JC Master Legal News Issue 834

Key Takeaways for This Issue
The China Securities Regulatory Commission has officially issued the Measures for the Administration of Foreign-Invested Futures Companies.
To implement the decisions and arrangements of the CPC Central Committee and the State Council on further opening up the financial sector, to systematically attract high-quality overseas financial institutions to invest in futures companies, and to enhance the ability of China’s futures industry to serve the real economy, with the approval of the State Council, the China Securities Regulatory Commission has officially promulgated the Measures for the Administration of Foreign-Invested Futures Companies (hereinafter referred to as the “Measures”).

The China Banking and Insurance Regulatory Commission has issued nine credit-related requirements, emphasizing that lenders should not arbitrarily cut off credit.
On August 18, the General Office of the China Banking and Insurance Regulatory Commission issued the “Notice on Further Improving Credit Work and Enhancing the Quality and Efficiency of Services to the Real Economy” (hereinafter referred to as the “Notice”), which sets forth nine requirements, including appropriately increasing the share of medium- and long-term loans, rationally setting performance assessment indicators to prevent a concentration of loan maturities—particularly at month‑end and quarter‑end—from straining corporate liquidity, and vigorously developing inclusive finance while strengthening financial services for small and micro enterprises, agriculture, rural areas, and farmers, as well as private enterprises.

The State Taxation Administration has unveiled 10 concrete measures to optimize the tax-related business environment, precisely addressing pressing, bottlenecks, and difficult issues.
Recently, the State Taxation Administration issued the “Notice on Implementing the Spirit of the National Teleconference on Deepening the ‘Delegation, Regulation, and Service’ Reform and Transforming Government Functions to Optimize the Tax‑Related Business Environment” (hereinafter referred to as the “Notice”). The Notice introduces 10 concrete measures to precisely enhance the business environment, introducing more effective and practical “signature initiatives” to further foster a stable, fair, and transparent tax‑related business climate.

Making Financial Adjudication More Professional: The Shanghai Financial Court Officially Unveiled
China’s first specialized financial court—the Shanghai Financial Court—was officially inaugurated on August 20. On its very first day of operation, the court accepted 20 cases with a total litigation value exceeding RMB 1 billion.

Real estate registration networking is accelerating across multiple provinces; experts say the property tax is drawing nearer.
The “Division of Key Tasks for the National Teleconference on Deepening the ‘Delegation, Regulation, and Service’ Reform and Transforming Government Functions,” recently issued by the State Council, stipulates that by the end of June 2019, all municipalities directly under the central government, sub-provincial cities, and provincial capitals will fully implement the “Internet Plus Real Estate Registration” initiative.

Table of Contents
Table of Contents

Finance & Capital Markets
The China Securities Regulatory Commission has officially issued the Measures for the Administration of Foreign-Invested Futures Companies.
The Northbound Surveillance Mechanism (Investor Identification Code System) under the Shanghai–Shenzhen–Hong Kong Stock Connect will be officially implemented on September 17, 2018.
The legislative, judicial, administrative, and market sectors have joined forces to conduct an in-depth study of the legal framework for civil compensation and redress for investors.
Six Years Since the Establishment of the Joint Conference Mechanism for Investor Protection: CSRC Announces Five Key Areas of Effort to Strengthen Investor Protection Work
New share issuances have become routine, and delisting mechanisms have diversified.

Corporate & Commercial
The China Banking and Insurance Regulatory Commission has issued nine credit-related requirements, emphasizing that lenders should not arbitrarily cut off credit.
The first meeting of the State Council Leading Group for Promoting the Development of Small and Medium-sized Enterprises was held to study and deploy measures to advance the high-quality development of SMEs.
Regulations on Self-Regulation and Service Standards for Regional Equity Markets Have Been Issued; Securities Offices Investing in the Operating Entities of Regional Equity Markets Must Maintain Business Independence.
China Banking and Insurance Regulatory Commission: Removes Restrictions on Foreign Ownership Limits in Chinese-funded Banks
The Ministry of Finance has decided to implement an open underwriting system for local government bonds.

