.13 billion. Since their inception, the number of eligible stocks under the Shanghai–Hong Kong Stock Connect has steadily expanded from 268 at launch to 317 today, while the Shenzhen–Hong Kong Stock Connect has increased its eligible universe from 417 to 462.
On May 7 this year, Hang Seng Indexes Company Limited released the “Consultation Conclusions on Whether to Include Foreign Companies, Structured Securities, and Companies with Different Voting Rights Structures in the Hang Seng Composite Index,” announcing that shares of foreign companies listed for the first time in Hong Kong, structured securities, and companies with different voting rights structures will all be eligible for inclusion in the Hang Seng Composite Index. The new eligibility criteria will take effect in Hong Kong starting in the third quarter of 2018. Prior to this, the Hang Seng Composite Index did not include foreign companies, structured securities, or companies with different voting rights structures.
In response, the Shanghai and Shenzhen stock exchanges have taken note of this significant change in the methodology for compiling the Hang Seng Composite Index. They conducted surveys and consultations with certain mainland securities offices—and through those offices, with investors—to gauge relevant views from all stakeholders. The majority of investors indicated a lack of familiarity with these new types of securities; some expressed difficulty in understanding the operating conditions and financial reporting practices of foreign companies, while others found bundled securities entirely incomprehensible. A few also suggested that it would be prudent to first introduce companies with different voting‑rights structures in the mainland market and allow investors to become acquainted with them before forming judgments. Some securities offices argued that mainland investors have yet to gain substantial exposure to these three categories of securities, leaving them ill‑equipped to assess their complexity and associated risks, and that appropriate investor education remains insufficient. Moreover, companies with different voting‑rights structures are still a relatively novel phenomenon in the Hong Kong market; therefore, they recommended waiting until such entities have achieved a critical mass and established a stable market footing there before considering their inclusion for mainland investors. Additionally, certain securities offices pointed out that the constituent universe is a key element in index construction. Adding these three special‑case securities effectively alters the stock selection criteria underlying the Hang Seng Composite Index, which serves as the basis for the Stock Connect eligible share pool. By contrast, the Hang Seng Index (HSI)—the benchmark index that tracks Hong Kong’s overall market performance—has not been adjusted accordingly in this instance.
In light of the aforementioned survey findings, the Shanghai and Shenzhen Stock Exchanges, after careful analysis and assessment, have determined that the adjustment to the constituent universe of the Hang Seng Composite Index falls under the “special circumstances” stipulated in Article 55 of the Measures for the Implementation of the Shanghai Stock Exchange’s Shanghai–Hong Kong Stock Connect Business and Article 56 of the Measures for the Implementation of the Shenzhen Stock Exchange’s Shenzhen–Hong Kong Stock Connect Business (namely, stocks falling under “other special circumstances as determined by this exchange” are excluded from the scope of Stock Connect eligible securities). Accordingly, the three newly added categories of securities to the Hang Seng Composite Index will not, for the time being, be included in the Stock Connect eligible securities list.
The Stock Connect mechanisms between the mainland and Hong Kong have played a pivotal role in the two-way opening-up of China’s capital markets and stand as a successful model of cooperation between the mainland and Hong Kong exchanges. As market liberalization continues to advance, the scope of eligible stocks under Stock Connect will be steadily refined and expanded. Going forward, the Shanghai Stock Exchange and the Shenzhen Stock Exchange will remain steadfast in advancing the reform and opening-up of the capital market, deepen consultations and collaboration with the Hong Kong Exchanges and Clearing, and, together with all market participants, conduct joint research on issues of concern, carry out thorough assessments, and guide members in making the necessary preparatory arrangements. They will actively create the conditions for broadening the range of eligible stocks under Stock Connect and continuously optimize and improve the mechanism itself.

Commercial & Corporate
The China Securities Regulatory Commission has launched the third batch of cases under its 2018 special enforcement campaign, rigorously investigating and prosecuting violations involving failure to disclose annual reports on time.
In accordance with the requirements of comprehensive, stringent, and law-based regulatory oversight, and in line with the key areas and work plan for inspection and enforcement in 2018, the CSRC’s inspection authorities, in collaboration with the departments responsible for listed company supervision, accounting oversight, and administrative penalties, recently launched the third batch of special enforcement actions for 2018. These efforts focus on investigating and addressing the illegal conduct of nine listed companies that failed to disclose their 2017 annual reports on time. At present, the investigation and handling of these cases have been fully initiated.
