JC Master Legal News Issue 832

Key Takeaways for This Issue
The 2018 CPC Central Commission for Discipline Inspection’s conference on comprehensively strengthening Party self‑discipline was held in Beijing.
On August 9–10, the China Securities Regulatory Commission (CSRC) convened a meeting in Beijing on comprehensively strengthening Party self‑discipline. The meeting reviewed and outlined plans for advancing comprehensive Party self‑discipline within the CSRC system and for ensuring the steady and sound development of the capital market. Liu Shiyu, Secretary of the CSRC Party Committee and Chairman, delivered a work report.

The China Securities Regulatory Commission has imposed administrative penalties on five market manipulation cases.
Recently, the China Securities Regulatory Commission imposed penalties in accordance with the law on the market-manipulation case involving Gao Yong, confiscating his illegal gains totaling RMB 897,387,345.82 and imposing an additional fine of the same amount. It also penalized Wang Shihong and Chen Jie for market manipulation, levying fines of RMB 1 million each.

The China Securities Regulatory Commission has refined the institutional framework of the capital market, formulating and issuing nine regulations in the first half of the year.
At the regular press conference held on the 10th, China Securities Regulatory Commission (CSRC) spokesperson Gao Li briefed the media on the CSRC’s work in formulating regulations and normative documents during the first half of this year. In the first six months, the CSRC promulgated nine regulations and 23 normative documents, with five regulations having undergone the public consultation process.

SSE: To prevent companies from using suspension as a means to avoid price declines, the exchange generally advises against suspending trading of company shares.
On August 9, in response to recent market suspension and resumption patterns, the Shanghai Stock Exchange stated that, since the beginning of this year, during periods of market correction, certain listed companies have shown signs of seeking trading halts to avoid price declines. In light of such practices, the Exchange has adopted a stringent regulatory approach in its day-to-day oversight, rigorously scrutinizing the legitimacy of the reasons for stock suspensions and whether there are underlying intentions to evade downward pressure, thereby preventing companies from using suspension as a means to sidestep market downturns.

The Shanghai Stock Exchange has adjusted its closing auction trading mechanism, effective August 20.
Recently, with the approval of the China Securities Regulatory Commission, the Shanghai Stock Exchange has adjusted its closing‑session trading mechanism by introducing a three‑minute closing auction and revising the “Shanghai Stock Exchange Trading Rules.” In parallel, it has also amended the “Shanghai Stock Exchange Measures for the Implementation of the Shanghai–Hong Kong Stock Connect,” the “Shanghai Stock Exchange Measures for the Administration of Trading in Stocks on the Risk Alert Board,” the “Shanghai Stock Exchange Detailed Rules for Real‑Time Monitoring of Abnormal Securities Trading,” and the “Notice on Matters Relating to the Supervision of Trading in Newly Listed Shares During the Initial Listing Period.” The revised closing‑session trading mechanism and related adjustments will take effect as of August 20, 2018.

Table of Contents
Table of Contents

Finance & Capital Markets
The 2018 CPC Central Commission for Discipline Inspection’s conference on comprehensively strengthening Party self‑discipline was held in Beijing.
The China Securities Regulatory Commission has imposed administrative penalties on five market manipulation cases.
The China Securities Regulatory Commission has refined the institutional framework of the capital market, formulating and issuing nine regulations in the first half of the year.
SSE: To prevent companies from using suspension as a means to avoid price declines, the exchange generally advises against suspending trading of company shares.
The Shanghai Stock Exchange has adjusted its closing auction trading mechanism, effective August 20.

Corporate & Commercial
Supporting market-oriented debt-to-equity swaps, private equity investment funds are poised for a major boom.
China Mobile posted a robust first-half profit of 65.6 billion yuan and plans to spin off and list three to four subsidiaries.
The central bank has conducted prudential assessments of certain insurance companies, with a particular focus on their asset management businesses.
A member of the Shanghai Internet Finance Association has issued a self-regulatory statement: “We will proactively accept regulatory oversight and supervision.”
The PPP Regulations are expected to be issued this year, and a document aimed at preventing and controlling local government debt risks is currently under review.

Taxation
Venture capital offices can precisely benefit from tax incentives.
Experts believe that personal income tax reform should take a long-term perspective.

Litigation & Arbitration
The Supreme People’s Court has issued guidelines to support and safeguard Hainan’s comprehensive deepening of reform and opening-up.
The Ministry of Public Security has standardized the procedures for handling state compensation cases.