Taxation
The State Taxation Administration has unveiled 10 concrete measures to optimize the tax-related business environment, precisely addressing pressing, bottlenecks, and difficult issues.
Starting next year, social insurance premiums will be collected centrally by the tax authorities, ensuring robust system support, information sharing, and standardized operations.
The draft Individual Income Tax Law is set for its second reading, with a high likelihood of lowering the 45% marginal tax rate.

Litigation & Arbitration
Making Financial Adjudication More Professional: The Shanghai Financial Court Officially Unveiled
The High People’s Court of Jiangsu Province has issued a notice on several issues concerning the handling of criminal cases involving refusal to enforce judgments and rulings.

Other
Real estate registration networking is accelerating across multiple provinces; experts say the property tax is drawing nearer.
Five ministries and commissions: Prevent illegal fundraising conducted under the guise of “blockchain”
Finance & Capital Markets
The China Securities Regulatory Commission has officially issued the Measures for the Administration of Foreign-Invested Futures Companies.
To implement the decisions and arrangements of the CPC Central Committee and the State Council on further opening up the financial sector, to systematically attract high-quality overseas financial institutions to invest in futures companies, and to enhance the ability of China’s futures industry to serve the real economy, with the approval of the State Council, the China Securities Regulatory Commission has officially promulgated the Measures for the Administration of Foreign-Invested Futures Companies (hereinafter referred to as the “Measures”).
In accordance with the requirements of the relevant legislative procedures, starting on May 4, 2018, the China Securities Regulatory Commission (CSRC) publicly solicited comments from the public on the Measures through its official website and the China Government Legal Information Network. The CSRC carefully reviewed and analyzed the feedback received, adopted reasonable and feasible suggestions, and accordingly revised and improved the Measures.
The Measures primarily cover the following aspects: First, they clarify the scope of application. A foreign‑invested futures company is defined as a futures company in which a single overseas shareholder or multiple related overseas shareholders directly hold, or indirectly control, more than 5% of the company’s equity. Second, they specify the requirements for overseas shareholders. Such shareholders must enjoy a strong international reputation and demonstrate solid operating performance, ranking among the top globally in terms of business scale, revenue, and profitability over the past three years, and maintaining high long‑term credit ratings during the same period. Third, they regulate indirect shareholding. Where an overseas investor, through investment relationships, agreements, or other arrangements, effectively controls more than 5% of a futures company’s equity, such holdings must be converted to direct ownership; however, exemptions are provided for indirect holdings via domestic securities offices in China and other circumstances prescribed by the China Securities Regulatory Commission. Fourth, they set forth clear provisions regarding the duties of senior management. Senior management of foreign‑invested futures companies must perform their duties on-site within China. Fifth, they impose requirements on the language of official documents and the deployment of information systems.
Following the issuance of the Measures, our Commission will accordingly update the Administrative Licensing Service Guide for Futures Companies. Eligible overseas investors may, in accordance with the Regulations on the Supervision and Administration of Futures Companies, these Measures, the Special Management Measures for Foreign Investment Access (Negative List) (2018 Edition), and the relevant provisions of the Service Guide, submit applications to our Commission. Such investors shall hold no more than 51% equity in domestic futures companies, with no restrictions on their equity share after three years.

The Northbound Surveillance Mechanism (Investor Identification Code System) under the Shanghai–Shenzhen–Hong Kong Stock Connect will be officially implemented on September 17, 2018.
Pursuant to proposals from the Shanghai Stock Exchange, the Shenzhen Stock Exchange, China Securities Depository & Clearing Corporation Limited, and The Stock Exchange of Hong Kong Limited (SEHK), and following consultation and mutual agreement with the Securities and Futures Commission of Hong Kong (SFC), the Northbound Look-through Mechanism (Investor Identification Code System) will be officially implemented on September 17, 2018.
Following the implementation of the northbound market transparency mechanism, northbound investors will be required to provide identity‑coding information, which will facilitate frontline regulatory oversight by the exchanges and enforcement by the China Securities Regulatory Commission, thereby safeguarding market order.