The annual report is a cornerstone of the information disclosure framework for listed companies and serves as an essential basis for investors to gain a comprehensive understanding of a company’s operations and management, enabling them to make informed investment decisions. Timely disclosure of the annual report is a fundamental legal obligation of listed companies, playing a critical role in upholding the principles of openness and transparency in the securities market and safeguarding investor confidence. China’s Securities Law and the Measures for the Administration of Information Disclosure by Listed Companies set forth clear requirements regarding the deadlines, content, and format for submitting and disclosing annual reports. Failure by listed companies to disclose their annual reports on time constitutes a grave disregard for the integrity of securities market regulations, a serious undermining of the principles of openness, fairness, and impartiality, and a severe infringement upon the legitimate rights and interests of investors, particularly small and medium-sized shareholders.
As of April 30 this year, a total of nine listed companies had failed to disclose their 2017 annual reports on time. According to the reasons cited by these companies, some were unable to appoint an auditing office, others could not issue an audit report by the deadline, and still others were engaged in retrospective adjustments to their financial data. Relevant leads already obtained by the regulatory authorities indicate that the failure to file annual reports is closely linked to deficiencies in corporate governance, perfunctory internal control systems, and a lack of diligence and accountability among senior management. Such circumstances may conceal other serious violations, including the non-disclosure of material matters, misappropriation of substantial funds, and financial fraud.
It should be noted that the aforementioned factors do not absolve listed companies of their statutory obligation to disclose annual reports on time. Going forward, the China Securities Regulatory Commission will, while rigorously investigating and prosecuting violations involving late or non‑compliant annual report disclosures, intensify its efforts to uncover and address underlying illegal activities. The Commission will urge listed companies to disclose information in a timely, truthful, accurate, and complete manner, thereby promoting sound corporate governance and safeguarding the healthy and stable development of the capital market.

The Shenzhen Stock Exchange has officially launched its bond‑pledge‑based tripartite repo business.
On July 13, 2018, the Shenzhen Stock Exchange, in collaboration with China Securities Depository & Clearing Corporation, officially issued the “Provisional Measures for Bond Pledge‑Based Tripartite Repo Transactions and Settlement of the Shenzhen Stock Exchange and China Securities Depository & Clearing Corporation” (hereinafter referred to as the “Provisional Measures”), further refining the repo trading mechanism and better serving market participants. At the same time, the Shenzhen Stock Exchange released the “Shenzhen Stock Exchange Guidelines for Bond Pledge‑Based Tripartite Repo Trading” (hereinafter referred to as the “Guidelines”), which elaborate and clarify the relevant provisions of the Provisional Measures, providing market participants with operational guidance for engaging in tripartite repo transactions. All applicable rules took effect on July 30, 2018.
Tripartite repo transactions serve as an important complement to the existing bond‑repo market on the Shenzhen Stock Exchange. Compared with conventional bond‑pledge repos, tripartite repos broaden the range of eligible collateral, allowing privately issued bonds and asset‑backed securities to be used as collateral. Moreover, in contrast to standard bond‑pledge agreement repos, tripartite repos offer a suite of collateral‑management services, including collateral basket management, collateral selection, and daily mark‑to‑market monitoring, thereby facilitating trading and ongoing risk management for both parties. The introduction of tripartite repo transactions helps further enhance liquidity in the exchange‑traded bond market, supports market participants in managing their liquidity, and refines the bond‑repo trading framework.
In May 2018, the Shenzhen Stock Exchange and China Securities Depository & Clearing Corporation jointly issued a public consultation on the Provisional Measures. Going forward, the Shenzhen Stock Exchange will continue to strengthen market training and investor education, enhancing market participants’ understanding of the tripartite repo business and their ability to identify associated risks, thereby ensuring the smooth implementation of this business.

Improvement in the Professional Quality of Lead Underwriters on the New Third Board; Negative Conduct in June Declined Compared with the Previous Month
On July 13, the National Equities Exchange and Quotations System released its June evaluation results for the professional conduct of sponsoring securities offices. In June, the system recorded a total of 40 instances of adverse conduct by securities offices, 10 fewer than in May. The decline in negative incidents indicates an improvement in the overall quality of offices’ professional practices compared with the previous month.