Other
Mobile payments are on the rise, while traditional ATM companies have seen their performance decline year after year, with profits plunging by 90%.
The Ministry of Industry and Information Technology summoned China Mobile for improper marketing practices on campuses.
Finance & Capital Markets
The 2018 CPC Central Commission for Discipline Inspection’s conference on comprehensively strengthening Party self‑discipline was held in Beijing.
On August 9–10, the CSRC system convened a conference on comprehensively and strictly governing the Party in Beijing. Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, the meeting thoroughly implemented the CPC Central Committee’s new arrangements and requirements for comprehensively and strictly governing the Party, with Comrade Xi Jinping at its core. It reviewed past work, analyzed the current situation, and formulated plans to advance the comprehensive and strict governance of the CSRC system and to ensure the steady and sound development of the capital market. Liu Shiyu, Secretary of the CSRC Party Committee and Chairman, delivered a work report.
The meeting reviewed the work of comprehensively strengthening Party self‑discipline within the CSRC system since the 19th National Congress of the CPC. The Party Committee of the CSRC has consistently regarded studying, implementing, and upholding Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era and the spirit of the 19th National Congress as its top political task, continuously enhancing the “Four Consciousnesses,” officely bolstering the “Four Confidences,” and earnestly ensuring the “Two Upholds.” In accordance with the overarching requirements for Party building in the new era, the Commission has made solid progress in comprehensively strengthening Party self‑discipline across the system, placing political Party building first, persistently advancing ideological and work‑style development, unremittingly ensuring the thorough and meticulous implementation of the spirit of the CPC Central Committee’s Eight‑Point Decision, rigorously enforcing supervision, discipline, and accountability, and resolutely upholding the principles of Party leadership over cadres and talent, thereby comprehensively strengthening the cadre workforce throughout the system. Through the concerted efforts of the entire system, significant new strides have been made in comprehensively strengthening Party self‑discipline within the CSRC, ushering in a fresh outlook.
With regard to the next steps in implementing the CPC Central Committee’s new arrangements and requirements for exercising full and rigorous Party self‑discipline, the meeting emphasized that strengthening full and rigorous Party self‑discipline is a crucial political guarantee for effectively carrying out all aspects of capital market regulation. The cause of full and rigorous Party self‑discipline is an ongoing journey; we must continue to advance it in greater depth across the CSRC system. Party committees at all levels within the system must elevate their political awareness, resolutely shoulder their principal responsibility, and, in response to salient problems, demonstrate a spirit of courage and accountability and adopt pragmatic measures, focusing on consistency and sustainability, strictness and practicality, and thoroughness and meticulousness. We must vigorously strengthen full and rigorous Party self‑discipline and work style development, set a good example in “one leading role” and “three exemplary models,” and strive to build model institutions. We must officely prioritize political development as the fundamental task of the Party, enhance the self‑building of Party committees at all levels, enforce strict norms in intra‑Party political life, and foster a sound political ecosystem. With the tenacity of driving nails home, we must sustain our efforts in the protracted battle to improve work style, comprehensively strengthen disciplinary construction, and govern the Party with strict discipline. We must thoroughly study and implement the Supervision Law, ensuring effective oversight of public power is put into practice. Finally, we must fully implement the Party’s organizational line for the new era, regard selecting and appointing the right people as our primary political responsibility, and work to build a high‑caliber contingent of regulatory officials who are trustworthy to the CPC Central Committee, politically strong, highly competent, and loyal, clean, and responsible.
The meeting, in further implementing the CPC Central Committee and the State Council’s directives on economic and financial work, conducted an in-depth analysis of the current capital market landscape and identified key priorities for the next phase. Upholding the overarching principle of seeking progress while maintaining stability, it integrated the “Six Stabilities” requirements into all aspects of capital market regulation, consciously strengthening a sense of the bigger picture and inter‑agency coordination, with a particular focus on safeguarding capital market stability and preventing and defusing various risks. Adhering to reform as the central task, the meeting will continue to deepen foundational institutional reforms covering issuance, mergers and acquisitions, share buybacks, employee stock ownership, corporate governance, and delisting. In line with the principle of “acting sooner rather than later, and faster rather than slower,” it will comprehensively accelerate the opening-up of the capital market. Regulatory oversight of listed companies and all types of securities and futures institutions will be strengthened, enforcement efforts will be intensified, and the development of regulatory technology will be vigorously advanced, thereby effectively protecting the legitimate rights and interests of investors. For certain major, long‑term, foundational initiatives, timely research and studies will be launched to continuously enhance the capital market’s functions, ensuring that it better supports supply‑side structural reform and high‑quality economic development.
The meeting reviewed typical cases of disciplinary and legal violations within the CSRC system over the past year and more, reinforced cautionary education, and laid out plans for implementing the spirit of the National Conference on Organizational Work. Participants engaged in thorough discussions on how to further advance comprehensive and strict Party governance within the CSRC system, prevent and defuse financial risks, deepen reform and opening-up in the capital market, and motivate cadres to take responsibility and deliver results, thereby aligning thinking and enhancing understanding.
Wang Huimin, Head of the CPC Commission for Discipline Inspection and Supervision stationed at the China Securities Regulatory Commission under the Central Commission for Discipline Inspection, presided over the meeting. Members of the CPC Committee of the CSRC, officials from the CPC Commission for Discipline Inspection and Supervision stationed at the CSRC, secretaries and principal heads of the Party branches in all departments of the CSRC headquarters, as well as secretaries, principal heads, and discipline inspection commissioners of Party committees at all units within the system, attended the meeting.

The China Securities Regulatory Commission has imposed administrative penalties on five market manipulation cases.
Recently, the China Securities Regulatory Commission imposed administrative penalties in accordance with the law on several market manipulation cases. Specifically, it confiscated illegal gains totaling RMB 897,387,345.82 from Gao Yong and levied an additional fine of the same amount; imposed fines of RMB 1 million each on Wang Shihong and Chen Jie for their respective market manipulation offenses; confiscated RMB 425,428.65 in illegal gains from Chu Lianjiang and imposed a fine of RMB 2,127,143.25; confiscated RMB 6,543,998.61 in illegal gains from Xie Yifeng and imposed a fine of RMB 19,631,995.83; and ordered Yu Honggao to dispose of illegally held securities in accordance with the law, confiscated his illegal gains of RMB 5,842,003.07, and imposed a fine of RMB 17,526,009.21. (For details of the administrative penalty decisions, please refer to the CSRC website.)
In the aforementioned cases, Gao Yong controlled and utilized two sub‑accounts under collective fund trust schemes and 14 individual accounts, leveraging financial leverage through trust products and other means to concentrate capital advantages. By employing tactics such as consecutive limit-up closures and continuous trading, he engaged in manipulative practices targeting “Jinghua Pharmaceutical.” Wang Shihong, then Assistant General Manager of the Over-the-Counter Markets Department and Head of the Market-Making Business Department at Guotai Junan Securities Co., Ltd. (hereinafter referred to as Guotai Junan), colluded with Chen Jie. Using market‑making‑specific securities accounts and accounts under Chen Jie’s actual control, and exploiting Guotai Junan’s status as a market maker, they suppressed or locked stock prices during market‑making transactions by, for example, placing deliberately low sell orders that executed within the final ten minutes before the close. This manipulation affected 14 stocks, including “Foxit Software.” Chu Lianjiang controlled and employed a related group of accounts, engaging in manipulative behavior against eight stocks, including “Baichuan Shares,” by executing fictitious buy orders during trading hours followed by reverse sell orders. Xie Yifeng controlled an account group comprising corporate accounts, private equity fund accounts, and other personal accounts, and used a variety of methods—including intraday price‑pumping, fictitious order submissions, and large‑scale limit‑up closures—to manipulate seven stocks, including “Hongyu New Materials.” Yu Honggao controlled and operated 40 accounts, leveraging his financial strength to engage in continuous buying and selling, intra‑account transfers among accounts under his actual control, and fictitious order submissions, thereby manipulating four stocks, including “Jingwei Textile Machinery.”
The aforementioned cases have revealed several new characteristics of market manipulation. Notably, some perpetrators seek to gain a substantial financial advantage by leveraging private margin financing, asset management schemes, private equity funds, and other channels to amplify their positions, often deploying enormous sums of capital. They execute rapid, intraday trades in individual stocks, which can easily trigger abnormal market volatility, send misleading market signals, and severely disrupt investors’ normal trading decisions, thereby infringing upon their legitimate rights and interests. At the same time, such manipulative practices tend to accumulate risks in specific stocks. The funding‑leverage mechanisms they rely on are frequently structured with built‑in liquidation triggers; during broad market declines or as stock‑specific risks materialize, these mechanisms may set off a cascade of downward price pressures, leading to panic selling and further exacerbating systemic risks. The potential harm is significant and must be officely and resolutely addressed. Our Commission will continue to strengthen regulatory enforcement, rigorously crack down on all forms of market manipulation, impose strict legal penalties on violators, uphold a fair and impartial market order, and safeguard the legitimate rights and interests of investors.