The legislative, judicial, administrative, and market sectors have joined forces to conduct an in-depth study of the legal framework for civil compensation and redress for investors.
On August 24, the China Securities Regulatory Commission (CSRC) convened a symposium in Nanjing, Jiangsu Province, to discuss the improvement of the legal framework for civil compensation and redress for securities investors. The meeting was attended by heads of relevant departments, including the National People’s Congress, the Supreme People’s Court, the Supreme People’s Procuratorate, the Ministry of Justice, the Higher People’s Courts of Jiangsu and Shanghai, and the Intermediate People’s Court of Nanjing, as well as leading experts and scholars, representatives from securities offices and law offices, and heads of pertinent units within the CSRC system. Huang Wei, a member of the CSRC Party Committee and Assistant Chairman, attended the meeting and delivered a speech.
In his address, Huang Wei emphasized that improving the system for compensating investors in the securities market is a fundamental and pivotal task for the capital market, and a critical component of investor protection. The China Securities Regulatory Commission (CSRC) has consistently attached great importance to safeguarding the rights and interests of securities market investors. The convening of this symposium represents a concrete step taken by the CSRC to implement the development philosophy of “putting the people first,” as articulated at the 19th National Congress of the Communist Party of China, and to fulfill General Secretary Xi Jinping’s call to “expedite the establishment of a multi-tiered capital market system that features complete financing functions, sound basic institutions, effective market regulation, and robust protection of investors’ legitimate rights and interests.” Successfully carrying out this work is vital for upholding a fair and orderly market environment, fostering enduring market confidence, and—most importantly—safeguarding the legitimate rights and interests of the broad base of small and medium-sized investors, deepening market reforms, promoting market development, and enabling the capital market to better serve the real economy.
The meeting focused on in-depth discussions around three key areas: first, how regulatory authorities can support investors in safeguarding their civil rights and interests, including through litigation support, settlement‑based compensation schemes, advance compensation mechanisms, mandatory share buyback orders, and compulsory enforcement of public commitments; second, how to further refine the civil litigation framework in the securities sector, encompassing model‑class action procedures, public interest litigation, evidentiary burden allocation, and punitive damages; and third, how to leverage alternative dispute‑resolution mechanisms such as arbitration and mediation to address investor‑related damages, including specialized arbitration systems, small‑claims mediation, and integrated litigation‑mediation coordination frameworks.
The meeting concluded that, in light of the predominantly retail‑investor structure of China’s securities market and the inherent vulnerability of small and medium‑sized investors, it is essential to establish dedicated institutional arrangements and provide tailored legal safeguards. This endeavor constitutes a comprehensive systemic undertaking: building upon the general framework of civil tort‑based damage compensation, it requires a pragmatic approach that draws extensively on the practices of mature overseas markets, further refining relevant systems and mechanisms. By leveraging the strengths of legislative, judicial, administrative, and market actors, enhancing coordination and collaboration, and pursuing innovative solutions, we can effectively ensure that remedies for securities‑related investor damages are put into practice.
The meeting concluded that, with investor damage compensation and redress as the central focus, the following areas of work should be strengthened in the next phase: First, accelerate the revision of the Securities Law and the enactment of the Futures Law, along with other legislative and regulatory reforms, to further refine the specialized legal framework for investor compensation and redress. Second, further improve judicial interpretations on civil liability for false statements, market manipulation, and insider trading in the securities market, thereby enhancing judicial protection for investors’ losses. Third, explore and refine litigation mechanisms tailored to the specific needs of investor protection, and conduct pilot programs on support‑based litigation, representative litigation, and public interest litigation. Fourth, building on accumulated experience, continue to refine systems such as advance compensation, administrative settlement payments, professional arbitration, and mediation for small‑value disputes, while deepening practical experimentation. Fifth, conduct in‑depth research into the practices of overseas markets—such as ordering share buybacks and compensating investors through fair‑use funds—to provide reference and guidance for establishing similar mechanisms in China. Sixth, intensify investor education efforts to bolster investors’ awareness of rational investing and their capacity to safeguard their rights.