In June, after adjustment using the weighting factors specified in the “Negative Behavior List for Sponsor Securities Offices,” the total number of violations stood at 39.5, involving 25 sponsoring securities offices. Specifically, there were 0.5 violations under the “Recommendation for Listing” category, accounting for 1.27%; 26.5 violations under the “Post‑Recommendation Supervision” category, representing 67.09%; 10.5 violations under the “Trading Management” category, or 26.58%; and 2 violations under the “Comprehensive Management” category, making up 5.06%.
Twenty-four sponsoring securities offices have five or fewer negative behavior records, accounting for 77.22% of the total (compared with 86.87% in May); one sponsoring securities office has between five and twenty negative behavior records, representing 22.78% of the total (versus 13.13% in May).
In June, a total of 102 sponsoring securities offices participated in the evaluation. Among them, CITIC Securities (16.600, +0.02, +0.12%) (Shandong) was included in its parent company CITIC Securities for the consolidated evaluation; Orient Citic Securities was incorporated into its parent company Orient Securities (8.650, +0.12, +1.41%) for the consolidated evaluation; SW China Securities (4.370, −0.02, −0.46%) and Western Securities (7.620, 0.00, 0.00%) were both merged into their respective parent companies, SW China Securities and Western Securities, for the consolidated evaluation; and Huatai United Securities was merged into its parent company Huatai Securities (14.640, −0.08, −0.54%) for the consolidated evaluation. As a result, the evaluation outcomes of 98 sponsoring securities offices were actually reported.
Statistics show that 39 sponsoring securities offices scored 90 points or above, accounting for 39.80%; 32 offices scored between 80 and 90 points, representing 32.65%; 21 offices scored between 70 and 80 points, making up 21.43%; and 6 offices scored below 70 points, accounting for 6.12%. The top five sponsoring securities offices in terms of evaluation scores are Anxin Securities, CITIC Securities (9.870, -0.40, -3.89%), Zhongtai Securities, Caitong Securities (10.720, -0.19, -1.74%), Dongwu Securities (6.620, -0.02, -0.30%)—tied for fifth—and Western Securities—also tied for fifth.

Mainland Chinese internet companies are flocking to Hong Kong to ring the opening bell.
On July 12, the Hong Kong Stock Exchange faced an unprecedented challenge: eight companies went public on the same day, and their executives were scheduled to ring the opening bell simultaneously. Normally, each company rings the bell once, with both the founder and investors taking the stage to do so together. In the end, the HKEX adopted a compromise: every two companies shared one gong, and only one representative from each company rang it.
At this time, Hong Kong stocks are experiencing a wave of IPOs by mainland Chinese companies: on June 21, Tongcheng Elong filed its prospectus with the Hong Kong Stock Exchange; on June 26, Zhaogang.com’s prospectus was published on the exchange; on June 28, Babytree announced plans to list in Hong Kong; on June 29, Liepin went public in Hong Kong; on July 3, Hujiang Education submitted its prospectus to the Hong Kong Stock Exchange; on July 9, Xiaomi listed in Hong Kong; on July 12, eight companies debuted on the Hong Kong stock market simultaneously, three of which were internet offices; and on July 13, 51 Credit Card listed in Hong Kong.
However, Chinese internet companies like Xiaomi that have rushed to list on the Hong Kong stock exchange are largely grappling with the same question: Can their lofty valuations—despite persistent losses—win market acceptance? Meitu, the second mainland‑based internet office after Tencent to list in Hong Kong, has been categorized by the HKEX under the internet sector. Yet it faces the same dilemma as Xiaomi: Is it an internet company, or a hardware company? According to Meitu’s latest financial report, the company posted quarterly profitability following its IPO. However, its revenue mix remains heavily skewed toward smartphone sales. “We are clearly an internet company,” said Meitu CEO Wu Xinhong to a reporter from Economic Observer. “The main reason we’re often mistaken for a phone maker is that smartphone sales account for more than 80% of our revenue—but that’s only a temporary phase. Meitu’s monthly active users (MAU) approach 500 million, while cumulative smartphone shipments since 2013 have totaled just a few million units. The number of app users far exceeds the number of smartphone users.” He added, “The reason for this revenue structure is that commercialization of our mobile‑internet products has progressed relatively slowly. We only began building a monetization team in 2016, and it takes time to turn those efforts into cash. Still, since late last year, the contribution of our internet‑related businesses to overall revenue has been steadily increasing.”