The China Securities Regulatory Commission has refined the institutional framework of the capital market, formulating and issuing nine regulations in the first half of the year.
At the regular press conference held on the 10th, China Securities Regulatory Commission (CSRC) spokesperson Gao Li briefed the media on the CSRC’s work in formulating regulations and normative documents during the first half of this year. In the first six months, the CSRC promulgated nine regulations and 23 normative documents, with five regulations having undergone the public consultation process.
The “Regulations on Equity Management of Securities Companies,” which has been open to public consultation since March this year, is still undergoing the formal procedures. The regulations are intended to comprehensively and systematically consolidate the requirements governing equity management in securities companies and to standardize the conduct of their shareholders. Gao Li stated that, in the first half of this year, the CSRC formulated a number of rules and normative documents, primarily falling into the following categories:
First, in response to the needs of capital market reform and opening-up, relevant systems and rules have been formulated or amended. These include: the issuance of the Measures for the Administration of the Issuance and Trading of Depositary Receipts (Trial), as well as amendments to four regulations—namely, the Measures for the Administration of Initial Public Offerings and Listings, the Measures for the Administration of Initial Public Offerings and Listings on the ChiNext Board, the Measures for the Administration of Securities Issuance and Underwriting, and the Measures for the Administration of Foreign-Invested Securities Companies—and the promulgation of twelve normative documents, such as guidelines on the issuance and listing of pilot red-chip enterprises, ongoing supervision, due diligence by sponsoring institutions, accounting treatment, depositary agreements, and provisional provisions governing the use of securities investment advisory services provided by Hong Kong‑based institutions by securities and fund management offices. In addition, draft measures are being prepared, including the Measures for the Administration of Foreign-Invested Futures Companies and the Measures for the Administration of Overseas Establishment, Acquisition, and Equity Participation by Securities Companies and Fund Management Companies, with the aim of steadily expanding the opening-up of the securities industry.
Second, efforts were made to further improve the corporate governance framework for listed companies. In collaboration with the State-owned Assets Supervision and Administration Commission of the State Council and the Ministry of Finance, the Measures for the Supervision and Administration of State‑Owned Equity in Listed Companies were jointly issued; special provisions governing share reductions by venture capital fund shareholders in listed companies were formulated; and Rules No. 19 on the Preparation and Disclosure of Information by Companies Issuing Securities Publicly—Correction of Financial Information and Related Disclosures—and Rule No. 14—Handling of Non‑Standard Audit Opinions and Related Matters—were revised. In addition, the Guidelines on Corporate Governance for Listed Companies and a Decision on Amendments were drafted to address emerging issues and evolving circumstances in the field of listed company regulation.
Third, we have improved the multi-tiered capital market institutional framework by issuing the “Guidelines on Information Reporting for Regional Equity Markets (Trial)” to fully leverage the role of regional equity markets as a “regulatory toolbox” for information reporting. In addition, we have developed the “Interface Specifications for Over-the-Counter Trading Systems in the Securities and Futures Industry,” a series of financial industry standards, thereby achieving unified regulatory oversight of securities offices’ over-the-counter trading activities.
Fourth, regulatory oversight of securities and futures industry institutions was further strengthened, with concentrated efforts directed toward institutional framework development. A series of measures were promptly introduced, including the “Regulations on Integrity in the Conduct of Securities and Futures Operating Institutions and Their Staff,” the “Opinions on Strengthening Risk Prevention and Control of Integrity-Related Practices in Investment Banking Activities of Securities Offices, Including the Engagement of Third Parties,” the “Internal Control Guidelines for Investment Banking Activities of Securities Offices,” and the “Guiding Opinions on Further Standardizing Internet Sales and Redemption Services for Money Market Funds,” thereby laying a solid foundation for the sound and orderly development of the securities and futures sector in the new stage. Meanwhile, draft regulations titled “Regulations on Equity Management of Securities Offices” are being prepared, aiming to comprehensively and systematically consolidate relevant requirements for equity management and to standardize the conduct of shareholders of securities offices.
Fifth, we will strengthen the development of an integrity‑based regulatory framework in the capital markets by revising the Measures for the Supervision and Administration of Integrity in the Securities and Futures Markets and formulating the Detailed Rules on Appropriately Restricting Certain Seriously Dishonest Persons from Taking Trains and Civil Aircraft for a Specified Period. These measures will further expand the “toolbox” for integrity‑based oversight in the securities and futures markets, thereby endowing such oversight with effective enforcement mechanisms.
In addition, the CSRC has revised and refined the Regulations on the Procedures for Implementing Administrative Licenses, focusing on addressing inconsistencies in policies regarding the temporary suspension of acceptance and the suspension of review processes among various securities intermediary service institutions. It has also issued documents such as the Guidelines for Target‑Date Pension‑Focused Mutual Funds (Trial) and the Regulatory Guidelines for Securities and Futures Investor Education Bases, thereby providing guidance and establishing standards in these areas. Gao Li stated that the formulation and promulgation of these rules and normative documents have strengthened the institutional framework of the capital market and improved the mechanisms governing its operation, which is of great significance for fundamentally optimizing the market structure, regulating the conduct of market participants, and enhancing market quality.