Six Years Since the Establishment of the Joint Conference Mechanism for Investor Protection: CSRC Announces Five Key Areas of Effort to Strengthen Investor Protection Work
Recently, the China Securities Regulatory Commission convened its third Joint Conference on Investor Protection in Shenzhen, where it deliberated and outlined measures to enhance coordination and advance the implementation of key investor protection initiatives. The meeting was chaired by Zhao Min, Director-General of the Investor Protection Bureau and convener of the joint conference, and was attended and addressed by Yan Qingmin, a member of the CSRC Party Committee and Vice Chairman.
The meeting concluded that, since its establishment six years ago, the Joint Conference Mechanism for Investor Protection has effectively leveraged the resources and strengths of various system‑wide entities, playing a pivotal role in promoting the issuance by the General Office of the State Council of the “Opinions on Further Strengthening the Protection of the Legitimate Rights and Interests of Small and Medium‑Sized Investors in the Capital Market,” the launch of the 12386 service hotline, and the establishment of a dedicated investor protection agency. With the successive introduction of systems such as suitability management, and the gradual rollout of mechanisms including shareholder rights exercise, dispute mediation, advance compensation, and support for litigation, coupled with the parallel establishment of service platforms like the 12386 hotline and the China Investors Website, many of the proposals and innovative measures initially examined at the meeting have now been progressively put into practice, calling for sustained commitment and continuous refinement. The meeting also reviewed and discussed key investor protection priorities, including investor education and investor surveys, and clarified the roadmap and tasks for the next phase of work.
Yan Qingmin pointed out that investor protection is a fundamental and indispensable pillar of the capital market. General Secretary Xi Jinping and Vice Premier Liu He have both underscored, on numerous occasions, the importance of safeguarding investors’ legitimate rights and interests and strengthening investor education. To advance investor protection, it is essential to study and apply General Secretary Xi Jinping’s scientific approach to thinking. First, we must uphold bottom-line thinking: enhancing this capacity means remaining vigilant in times of peace, preparing for the worst, anticipating difficulties thoroughly, acting proactively, and responding calmly to change. Second, we must adopt a problem-oriented approach: problems are the voice of our times, and investor protection in the new era faces new challenges. Studying the spirit of the 19th National Congress requires close integration with concrete practice; only by accurately identifying issues can we address them in a pragmatic and fact-based manner. Third, we must embrace dialectical thinking, mastering the “two‑point analysis” method—viewing issues from both perspectives and pinpointing the principal contradiction. Investor education and protection are neither isolated endeavors nor tasks that any single entity can accomplish alone; they must be closely integrated with all relevant business functions, mobilizing the collective strength of all stakeholders to jointly safeguard investors’ legitimate rights and interests.
Yan Qingmin emphasized that to ensure effective insurance coverage, efforts should be focused on the following five areas:
First, we must maintain a high political stance. Comrade Xi Jinping has pointed out that the people’s support is the greatest politics. China’s capital market comprises 140 million investors, the majority of whom are small and medium-sized investors; safeguarding their legitimate rights and interests is vital to the well-being of countless households. Chairman Liu Shiyu has emphasized that the CSRC is, above all, a political institution, and protecting investors’ lawful rights and interests is its paramount political task. All units within the system must, in accordance with the requirements of the Commission’s Party Committee, officely uphold both a political stance and a people-centered stance, treat investor protection as a top‑priority project, and ensure that investor protection serves as the guiding thread that ties together all aspects of the unit’s work.
Second, institutional mechanisms must be effective; we need to play the “collaboration card” and make coordinated moves. First, take the lead: the Insurance Protection Bureau should assume a strong coordinating role, aligning and driving all units within the system to implement insurance‑protection measures effectively. Second, ensure comprehensive coordination: relevant specialized agencies should consolidate data on investor demographics and other key metrics, leverage their respective strengths, and mobilize societal resources to support and strengthen insurance‑protection efforts. Third, foster synergy: all units across the system must work in close collaboration, turning joint meetings into a think tank and advisory body for insurance‑protection initiatives, pooling resources to address persistent challenges in this area.
Third, foundational work must be solid and steady. The National Financial Work Conference emphasized the need to place greater emphasis on conduct‑based regulation, with investor education and protection constituting its core components—tasks that entail a great deal of groundwork. First, we must strengthen the utilization and development of big data, accelerating the deep integration of information technology with insurance‑related operations to provide robust data support for investor suitability assessments, investor education, and the handling of complaints and grievances. Second, we must prioritize investor education. This is a vital undertaking that yields immediate benefits while delivering long-term advantages; our goal is to cultivate a sophisticated, rational investor base by disseminating knowledge, highlighting risks, and clarifying underlying principles, thereby enhancing investors’ ability to identify risks and safeguard themselves.
Fourth, our work must be professional and focused. We should regularly review our toolkit, ensuring that our investor education and protection measures remain up-to-date and adequate. We must promptly monitor emerging international trends, and insurance professionals should uphold high standards in their practice, maintaining a constant sense of urgency and vigilance. In our approaches, we must rely on sound science; in our thinking, we should be forward-looking and proactive, striving to deliver work that is solid, meticulous, refined, and specialized.
Fifth, we must adopt a pragmatic work style. China’s capital market is home to a large number of small and medium-sized investors, whose aspirations for a better life are steadily growing, placing ever higher demands on the protection of their legitimate rights and interests. Investor education and protection remain ongoing priorities, requiring us to proceed from reality, fully implement existing policies such as Document No. 110 issued by the General Office of the State Council, and introduce more innovative measures tailored to China’s national conditions. With unwavering commitment and undivided focus, we will ensure that investors reap greater benefits.
More than 50 officials, including responsible personnel from the relevant departments of the China Securities Regulatory Commission and several of its local branches, attended the meeting.