Questions about internet‑listed companies extend beyond their business models; stock prices present an even more daunting test.
On its debut day, Xiaomi’s share price fell below its IPO price. As the first company listed on the Hong Kong stock market to adopt a “dual-class share” structure, Xiaomi opened at HK$16.60, down 2.35% from its issue price of HK$17.00. During the opening auction, trading volume reached HK$230 million, and by the close, the stock was 1.18% lower than its IPO price. Founder Lei Jun quipped that starting from a low point might not be such a bad thing, even donning a pair of ripped jeans to make the point. Xiaomi is far from alone: other companies that have seen their shares trade below IPO price include Uxin, which listed on the U.S. stock market, as well as Liepin and S杉Sang, among others.
On July 11, 2018, Meitu repurchased 3 million shares at a price ranging from HK$6.08 to HK$6.17 per share, spending approximately HK$18.4089 million. However, the market did not respond positively; as of the time this article was written on July 13, Meitu’s share price remained around HK$6.40 per share—still below its initial offering price.
An investor told a reporter that Hong Kong‑listed stocks use a book‑building process for pricing, and a price below the IPO range reflects the market’s assessment of the company’s value. He added that a price drop below the IPO level is not alarming; such a scenario is relative to the A‑share market, where the P/E ratio typically hovers around 23 times. In A‑shares, the likelihood of new issues trading significantly below their offering price is very low, whereas in Hong Kong, post‑IPO price declines are relatively common.

Another investor noted that the market has become more mature, with pricing increasingly anchored in solid business fundamentals—storytelling alone is no longer effective. Meanwhile, the mobile‑internet traffic dividend is nearing its peak, and the underlying growth drivers of many companies are struggling to win market validation. Most of the mobile‑internet offices going public this time were founded between 2010 and 2013; during their fundraising rounds, they benefited from the traffic‑growth boom, commanding premium valuations. But now that this growth tailwind has faded, these companies are finding it hard to meet expectations, leading to lower valuation multiples in the secondary market. Furthermore, from a liquidity perspective, the recent wave of IPOs by internet companies has kept overall market capital supply relatively stable, which to some extent constrains the ability of individual offices to raise funds.

In the first half of the year, the number of PPP projects launched in Hubei Province increased by 70%, and the province’s cumulative contracted investment ranked fourth nationwide.
On July 13, the Provincial Development and Reform Commission reported that in the first half of the year, the province secured a total of 84 PPP projects, up 71.43% year on year, with combined investment totaling RMB 129.317 billion, an increase of 3.88% over the same period last year. At present, all 17 cities, prefectures, and forest regions across the province have achieved full coverage in the implementation of PPP projects.
Among them, cities and prefectures including Jingmen, Ezhou, Xiaogan, Huanggang, Xianning, Suizhou, and Enshi have achieved full coverage of PPP project implementation across all their subordinate counties, county-level cities, and districts. At the provincial level, the coverage rate of PPP project implementation in counties, county-level cities, and districts stands at approximately 85%, with projects spanning 15 sectors, including energy, transportation, water conservancy, environmental protection, agriculture, forestry, and major municipal infrastructure.
From 2017 to June 2018, in terms of the number of PPP projects successfully implemented, both Wuhan and Jingzhou each had 28 projects, tying for first place across the province. In terms of total committed investment, Wuhan led by a wide margin, with RMB 158.461 billion. Municipal engineering, environmental protection, and transportation were the sectors with the highest concentration of completed PPP projects. State-owned enterprises continued to dominate as the primary investors in PPP projects. Between 2017 and June 2018, private enterprises—either as consortium leaders or as standalone social capital partners—accounted for a cumulative investment of RMB 144.135 billion, representing 34.13% of the total.
According to data from market research offices, from 2017 through June 2018, our province ranked fifth nationwide in the total number of PPP projects awarded and fourth nationwide in the total value of awarded contracts.
Taxation TAXATATION
The Ministry of Finance and the State Taxation Administration have raised the annual taxable income threshold for small and low-profit enterprises to RMB 1 million.