SSE: To prevent companies from using suspension as a means to avoid price declines, the exchange generally advises against suspending trading of company shares.
On August 9, in response to recent market suspension and resumption patterns, the Shanghai Stock Exchange stated that, since the beginning of this year, during periods of market correction, certain listed companies have shown signs of seeking trading halts to avoid price declines. In light of such practices, the Exchange has adopted a stringent regulatory approach in its day-to-day oversight, rigorously scrutinizing the legitimacy of the reasons for stock suspensions and whether there are underlying intentions to evade downward pressure, thereby preventing companies from using suspension as a means to sidestep market downturns.
The Shanghai Stock Exchange stated that as early as 2014, it had already placed the improvement of its suspension and resumption regime on its agenda and issued dedicated business rules governing such procedures. Over the past two years, the Exchange has continued to uphold stringent regulatory oversight, particularly in response to recent market adjustments, by implementing targeted supervisory measures. As a result, issues previously raised by the market—namely, frequent, prolonged, and premature trading halts—have been significantly alleviated.
Looking at the recent suspension of trading by Shanghai-listed companies, since the beginning of this year, during market corrections, some listed offices have shown signs of seeking trading halts to avoid price declines. These companies share two characteristics: first, their stock prices have fallen sharply in recent days; second, the proposed initiatives they disclose often appear to be hastily assembled, and even those projects that genuinely reflect a planning intent are generally still immature.
In response to such situations, the Shanghai Stock Exchange has drawn on its prior regulatory experience and, in its day-to-day oversight, has adopted a stringent approach to scrutinizing the authenticity of the reasons for stock suspensions by listed companies and whether there is an intent to evade price declines, thereby preventing companies from using suspension as a means to sidestep market downturns.
In terms of specific arrangements, the principle is to discourage suspension of trading in company shares; instead, companies are required to disclose proposed plans in stages and fully disclose associated risks. At the same time, reasonable market‑driven suspension requests are duly respected. Where particularly sensitive information necessitates a short‑term suspension, or where a company faces significant risks requiring verification and resolution, suspension procedures will be handled in accordance with applicable regulations.
The Shanghai Stock Exchange stated that, following the implementation of the aforementioned regulatory measures, market feedback—particularly from listed companies—has been positive.
According to data from the Shanghai Stock Exchange, on August 9, 45 listed companies in the Shanghai market were suspended from trading, accounting for approximately 3.1% of all Shanghai‑listed offices—primarily companies that had already entered the planning stages of mergers and reorganizations. Overall, this arrangement has helped stabilize market expectations, safeguard market liquidity, and protect investors’ trading rights.

The Shanghai Stock Exchange has adjusted its closing auction trading mechanism, effective August 20.
To further ensure price stability during the closing session, the Shanghai Stock Exchange, with the approval of the China Securities Regulatory Commission, has recently adjusted its closing‑session trading mechanism by introducing a three‑minute closing auction and revising the “Shanghai Stock Exchange Trading Rules.” In parallel, it has also amended the “Shanghai Stock Exchange Measures for the Implementation of the Shanghai–Hong Kong Stock Connect,” the “Shanghai Stock Exchange Measures for the Administration of Trading in Stocks on the Risk Alert Board,” the “Shanghai Stock Exchange Detailed Rules for Real‑Time Monitoring of Abnormal Securities Trading,” and the “Notice on Matters Relating to the Supervision of Trading in Newly Listed Shares During the Initial Period” (SSE Document No. 59 [2015]). The revised closing‑session trading mechanism and related adjustments will take effect as of August 20, 2018. The key elements of this adjustment are as follows:
I. Adjustments to the Closing Trading Mechanism
First, a closing auction will be implemented for stocks. The method for determining the closing price will be changed to a closing auction, which will take place from 2:57 p.m. to 3:00 p.m. During this period, orders may be placed but cannot be canceled. Market data will be displayed in the same manner as during the opening auction.
The methods for determining the closing prices of bonds, bond repurchase agreements, funds, and other trading instruments remain unchanged.
Second, the resumption time for securities after a trading suspension has been adjusted. To align with the implementation of the closing auction and enhance trading efficiency, for securities that are suspended pursuant to the Exchange’s trading‑supervision rules and resume trading on the same day, the resumption time is hereby revised as follows: If the suspension lasts until or beyond 2:57 p.m., the security will resume trading at 2:57 p.m. on the same day and proceed directly to the subsequent trading phase; in addition, the previous rule stipulating that “intraday suspensions would remain in effect until 2:55 p.m.” is amended to extend the suspension until 2:57 p.m., with resumption at that time and entry into the subsequent trading phase.
II. Adjustment to the Valid Price Range for Initial Public Offering Orders on the First Day of Trading
To streamline price‑control procedures and enhance the efficiency of investor order submissions, the price‑quote range for the first day of trading is adjusted as follows:
For the first trading day of a newly listed stock, the valid price range for limit orders during the opening call auction remains unchanged: “the valid bid or offer price shall not exceed 120% of the issue price nor fall below 80% of the issue price.” During the continuous trading session, the closing call auction, and any trading suspension within the opening period, the valid price range is uniformly adjusted to: “the order price shall not exceed 144% of the issue price nor fall below 64% of the issue price” (where 144% corresponds to 120% of the upper limit of the valid price range in the opening call auction, and 64% corresponds to 80% of the lower limit).
For the other three categories of stock listings—namely, follow-on offerings, resumption of trading after suspension, and relisting following delisting—the valid price range for limit orders during the opening call auction on the first day of listing will remain unchanged: “limit prices shall not exceed 900% of the previous closing price nor fall below 50% of the previous closing price.” Thereafter, the valid price range for limit orders will be uniformly adjusted to: “limit prices shall not exceed 110% of the most recent transaction price nor fall below 90% of the most recent transaction price.”
The other price‑control mechanisms previously prescribed by the Shanghai Stock Exchange for the first day of a stock’s listing are no longer applicable.
III. Adjustments to the Acceptance of Order Entries for Stocks Suspended During Market Hours
Stocks that were suspended during trading hours may still accept order submissions and allow order cancellations. Upon resumption of trading, all accepted orders will be matched in a single batch‑auction session.
No changes will be made to the relevant provisions governing order submissions during the suspension periods for bonds, bond repurchase transactions, and funds. Going forward, the SSE will conduct market testing on the aforementioned adjustments to ensure the smooth implementation of the closing‑trade mechanism reform.