New share issuances have become routine, and delisting mechanisms have diversified.
“We will refine the issuance review and M&A restructuring oversight mechanisms, further enhance operational efficiency and transparency, and better serve the real economy. We will also continue to improve and resolutely enforce the delisting regime,” noted the recent meetings of the CSRC Party Committee and the Chairman’s Office.
In the industry’s view, refining the issuance review process and continuously improving and enforcing the delisting regime—balancing “entry” with “exit”—aims to enable compliant companies to grow and thrive through the capital market while removing from the market those that no longer meet listing requirements, thereby fostering the sound development of the capital market.
IPOs have become routine. According to data released by the Shanghai Stock Exchange, as of last weekend, 43 companies listed on the SSE’s Main Board had completed their IPOs, raising RMB 69.102 billion. On the Shenzhen Stock Exchange, nine companies listed on the SME Board raised RMB 10.717 billion, while 20 companies on the ChiNext Board raised RMB 19.342 billion.
Meanwhile, the streak of five consecutive weeks with no new IPO applications submitted to the review committee has come to an end: last week, the Shenzhen Stock Exchange’s SME Board added one new company to the review queue. As a result, a total of 70 companies have filed for review so far this year—29 on the Shanghai Stock Exchange, 16 on the Shenzhen Stock Exchange’s SME Board, and 25 on the ChiNext Board.
As the issuance of new shares has become routine, the number of delisted companies this year has risen markedly compared with previous years, and the types of delistings have grown increasingly diverse.
On the evening of May 22, the Shanghai Stock Exchange fired the first shot in this year’s delisting process, removing *ST Jien and *ST Kunji from trading. Two days later, the Shenzhen Stock Exchange held a hearing on the delisting of *ST Xicarbon. In late June and early July, Jinya Technology and Yabait were subjected to mandatory delisting proceedings for violations of securities laws.
Meanwhile, the China Securities Regulatory Commission recently issued the “Decision on Amending the Several Opinions on Reforming, Improving, and Strictly Implementing the Delisting System for Listed Companies,” which stipulates that if a listed company engages in fraudulent issuance, material violations of information disclosure requirements, or other serious unlawful acts involving national security, public safety, ecological security, production safety, or public health and safety, the stock exchange shall, in strict accordance with the law, make a decision to suspend or terminate the trading of the company’s shares.
The industry believes that this measure is of great significance for further improving the functions of the capital market, boosting the vitality of market entities, fostering a culture of rational investing, and establishing an effective mechanism for survival of the fittest. In particular, by including serious violations in areas such as national security, public safety, ecological security, production safety, and public health safety within the scope of mandatory delisting, the framework for mandatory delisting due to material violations has been further refined, thereby helping to guide A-share investors toward value‑oriented investment.