According to the Ministry of Finance’s website, the Ministry of Finance and the State Taxation Administration recently issued the “Notice on Further Expanding the Scope of the Preferential Corporate Income Tax Policy for Small and Low-Profit Enterprises” (hereinafter referred to as the “Notice”). The Notice stipulates that, from January 1, 2018, to December 31, 2020, the annual taxable income threshold for small and low-profit enterprises will be raised from RMB 500,000 to RMB 1 million. For such enterprises with an annual taxable income of RMB 1 million or less, their income will be included in taxable income at a reduced rate of 50%, and corporate income tax will be levied at a rate of 20%.
The Notice clarifies that small and low-profit enterprises are those engaged in industries not restricted or prohibited by the state and meeting the following criteria: for industrial enterprises, the annual taxable income does not exceed RMB 1 million, the number of employees does not exceed 100, and total assets do not exceed RMB 30 million; for other enterprises, the annual taxable income does not exceed RMB 1 million, the number of employees does not exceed 80, and total assets do not exceed RMB 10 million.
The Notice states that the “number of employees” includes both the number of workers who have an employment relationship with the enterprise and the number of workers employed through labor dispatch agencies. The indicators for “number of employees” and “total assets” shall be determined based on the annual quarterly average of the enterprise. The specific calculation formulas are as follows: Quarterly average = (beginning-of-quarter value + end-of-quarter value) ÷ 2; Annual quarterly average = the sum of the quarterly averages for all four quarters divided by 4. For enterprises that commence operations or cease business activities during the year, the relevant indicators shall be determined using their actual period of operation as a tax year.
The Notice also states that the “Notice of the Ministry of Finance and the State Taxation Administration on Expanding the Scope of the Income Tax Preferential Policy for Small and Low-Profit Enterprises” shall be repealed effective January 1, 2018. Finally, the Notice requires that fiscal and tax authorities at all levels strictly adhere to the provisions set forth herein, proactively carry out publicity and guidance on the income tax preferential policy for small and low-profit enterprises, and ensure its full and effective implementation.

Jiangsu Tax Enforcement “Applies a Single Standard Across the Board”
Recently, the Jiangsu Provincial Tax Service of the State Taxation Administration issued the “Measures for the Exercise of Discretionary Powers in Tax Administrative Penalties in Jiangsu Province” and the “Benchmark for Discretionary Powers in Tax Administrative Penalties in Jiangsu Province.” This signifies that, following the merger of the former national and local tax authorities, taxpayers in Jiangsu will benefit from more uniform and equitable enforcement, with a consistent standard applied across all cases.
“Faced with the same tax‑related violation, every tax service hall across the province will apply the same standards and deliver the same outcome,” said a responsible official from the policy and regulation department of the provincial tax authority. Taking advantage of the merger of the national and local tax authorities, they have refined and optimized the previously unified discretionary guidelines for penalties, ensuring full coverage of all punishable offenses, more granular categorization, and more thorough consideration of relevant factors.
“In the early stages of starting a business, there are countless tasks to handle, and it’s hard to fully grasp tax policies—our biggest concern is being penalized for even minor non‑compliance.” At the Yuhuatai District Tax Service Hall, a taxpayer from a newly established enterprise told our reporter that the implementation of measures such as “no penalty for first‑time violations” has brought a greater degree of flexibility and human consideration to tax enforcement. The provincial tax bureau’s further standardization of tax administrative penalties will help ensure that, across the province, tax authorities achieve the goal of “consistent treatment and uniform penalties, with fairness and impartiality.”

Litigation & Arbitration
The “Winning the Battle Against Enforcement Difficulties” all-media live broadcast was held at the Jiaozuo People’s Court in Henan Province.
Recently, the News Bureau and the Enforcement Bureau of the Supreme People’s Court, together with the Higher People’s Court of Henan Province and the two-level courts of Jiaozuo City in Henan Province, jointly hosted a multimedia live‑streaming event titled “Securing Success in Enforcement,” broadcasting live from the enforcement sites of the Jiefang District People’s Court, the Bo’ai County People’s Court, and the Wen County People’s Court in Jiaozuo City.