Commercial & Corporate
Supporting market-oriented debt-to-equity swaps, private equity investment funds are poised for a major boom.
Recently, the National Development and Reform Commission and four other ministries jointly issued the “Key Work Points for Reducing Corporate Leverage in 2018.” With regard to specific fundraising methods, the document states that financial asset investment companies will be supported in raising equity‑based capital to carry out market‑oriented debt‑to‑equity swaps through various channels, including issuing private‑placement asset management products earmarked for such swaps and establishing subsidiaries to act as managers and launch private‑equity investment funds.
Liu Zhe, deputy director of the Wanbo Institute for New Economy, told a reporter from the Securities Daily yesterday that, at the outset of fundraising, private equity investment funds are structured as equity‑based vehicles, with no demand for debt or fixed returns. This design helps prevent debt‑to‑equity swaps from degenerating into “equity in name, debt in reality.” At the same time, private equity funds offer greater flexibility and operate under relatively market‑oriented mechanisms; by entering the debt‑to‑equity market, they can help steer such transactions toward a market‑driven path and effectively avoid becoming mere lifelines for “zombie enterprises.”
Meanwhile, Liu Zhe also noted that encouraging private equity investment funds to increase their participation in the debt-to-equity market presents a significant opportunity for the sector’s development. The debt-to-equity market can effectively broaden the pool of potential investment opportunities, while funds, by acquiring equity stakes in companies, engage in corporate governance and management. Through professional market‑driven strategies, they can help turn around underperforming enterprises, unlock their latent value, and enhance the overall profitability of the funds.
Liu Xiangdong, an associate researcher at the Economic Research Department of the China Center for International Economic and Technical Exchanges, said yesterday in an interview with a Securities Daily reporter that encouraging private equity funds to participate in market‑based debt-to-equity swaps aims to reduce corporate financing risks, promote diversification of equity structures, and enhance risk resilience. For private equity funds, this broadens their investment scope, improves capital allocation efficiency, and lowers investment‑related risks.
In the view of many industry insiders, allowing private equity offices to enter the market is intended to further stimulate market participants, enhance market efficiency, and foster robust competition. At present, the primary objectives of debt-to-equity swaps remain risk reduction and deleveraging. For private equity investment funds, this also presents an opportunity to expand into new areas.
Speaking of private equity funds’ participation in market‑based debt‑to‑equity swaps, what advantages do they offer compared with other fundraising methods? Liu Xiangdong argues that private equity is more sensitive to risk and involves the direct deployment of its own capital, making such investments in debt‑to‑equity conversions more akin to direct financing. He further contends that the key to encouraging private equity funds to engage in market‑based debt‑to‑equity swaps lies in establishing robust legal safeguards to effectively protect investors’ equity‑related rights and interests. At the same time, it is essential to carefully manage private equity funds’ return expectations to prevent sham debt‑to‑equity arrangements that masquerade as equity investments but are, in fact, debt‑based.

China Mobile posted a robust first-half profit of 65.6 billion yuan and plans to spin off and list three to four subsidiaries.
On August 9, China Mobile announced its first-half 2018 results. Despite intensifying competition in the telecom sector for both customer base and data‑traffic share, China Mobile’s performance in the first half still exceeded institutional expectations: during the period, its operating revenue rose 2.9% year over year to RMB 391.8 billion, while net profit increased 4.7% year over year to RMB 65.6 billion.
At the interim results conference, China Mobile Chairman Shang Bing stated that the company will continue to leverage its scale, network, and resource advantages to officely maintain its leading position in 4G. Looking ahead, investment planning will be guided by the maturity of 5G network business models and the return on investment.
Li Yue, Executive Director and Chief Executive Officer of China Mobile, revealed that the company is currently planning to spin off and list three to four of its subsidiaries, though the specific timing and location of these listings remain undecided. With regard to particular business units, Li Yue stated that the company will consider selecting entities that are already operating independently, have limited ties to its core network‑related operations, and facilitate streamlined financial reporting.
On August 8, China Tower, in which China Mobile holds a 40% stake, listed on the Hong Kong Stock Exchange, becoming the year’s largest IPO by funds raised and drawing significant market attention. Dong Xin, China Mobile’s chief financial officer, stated that the listing is expected to generate approximately RMB 2 billion in profit for China Mobile, which will be reflected in the company’s second-half financial results. At this time, no special dividend has been considered.

The central bank has conducted prudential assessments of certain insurance companies, with a particular focus on their asset management businesses.
It has recently been learned that a branch of the People’s Bank of China has issued a notice to corporate insurance institutions, subjecting them to a prudential assessment. The assessment focuses on three key areas: first, the overall soundness of the company’s operations; second, its asset management business; and third, the extent to which non‑financial enterprises invest in financial institutions.
Among these, the first item—corporate operational fundamentals—is a standard component of the soundness assessment; however, the latter two—asset management activities and non‑financial enterprises’ investments in financial institutions—are particularly noteworthy. These two areas have been designated as key focus points in this year’s soundness evaluation, aligning with the regulatory priorities in the financial sector.
According to the notice, the central bank’s prudential assessment is conducted in two phases—self-assessment by insurance companies and on-site assessment by the central bank—each lasting one week, with the possibility of appropriate extension or additional follow-up assessments based on actual circumstances.
A comprehensive prudential assessment primarily entails a thorough evaluation of a company’s fundamental business fundamentals. Specifically, the central bank will, guided by both macroprudential and microprudential principles, employ a combination of qualitative and quantitative analytical methods to conduct a holistic, multi‑faceted appraisal of the company’s prudential soundness.
The specific assessment areas include: corporate governance; internal control, risk management, and compliance; assessment of key business risks; contagion risk assessment and stress‑testing; capital adequacy, workforce stability, and business‑system resilience; as well as the soundness of core operational metrics such as growth capacity, solvency, liquidity, profitability, and management quality.
Compared with previous years, a key focus of this year’s assessment of insurance institutions’ stability is the evaluation of their asset management operations. With the issuance of new regulations on asset management this year, the central bank has placed particular emphasis on whether insurance institutions engage in conduit activities or multi-layered nesting, and on how they are implementing the requirements to eliminate conduits and prevent nested structures.
Specifically, the central bank requires insurance companies to provide details on their implementation of the new asset‑management regulations, including the status of compliance during the transition period, their remediation plans for asset‑management activities, and any challenges encountered in applying the new rules along with corresponding recommendations. In addition, the assessment will cover the overall profile of the company’s asset‑management operations and associated risks, such as the scale, returns, and structure of these activities; the types of risks involved and the measures in place to manage them; the allocation of funds and client characteristics; the processes used to identify, assess, and analyze risks; instances of default and how they were handled; and whether there have been large‑scale redemptions or losses, together with the steps taken to address them.
The central bank also seeks to assess whether insurance institutions’ asset management activities give rise to cross‑financial risks. This includes evaluating whether risk assessments are conducted on financial institution counterparties, examining the nature of non‑standard investment products issued by other financial institutions—such as their scale and the concentration of exposure to individual counterparties—and determining whether the allocation of rights and responsibilities between the company and other financial entities is appropriate.
The establishment and implementation of internal control systems for asset management, as well as investor protection efforts, are also part of the assessment. This year’s prudential assessment places particular emphasis on evaluating non-financial enterprises’ investments in financial institutions. Specifically, the assessment covers two areas: first, the shareholders’ profile; and second, the assessment of related-party transaction risks.
With respect to shareholders, the scope encompasses several aspects: the company’s investments in financial institutions through equity establishment, mergers and acquisitions, equity participation, and other means; whether the company conducts due diligence on shareholder qualifications, shareholding structures, investment funds, corporate governance, and related-party transactions; whether there is a de facto controller, ultimate beneficial owner, or other affiliated parties and persons acting in concert; whether the controlling shareholder’s commitments to provide capital support to the insurance institution have been fulfilled; whether the controlling shareholder has engaged in unlawful interference with, or appropriated, the insurance institution’s finances, funds, assets, or expenses; and whether related-party transactions between the controlling shareholder and the insurance institution are transparent, fair, and compliant with applicable regulations.
The risk assessment of related-party transactions covers the following aspects: whether the firewall between an insurance company and its affiliates is effective; whether a management system for related-party transactions has been established and whether related-party transaction risks are effectively controlled; compliance with applicable laws and regulations regarding the use of funds, investment limits, reporting requirements, and information disclosure; whether significant related-party transactions have been approved by the board of directors or the shareholders’ meeting; whether financial services and transactions involving related parties adhere to relevant laws, regulations, and accounting standards; whether related-party transactions are conducted through credit extensions, guarantees, or the purchase and transfer of assets; and whether there are instances of multi-layered nesting, off‑book agreements, or dual‑track contracts.