Commercial & Corporate
The China Banking and Insurance Regulatory Commission has issued nine credit-related requirements, emphasizing that lenders should not arbitrarily cut off credit.
On August 18, the General Office of the China Banking and Insurance Regulatory Commission issued the “Notice on Further Improving Credit Work and Enhancing the Quality and Efficiency of Services to the Real Economy” (hereinafter referred to as the “Notice”), which sets forth nine requirements, including appropriately increasing the share of medium- and long-term loans, rationally setting performance assessment indicators to prevent a concentration of loan maturities—particularly at month‑end and quarter‑end—from straining corporate liquidity, and vigorously developing inclusive finance while strengthening financial services for small and micro enterprises, agriculture, rural areas, and farmers, as well as private enterprises.
The Notice states that efforts should be further intensified to unblock the transmission mechanism of monetary policy and meet the effective financing needs of the real economy. For enterprises that meet credit eligibility criteria but are experiencing temporary operational difficulties, continued financial support should be provided, and lenders should refrain from arbitrarily withdrawing or cutting off credit. For growing, advanced manufacturing offices, it is necessary to broaden the range of eligible collateral, innovate guarantee and financing mechanisms, appropriately determine loan‑to‑value ratios, and extend appropriate preferential treatment in terms of funding availability and lending rates.
In the area of inclusive finance, the Notice calls for fully leveraging favorable conditions—such as ample market liquidity and stable profitability in the banking and insurance sectors—while adhering to the principle of “preserving capital with modest profits.” It urges increased financial support for small and micro enterprises, agriculture, rural areas, and farmers, poverty alleviation efforts, and private enterprises, with the aim of reducing financing costs.
Wu Wen, a senior researcher at the Bank of Communications Financial Research Center, stated that, overall, the Notice sets forth new requirements across three key areas: First, from the perspective of meeting the financing needs of the real economy, it underscores both what should and should not be done. Second, in terms of risk management, it reiterates the need to intensify efforts to dispose of non‑performing loans and to accelerate the exit of “zombie enterprises,” with these priorities remaining unchanged. At the same time, it clarifies that regulatory guidance merely encourages prudent “rollover without principal repayment” and does not permit banking institutions to use such practices to conceal non‑performing loans. Furthermore, it emphasizes the importance of revitalizing existing assets, freeing up credit capacity, and improving capital efficiency, while also encouraging the swift implementation of market‑based debt‑to‑equity swap projects that have already been signed. Third, from the standpoint of enhancing internal systems and mechanisms, the Notice stresses that banking institutions must further standardize their business practices, strictly prohibit the imposition of unreasonable loan conditions, and thereby reduce the borrowing burden on enterprises.
According to data previously released by the China Banking and Insurance Regulatory Commission, preliminary statistics show that new RMB loans in July totaled 1.45 trillion yuan, an increase of 623.7 billion yuan year on year. In July, new loans to the infrastructure sector reached 172.4 billion yuan, up 46.9 billion yuan from June. Meanwhile, off-balance-sheet financing instruments such as trust loans and entrusted loans have also stabilized. Additionally, during the first seven months of this year, bank loans to small and micro enterprises grew by 1.6 trillion yuan, with the growth rate consistently outpacing the overall loan growth rate for the same period.
Wu Wen stated that, overall, the Notice broadly addresses measures to tackle the credit‑related challenges recently observed in the market. With a clear policy orientation toward reducing financing costs for the real economy, room for further increases in loan rates will be increasingly constrained, while the decline in interbank funding costs should help cushion the stabilization of net interest margins. Looking ahead, bank profit growth is expected to shift from price‑driven to volume‑driven, with boosting volumes to offset margin compression becoming the primary operational strategy. In addition, fiscal stimulus is likely to support a stabilization and rebound in the pace of banks’ asset expansion.