Hu Xiaoping, Member of the Standing Committee of the Jiaozuo Municipal Party Committee and Secretary of the Political and Legal Affairs Commission; Li Yujie, Secretary of the Party Leadership Group and President of the Jiaozuo Intermediate People’s Court; National People’s Congress deputies stationed in Henan—Huo Xiaoli, Liang Bing, and Li Dongyan—along with several provincial People’s Congress deputies and CPPCC members, as well as more than 40 media reporters, jointly observed and witnessed the enforcement proceedings. The all‑media live broadcast was simultaneously streamed on television and online. On that day, over 200,000 netizens tuned in to watch the on‑site enforcement via the livestream, while the related Weibo hashtag garnered a total of 120 million views.
At 2:20 p.m. that day, under the command of Sun Xuefeng, Secretary of the Political and Legal Affairs Commission of Bo’ai County, and led by Zhang Hongwei, Party Secretary and President of the Bo’ai County People’s Court, the county court, the county procuratorate, and the county public security bureau jointly enforced a case involving unpaid execution funds owed by Jiaozuo Antai Glass Products Co., Ltd. In accordance with the plan, the enforcement judges divided into two teams: one conducted a search of the finance office, while the other sealed off any assets of value. At 2:58 p.m., despite the sweltering heat, enforcement officers systematically inventoried and moved the items on site, with deputies to the People’s Congress and members of the Chinese People’s Political Consultative Conference present to oversee the eviction process.
According to reports, to enhance the rate of cases concluded in practice and the rate of enforcement actually carried out, while preventing passive, selective, or obstructive enforcement, the Wen County People’s Court has introduced innovative mechanisms: an “Enforcement + 110” joint police‑enforcement system and an enforcement reward‑insurance scheme. These measures facilitate the location of debtors and assets, thereby improving enforcement efficiency.
The applicant for enforcement, the Jiaozuo City Jiefang District Rural Credit Cooperative Union, filed a lawsuit against the borrower and the guarantor after failing to recover a 200,000-yuan loan. The court ruled that the borrower bears the obligation to repay the debt, while the guarantor assumes joint and several liability. Wang Junping, an employee of the Jiaozuo Municipal Bureau of Agriculture, served as the guarantor in this case. At 4:20 p.m. that day, enforcement officers arrived at the Jiaozuo Municipal Bureau of Agriculture’s office on Renmin Road in Jiaozuo and carried out compulsory enforcement against the judgment debtor, Wang Junping. They took the judgment debtor away from the workplace and informed him that, should he continue to refuse to comply, he would be detained in accordance with the law.
According to Song Haiyan, Director of the Enforcement Bureau of the Jiefang District People’s Court in Jiaozuo City, among the many persons subject to enforcement, there is a special group—public officials. The Party Leadership Group of the Jiaozuo Intermediate People’s Court attaches great importance to the enforcement of cases involving public officials, proactively reports to the Municipal Party Committee, and has issued documents to support the court’s enforcement work. The Jiaozuo Intermediate People’s Court has explicitly stipulated priority enforcement against public officials involved in enforcement cases.
Previously, the General Offices of the Jiaozuo Municipal Party Committee and the Municipal Government issued the “Opinions on Supporting the People’s Courts in Tackling the Issue of Difficult Enforcement.” The Political and Legal Affairs Commission of the Jiaozuo Municipal Party Committee, in coordination with the Municipal Commission for Discipline Inspection, the Municipal Organization Department, the Municipal Office for Spiritual Civilization, the Municipal Bureau of Land and Resources, and 26 other departments, jointly promulgated the “Notice on Issuing the ‘Implementation Opinions of Jiaozuo City on Joint Punitive Measures Against Discredited Persons Subject to Enforcement,’” thereby launching a coordinated punitive regime against such individuals. The authorities also decided to give priority to identifying and enforcing judgments against public officials who have failed to comply with legally effective court rulings, while requiring employees of state-owned enterprises, deputies to the People’s Congress, and members of the Chinese People’s Political Consultative Conference to be subject to the same management standards as public officials. To date, the city has concluded 212 cases involving public officials, with a total enforcement value of RMB 33.578 million.

The Jiangsu procuratorial organs have instituted public prosecution, in accordance with the law, against Xi Tongfu on suspicion of accepting bribes.
On July 6, 2018, the case involving Xi Tongfu, a former member of the Party Leadership Group of the Jiangsu Provincial Commission of Economy and Information Technology (at the deputy-department level), who is suspected of accepting bribes, was assigned jurisdiction by the Jiangsu Provincial People’s Procuratorate and subsequently prosecuted by the Zhenjiang Municipal People’s Procuratorate before the Zhenjiang Intermediate People’s Court.