A member of the Shanghai Internet Finance Association has issued a self-regulatory statement: “We will proactively accept regulatory oversight and supervision.”
In response to the clear requirements and work arrangements recently put forward by the Leading Group for the Special Rectification of Internet Finance Risks and the Leading Group for the Special Rectification of P2P Online Lending Risks—aimed at steadily advancing the special rectification efforts, particularly in the online lending sector—this statement seeks to appropriately address and mitigate risks within the online lending industry, safeguard the rights and interests of all market participants, especially investors, foster a conducive environment for the industry’s healthy development, bolster industry confidence, and usher in a new phase of growth for the online lending sector. On August 8, 2018, the online lending member institutions of the Shanghai Internet Finance Industry Association jointly issued a self-regulatory declaration:
I. Officely uphold the principle of lawful and compliant operations. We will rigorously comply with all applicable laws and regulations governing the online lending industry, steadfastly maintain our role as an information intermediary, and, in strict accordance with the requirements of the special rectification campaign and the “1+3” regulatory framework, proactively implement corrective measures to ensure full compliance, never crossing the regulatory red lines.
II. Officely advance the transparency of all information disclosure. In strict compliance with the China Banking Regulatory Commission’s “Guidelines on Information Disclosure for Online Lending Information Intermediary Institutions,” we conduct information disclosure through our official website, official WeChat account, and other channels, and submit reports in accordance with the requirements of regulatory authorities, industry associations, and other relevant departments, ensuring that all disclosed and reported information is truthful, accurate, complete, and timely. We refrain from making false or misleading publicity, thoroughly understand our clients, and fully disclose potential risks.
III. Officely and proactively accept regulatory oversight and supervision. Actively embrace regulatory scrutiny and cooperate with all relevant supervisory authorities in their inspections and guidance of the platform; actively integrate into the association’s self-regulatory management system and support its various self-regulatory initiatives; and establish an investor‑led compliance committee to voluntarily submit to investor oversight.
IV. Officely promote inter‑industry collaboration and coordination. Actively facilitate exchanges and cooperation among platforms, and advance the mechanism for sharing blacklists of debt evaders and defaulters. With respect to self‑media outlets that exaggerate facts, publish false reports, or engage in extortion against financial institutions, we will proactively report such behavior to the relevant authorities, working together to safeguard the industry’s healthy ecosystem.
V. Officely and earnestly assume social responsibility. We will ensure that we neither abscond nor lose contact, proactively establish an executive hotline to facilitate timely and smooth communication with investors, and consistently engage with investors in a positive and sincere manner, doing our utmost to safeguard their rights and interests.

The PPP Regulations are expected to be issued this year, and a document aimed at preventing and controlling local government debt risks is currently under review.
China’s economic policy landscape in the second half of the year is drawing close attention, with new initiatives and measures expected. Macro‑economic regulation in the second half will have ample room and a full array of policy tools at its disposal, with priorities focused on boosting consumption, advancing rural revitalization, cutting taxes and fees, and stimulating private investment.
Industry insiders believe that, under the policy orientation of expanding domestic demand, measures to boost consumption are expected to be rolled out soon. Relevant ministries and commissions are also drafting policy documents aimed at broadening consumer spending. According to reports, the Ministry of Industry and Information Technology is currently preparing a Three-Year Action Plan for Expanding and Upgrading Information Consumption and plans to designate a number of pilot cities for information consumption in the next phase.
On the front of rural revitalization, the National Development and Reform Commission announced earlier this week that the “Rural Revitalization Strategic Plan (2018–2022)” has recently been issued and put into effect by the CPC Central Committee and the State Council. The document is expected to be officially released to the public shortly.
In addition, the highly anticipated PPP Regulations are expected to be issued this year. Documents currently under development by the relevant authorities to manage and mitigate local government debt risks may clarify the relationship between PPPs and implicit debt. All of these measures will help standardize the development of PPPs and boost private investment.
Taxation TAXATATION
Venture capital offices can precisely benefit from tax incentives.
The State Taxation Administration recently issued an announcement clarifying the implementation guidelines for tax policies applicable to venture capital offices and angel investors, with the aim of enhancing policy applicability and enabling taxpayers to accurately benefit from tax incentives.
The announcement clarifies the criteria for the two-year holding period and the method for calculating the investment duration. According to the “Notice on Relevant Tax Policies for Venture Capital Enterprises and Angel Investors,” jointly issued earlier by the Ministry of Finance and the State Taxation Administration (hereinafter referred to as the “Notice”), corporate‑type venture capital enterprises that directly invest in seed‑stage or early‑stage technology offices through equity investments for a continuous period of at least two years may deduct 70% of their investment amount from their taxable income in the year the equity is held for two years. Any deduction not utilized in that year may be carried forward and applied in subsequent tax years.
The announcement clarifies that, as stated in Article 1 of the Notice, “two full years” means that the paid-in capital invested by corporate venture capital offices, partnership venture capital offices, and individual angel investors in early-stage technology enterprises has been held for two full years, with the investment period calculated from the date on which the early-stage technology enterprise receives the investment and completes its business registration amendment.
“It should be noted that, for partnership venture capital offices investing in early-stage technology enterprises, the policy now only requires that the partnership venture capital office’s paid-in capital invested in such enterprises remain in place for a full two years, while the requirement that individual partners’ own paid-in contributions to the partnership venture capital office also remain in place for two years has been eliminated. This simplification of the policy conditions will help enterprises implement the policy more accurately,” said an official from the State Taxation Administration.
The Notice also stipulates that, for start-up technology enterprises, “in the year of receiving investment and the subsequent tax year, the total R&D expenses must account for no less than 20% of the total cost and expense expenditures.” In this regard, the Announcement clarifies that the ratio of total R&D expenses to total cost and expense expenditures refers to the proportion of the aggregate R&D expenses incurred in the year of receiving investment and the following tax year, relative to the aggregate cost and expense expenditures for the same period.
“This calculation methodology draws on the approach used to determine the R&D expense ratio for high-tech enterprises, thereby lowering the threshold for qualifying for the preferential treatment and enabling more companies to benefit from the policy incentives,” said the official. For example, suppose a corporate venture capital office invested in a start-up technology enterprise in May 2018. Assuming all other conditions meet the requirements set forth in the relevant regulations, if the start-up’s R&D expenses in 2018 totaled RMB 1 million and its cost of goods sold amounted to RMB 10 million, the R&D expense ratio for that year would be 10%, below the 20% threshold. In 2019, with R&D expenses of RMB 5 million and cost of goods sold of RMB 10 million, the R&D expense ratio rises to 50%, exceeding the 20% threshold. “If the requirement were that the R&D expense ratio must exceed 20% in both the year of investment and the following year, the corporate venture capital office would not qualify for the tax incentive,” the official explained. However, under the calculation method specified in the announcement, if the average R&D expense ratio of the start-up over the two years—investment year and the subsequent year—reaches 30%, the corporate venture capital office would be eligible for the tax benefits.
The announcement also clarifies the methodology for calculating the capital contribution ratios of partners in venture capital partnership enterprises. Given that such partnerships are eligible for tax incentives in the year they complete a two-year investment period in early-stage technology companies, the calculation date has been set as the end of the year in which the two-year threshold is met. This approach standardizes the treatment of investments that reach the two-year mark within the same year, streamlines the calculation process, and reduces the administrative burden on enterprises.