The first meeting of the State Council Leading Group for Promoting the Development of Small and Medium-sized Enterprises was held to study and deploy measures to advance the high-quality development of SMEs.
According to the Chinese Government Website, the first meeting of the State Council Leading Group for Promoting the Development of Small and Medium-sized Enterprises was held in Beijing on August 20. Liu He, a member of the Political Bureau of the CPC Central Committee, Vice Premier of the State Council, and head of the State Council Leading Group for Promoting the Development of Small and Medium-sized Enterprises, presided over the meeting and delivered a speech.
The meeting emphasized the need to fully recognize the importance of fostering the development of small and medium-sized enterprises (SMEs). At present, China’s SMEs exhibit the quintessential “56789” profile: they contribute over 50% of tax revenue, more than 60% of GDP, over 70% of technological innovation, more than 80% of urban employment, and account for over 90% of all enterprises. They are a vital driving force behind national economic and social development, an essential foundation for building a modernized economic system and advancing high-quality economic growth, a key pillar for expanding employment and improving people’s livelihoods, and a crucial incubator of entrepreneurial spirit. Strengthening efforts to support SMEs is of great significance for ensuring stable employment, financial stability, steady investment, stable foreign investment, robust foreign trade, and sound market expectations, thereby enhancing the economy’s long-term competitiveness.
The meeting emphasized the need to promptly address the most pressing challenges facing small and medium-sized enterprises (SMEs). It is essential to uphold the basic economic system, treat state-owned and private sectors equally, and accord equal treatment to enterprises of all sizes—large, medium, and small—while focusing efforts on creating a favorable business environment. Financial support must be strengthened, institutional and technological innovation accelerated, incentive mechanisms improved, and the transmission of monetary and credit policies enhanced to alleviate difficulties and high costs in accessing financing. The capital market should be further refined to broaden direct financing channels for SMEs and better meet their funding needs. Fiscal and tax policies must be made more targeted, with effective implementation of measures such as tax and fee reductions and financing guarantees to ensure that existing policies deliver tangible results. The intermediary service system should be improved to raise the quality and standard of services. Protection of property rights and intellectual property rights must be reinforced, enforcement tightened, and the cost of violations increased to safeguard the innovative R&D achievements of SMEs. Finally, the entrepreneurial spirit should be vigorously promoted, with robust protective mechanisms put in place to create a conducive environment for entrepreneurs’ growth.

Regulations on Self-Regulation and Service Standards for Regional Equity Markets Have Been Issued; Securities Offices Investing in the Operating Entities of Regional Equity Markets Must Maintain Business Independence.
To promote the sound development of regional equity markets, better serve the real economy, and safeguard against financial risks, the Securities Association of China recently formulated and issued the “Self-Regulatory Management and Service Standards for Regional Equity Markets (Trial)” (hereinafter referred to as the “Standards”), which simultaneously abolishes the previous “Business Standards for Securities Companies’ Participation in Regional Equity Trading Markets.” The Standards stipulate that when securities companies acquire equity stakes in regional equity market operating institutions, they must take appropriate measures to maintain business independence from such institutions and may not exploit their shareholder status to seek improper benefits.
According to the relevant regulations, regionally‑based equity market operators duly established in accordance with the law may join the Securities Association as special members and be subject to self‑regulatory oversight and services. Securities offices and their subsidiaries may participate in regional equity markets through various means, including investing in and acquiring equity stakes in such operators or engaging in related market activities.
Securities offices may engage in the following activities in regional equity markets: recommending enterprises for listing; underwriting corporate bonds convertible into shares and recommending such bonds—underwritten by the office—for trading on the regional equity market; acting as agents to open securities accounts in the regional equity market; providing intermediary services to qualified investors who have opened accounts in the regional equity market for the purchase and sale of securities; investing in securities listed on the regional equity market using their own funds or asset management products managed in accordance with the law; organizing roadshows and other activities to facilitate the matching of investment and financing needs among qualified investors for privately placed securities; providing qualified investors with corporate research reports and due diligence information; engaging in business cooperation with commercial banks, micro‑finance companies, and other institutions to offer financing services to enterprises; offering related services such as restructuring guidance, management training, management consulting, and financial advisory; and recommending enterprises for presentation, as well as undertaking other activities prescribed by the China Securities Regulatory Commission or the Securities Association.
In addition, the regulations emphasize that personnel of operating institutions shall not engage in any of the following practices when conducting business: independently or in concert with others, engaging in fraudulent activities, insider trading, market manipulation, or other illegal or non‑compliant conduct; undertaking business that creates a conflict of interest with their duties; disparaging competitors or employing other unfair competitive means to solicit business; accepting bribes from, or offering bribes to, stakeholders; disclosing investment information without authorization or using clients’ personal information to obtain improper benefits for oneself or others; concealing, falsifying, altering, or destroying investment information; engaging in improper transactions that harm the interests of the operating institution; engaging in the transfer of benefits; or committing any other acts prohibited by the China Securities Regulatory Commission and the Securities Association of China.