During the review-and-prosecution stage, the procuratorial organ duly informed the defendant, Xi Tongfu, of his procedural rights and, in accordance with the law, interrogated him and heard the views of his appointed defense counsel. The indictment filed by the Zhenjiang Municipal People’s Procuratorate alleges that, between 1996 and 2017, the defendant, Xi Tongfu, took advantage of his positions—Deputy Secretary of the Party Working Committee of the Nanjing Jiangning Economic and Technological Development Zone and General Manager of the Economic and Technological Development Corporation; Member of the Standing Committee of the Jiangning County (District) Party Committee; Member of the Standing Committee of the Lianyungang Municipal Party Committee and Secretary of the Party Working Committee of the Lianyungang Economic and Technological Development Zone; and Secretary of the Lianyun District Party Committee of Lianyungang City—to seek benefits for relevant enterprises and individuals in matters such as enterprise restructuring, land transfer, land expropriation and relocation, and project contracting. He thereby illegally accepted property from others in an especially large amount, and, in accordance with the law, should be held criminally liable for the crime of accepting bribes.
Other
China’s trade surplus has narrowed year-on-year for eight consecutive quarters, as foreign trade continues to improve in quality and efficiency.
On July 13, Huang Songping, spokesperson for the General Administration of Customs, stated at a press conference held by the State Council Information Office that China’s goods trade surplus in the first half of this year narrowed by 26.7% compared with the same period last year. Since the third quarter of 2016, China’s trade surplus has recorded year-on-year declines for eight consecutive quarters.
In the first half of this year, China’s total import and export value reached 14.12 trillion yuan, up 7.9% year on year. Specifically, exports amounted to 7.51 trillion yuan, an increase of 4.9%, while imports totaled 6.61 trillion yuan, up 11.5%. The trade surplus stood at 901.32 billion yuan, narrowing by 26.7% compared with the same period last year.

In the first half of the year, newly established foreign-invested enterprises increased by more than 90 percent.
At the Ministry of Commerce’s regular press conference on the 12th, spokesperson Gao Feng stated that from January to June, the number of newly established foreign-invested enterprises nationwide continued to grow rapidly, while the actual utilized foreign investment registered a modest but steady increase. During this period, 29,591 new foreign-invested enterprises were set up, up 96.6% year on year, and the actual utilized foreign investment reached RMB 446.29 billion, an increase of 1.1% compared with the same period last year. In June alone, 5,565 new foreign-invested enterprises were established nationwide, up 92.3% year on year, with actual utilized foreign investment totaling RMB 100.7 billion, up 0.3% year on year.
The technology manufacturing sector maintained its growth momentum, with actual utilized foreign investment in manufacturing reaching RMB 134.83 billion, up 4.9% year on year and accounting for 30.2% of the total. In the high‑tech industries, actual utilized foreign investment increased by 1.6% year on year, representing 20.9% of the overall total. Specifically, high‑tech manufacturing attracted RMB 43.37 billion in foreign investment, a year-on-year rise of 25.3%, with the electronics and communications equipment manufacturing, computer and office equipment manufacturing, and medical instruments and apparatus manufacturing sectors posting year-on-year growth rates of 36%, 31.7%, and 179.6%, respectively. Meanwhile, high‑tech services drew RMB 50.03 billion in foreign investment, with technology transfer and commercialization services expanding by 22.2% year on year.
The pilot free trade zones have spearheaded nationwide growth in foreign investment, while the western region has maintained strong momentum in attracting foreign capital. The 11 pilot free trade zones established 4,281 new foreign-invested enterprises and recorded actual utilized foreign investment of RMB 57.84 billion, up 32.6% year on year, accounting for 13% of the national total. Meanwhile, the western region saw actual utilized foreign investment reach RMB 28.84 billion, a year-on-year increase of 13.2%.
　In addition, on the 12th, the Ministry of Commerce released the 2017 China Shopping Center Development Index Report, which indicated that China’s shopping center development index stood at 68.5 in 2017, up 1.3 points year over year and 18.5 points above the threshold for expansion, signaling a sustained recovery and improvement across the sector. Specifically, the current‑conditions index was 65.1, up 0.9 points year over year, while the expectations index reached 73.5, an increase of 1.8 points compared with the previous year, reflecting growing market confidence among shopping center operators.

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