Experts believe that personal income tax reform should take a long-term perspective.
Recently, the draft Amendment to the Individual Income Tax Law (hereinafter referred to as the “draft”) closed its public consultation period. According to the website of the National People’s Congress of China, more than 130,000 comments were received over the past month. Experts argue that personal income tax reform should adopt a long-term perspective and focus on optimizing the tax structure.
After being set at RMB 800 per month in 1980, China adjusted the personal income tax threshold on three occasions in response to economic and social developments: it was raised to RMB 1,600 per month in 2006, to RMB 2,000 per month in 2008, and to the current level of RMB 3,500 per month in 2011.
This time, the personal income tax threshold is proposed to be raised to RMB 5,000 per month, a move that, in terms of its magnitude, matches the previous adjustment. According to survey data recently released by the National Bureau of Statistics, in 2017 the average annual wage for employees at enterprises above designated size in China was RMB 61,578.
Yang Zhiyong, a researcher at the Institute of Financial Strategy of the Chinese Academy of Social Sciences, stated that while the personal income tax threshold is certainly important, even more crucial is establishing a personal income tax system that combines comprehensive and categorized approaches, thereby better promoting social equity. Special additional deductions, which vary from person to person, also reflect more equitable, targeted assistance. Experts note that the draft still requires further clarification on details such as comprehensive taxation and special deductions.
In the view of Liu Yi, Director of the Department of Public Finance at Peking University’s School of Economics, truly alleviating the tax burden on the public requires a system of actual expense reimbursement. Furthermore, with regard to children’s education, if a uniform national standard were applied, it could result in lower deduction rates in first-tier cities while covering a larger share of expenses in cities where education costs are relatively low. As for continuing education, defining the concept of “continuing education” and accrediting the qualifications of training institutions also pose significant challenges.
Experts argue that personal income tax reform should adopt a long-term perspective, ultimately aiming to raise the incomes of low-income earners, expand the share of the middle class, and strengthen tax-based income redistribution for high-income groups. The reform should establish an overarching framework that imposes appropriate taxation on both capital and labor income, phase out the employer‑withholding system, and shift the underlying tax‑collection paradigm. It should also build a credit‑based system, introduce a lifelong, unique taxpayer identification number linked to individual retirement benefits, and impose limits on cash‑in‑hand income.
From the perspective of tax administration, Zhao Wei, Chief Macro and Bond Researcher at the Yangtze Securities Research Institute, argues that to ensure the successful implementation of the tax reform plan, the tax administration system must undergo further deepening of reforms. For instance, taxing comprehensive income requires calculating how to determine deductible amounts across multiple sources of income; and shifting from monthly to annual tax filing may also give rise to challenges such as a disproportionately heavy administrative workload during certain months of the year.
However, the factors conducive to effective tax administration are steadily increasing. Yang Zhiyong noted that the share of cash transactions has declined markedly, and even information on small‑value cash transactions—once notoriously difficult to track—has become easier to obtain thanks to the proliferation of electronic payment methods. Anti‑money‑laundering measures have also grown more sophisticated, and the implementation of the Golden Tax Project Phase III along with other technological tools in tax collection and administration has significantly enhanced the efficiency and effectiveness of tax oversight.
A fiscal and tax expert told a China Securities Journal reporter that, in addition to personal income tax reform, the share of value-added tax should be reduced and the welfare system for low-income groups should be improved. Because low-income households already pay relatively little in taxes, the scope of special additional deductions they can claim is quite limited. If the VAT component— which accounts for a significant portion of basic living expenses—could be exempted or offset, the impact on low-income earners could be substantial.
Li Chao, chief macro analyst at the Huatai Securities Research Institute, views the tax‑credit policy as a key highlight. As trends such as population aging and consumption upgrading unfold, expenditures on family education, healthcare, and mortgage interest payments are significant factors that crowd out other consumer spending. Attention should be paid to the detailed implementation of these policies going forward; if the deduction amounts are substantial, they could play a major role in boosting consumer spending and stimulating economic growth.
LITIGATION & ARBITRATION
The Supreme People’s Court has issued guidelines to support and safeguard Hainan’s comprehensive deepening of reform and opening-up.
The Supreme People’s Court recently issued the “Opinions on Providing Judicial Services and Guarantees for Hainan’s Comprehensive Deepening of Reform and Opening-Up.” The document calls on people’s courts at all levels to fully leverage their judicial functions, establish and improve working mechanisms, strengthen policy support, proactively explore new approaches and boldly innovate, and enhance adjudication and enforcement efforts, thereby helping Hainan build a business environment that is rule-of-law‑based, internationalized, and convenient, as well as a fair, open, and unified market environment.
The opinions emphasize the need to strengthen criminal adjudication and severely crack down on all types of criminal offenses that undermine Hainan’s comprehensive deepening of reform and opening-up. Administrative adjudication must be improved to support, in accordance with the law, the transformation of government functions and to foster a more flexible policy framework, regulatory model, and governance system. Civil and commercial adjudication should be reinforced, with a strong focus on property rights protection, to underpin the development of a modern economic system and safeguard a unified market and fair competition. Maritime adjudication must be strengthened to advance the strategy of building a maritime power, promote the development of the marine economy, protect the marine ecological environment, and uphold national maritime interests. The judiciary should play a leading role in protecting intellectual property, bolstering IP adjudication to support the innovation-driven development strategy, deepening reforms in the field of IP adjudication, supporting the establishment of an IP court in Hainan, and backing the construction of the China (Hainan) International Intellectual Property Exchange. Financial cases should be handled appropriately in accordance with the law to help prevent and control financial risks, maintain financial market order, promote the sound development of the financial sector, and foster innovation in investment and financing while advancing the internationalization of the renminbi.
The guidelines call for strengthening the development of a diversified system of international commercial dispute‑resolution institutions, fully leveraging the role of alternative dispute‑resolution mechanisms, supporting the establishment of international commercial arbitration bodies, and establishing sound mechanisms for resolving consumer‑rights disputes in cross‑border e‑commerce as well as centralized adjudication mechanisms for international commercial cases. It also emphasizes the comprehensive construction of smart courts, promoting the deep integration of modern technology with judicial work, and elevating the level of informationization in judicial services and safeguards. Furthermore, it calls for deepening judicial reform, reinforcing the trial‑system framework, steadily advancing reforms of internal court structures and comprehensive, coordinated judicial‑system reforms, improving the judge‑quota system, and refining litigation mechanisms that are tailored to the needs of free trade pilot zones and free trade ports, making them more convenient and efficient.

The Ministry of Public Security has standardized the procedures for handling state compensation cases.
Recently, the Ministry of Public Security has publicly solicited comments from the public on the “Regulations on Procedures for Handling State Compensation Cases by Public Security Organs (Revised Draft for Comments).” The draft stipulates that, with respect to compensation applications that have been accepted, the agency obligated to provide compensation shall render a decision within two months from the date of acceptance.
The draft for public comment stipulates that when the legal affairs department of the agency obligated to compensate receives a compensation application submitted in person, it shall issue a receipt on the spot. Upon receipt of the application, the legal affairs department shall conduct a review within five working days. The agency obligated to compensate shall comprehensively examine the facts, evidence, and grounds underlying the compensation claim, with particular emphasis on determining the legality of the official act at issue; the factual circumstances of the infringement, the resulting harm, and the causal relationship; and whether any statutory grounds exist under which the State is not liable for compensation.
The draft for public comment clarifies that, upon ascertaining the facts, where compensation is warranted, the agency obligated to provide compensation shall fully solicit the views of the claimant and may, within the limits prescribed by law, negotiate the method, items, and amount of compensation. Such negotiations shall adhere to the principles of voluntariness and legality. If consensus is reached through negotiation, the compensating agency shall render a compensation decision in accordance with the agreed terms; if the claimant refuses to negotiate, or no agreement is reached, or the claimant withdraws consent prior to the issuance of the compensation decision, the compensating agency shall make a compensation decision in accordance with the law.
Other
Mobile payments are on the rise, while traditional ATM companies have seen their performance decline year after year, with profits plunging by 90%.
Virgin Creative, whose primary business is ATM operations, sparked a major market reaction upon the release of its 2017 annual report. In 2017, the company reported revenue of RMB 43.006 million, down 60.74% year over year, while net profit attributable to shareholders of the listed company totaled RMB 3.0281 million, a decline of 91.13% compared with the same period last year.
Regarding the reasons for the sharp decline in performance, Virgin Creative stated: With the explosive growth of mobile payments, an increasing number of people have become accustomed to paying via their smartphones, and even residents in remote areas and vast rural regions are now using QR‑code scanning for transactions. As demand for cash diminishes, bank customers’ reliance on cash‑handling self‑service devices—particularly ATMs—has also declined, leading to a steep slowdown in banks’ ATM procurement. Since 2017, the domestic ATM market has been stagnant or contracting. With commercial banks in China reducing the deployment of self‑service equipment, especially ATMs, the outlook for the industry in which the company operates has become highly uncertain. In the near term, the company’s business in innovative ATM‑related solutions and security‑protection products will face significant market pressure and challenges. Faced with this severe downturn, Virgin Creative, which had spent two years preparing for an IPO, was forced to announce the termination of its plans.
The tragedy of Virgin Creative is merely a microcosm of the ATM industry. According to iResearch, by 2019, China’s mobile‑payment market is expected to reach RMB 104 trillion. As mobile payments continue to deepen and cashless models gain widespread adoption, the entire upstream and downstream ecosystem will undergo profound transformation.
The head of the Operations and Technology Department at a certain joint-stock bank told a reporter from the 21st Century Business Herald that, driven by the rise of mobile payments and digital banking, people’s reliance on traditional bank branches is declining, cash transactions have dropped significantly, and fewer individuals are using ATMs. Although the total number of ATMs has not yet shown a marked decline, new installations have fallen for three consecutive years, with substantial reductions—indeed, some regions have recorded zero growth. As a result, conventional ATM manufacturers are now facing the challenge of transformation.
In addition to Virgin Creative, ATM equipment manufacturer Xindatong is also faring poorly. After posting a loss of RMB 21.297 million last year, the company reported a further net loss of RMB 41.306 million in the first quarter of this year. With its performance continuing to deteriorate, Xindatong’s share price has been dismal, hovering near RMB 0.5 for an extended period, and senior executives have begun to resign.

The Ministry of Industry and Information Technology summoned China Mobile for improper marketing practices on campuses.
On August 2, in response to recently disclosed violations in the marketing of telecommunications services on university campuses, the Ministry of Industry and Information Technology (MIIT) held talks with relevant officials from China Mobile, Jiangsu Mobile, and Nanjing Mobile, urging them to effectively safeguard users’ legitimate rights and interests.
With university admission notices now being issued, some netizens have reported: “Nanjing Mobile and China Post have stopped mailing physical cards and switched to sending QR codes instead, effectively forcing college students to sign up for a card in this new way.”
According to reports, in mid-July this year, the Ministry of Industry and Information Technology convened a videoconference to mobilize and deploy measures for regulating the telecommunications services market on campuses during the autumn season, requiring telecom operators to refrain from setting up sales outlets or conducting marketing activities on campus premises or in their immediate vicinity.
Industry insiders point out that violations in campus telecom marketing persist despite repeated crackdowns, primarily because the campus market holds a significant share of the overall telecommunications sector and generates substantial profits. Against the backdrop of an increasingly saturated telecom market, the three major operators are placing even greater emphasis on this lucrative segment to boost their performance.

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