China Banking and Insurance Regulatory Commission: Removes Restrictions on Foreign Ownership Limits in Chinese-funded Banks
On August 23, the China Banking and Insurance Regulatory Commission issued the “Decision of the China Banking and Insurance Regulatory Commission on Abolishing and Amending Certain Regulations” (hereinafter referred to as the “Decision”), which removes foreign‑ownership caps on Chinese‑funded banks and financial asset management companies, implements a unified equity‑investment ratio regime for both domestic and foreign investors, and continues to advance measures to facilitate foreign investment.
An official from the relevant department of the China Banking and Insurance Regulatory Commission stated that easing foreign‑capital access to the financial sector is a top priority in China’s efforts to open its service industries to the outside world. Looking back at the banking sector’s opening-up process, foreign investment in Chinese‑owned banks has played a pivotal role in the market‑oriented reform of China’s banking industry: by attracting capital, it has strengthened the capital base of domestic banks, and by bringing in expertise, it has enhanced their operational management and risk‑control capabilities, thereby bolstering international confidence in the overall health of China’s banking sector.
The official stated that both the domestic and international economic landscapes, as well as the prevailing patterns of interests, have undergone profound changes. From an international perspective, China’s ongoing integration into the global economy and the overseas expansion of Chinese‑capital institutions are placing higher demands on the opening up of China’s banking sector—both in terms of market access, business operations, and regulatory frameworks. Consequently, the task of fully implementing a foreign‑investment management system based on pre‑entry national treatment combined with a negative list, and of establishing financial market rules that are consistent across domestic and foreign entities and characterized by openness and transparency, has become even more pressing. Domestically, China’s economy is currently at a critical juncture of transformation and upgrading; the development of the real economy calls for robust financial support, as well as for more effective harnessing of both domestic and international resources and markets to enhance the efficiency of financial resource allocation and elevate the quality of financial services.
Specifically, the Decision comprises the following four key aspects:
First, the Measures for the Administration of Overseas Financial Institutions’ Equity Investments in Chinese‑funded Financial Institutions have been repealed. In line with the principle of national treatment, no separate regulations are imposed on foreign‑capital equity investments in Chinese‑funded financial institutions; both domestic and foreign investors are subject to the same market access and administrative licensing regime.
Second, the restrictions on the shareholding ratios of foreign investors in Chinese-funded banks and financial asset management companies have been lifted under the Measures for the Implementation of Administrative Licensing Matters for Chinese‑funded Commercial Banks, the Measures for the Implementation of Administrative Licensing Matters for Rural Small and Medium‑sized Financial Institutions, and the Measures for the Implementation of Administrative Licensing Matters for Non‑Bank Financial Institutions issued by the China Banking Regulatory Commission. Accordingly, the provisions in the relevant articles of these three licensing measures that stipulated that the investment shareholding ratio of a single overseas financial institution and its affiliates as a sponsor or strategic investor in a single Chinese‑funded commercial bank or rural commercial bank, or as a strategic investor in a single financial asset management company, shall not exceed 20%, and that the aggregate investment shareholding ratio of multiple overseas financial institutions and their affiliates in such institutions shall not exceed 25%, have been deleted.
Third, the regulatory status and applicable legal framework for Chinese-funded banks in which foreign investors hold equity are clarified. In line with the principle of treating domestic and foreign investors equally, it is stipulated that when overseas financial institutions invest in and acquire stakes in Chinese commercial banks and rural small- and medium-sized financial institutions, such investments shall be subject to supervisory oversight according to the institutional category of the investing entity at the time of the investment, without altering the bank’s institutional classification on account of foreign ownership. This establishes a fair, open, and transparent regulatory framework for both domestic and foreign equity participation in the banking sector, while ensuring the stability and continuity of regulatory rules and the overall supervisory system.
Fourth, it is clarified that when overseas financial institutions invest in and acquire equity stakes in Chinese-funded banks, they must not only comply with the relevant prudential regulatory requirements but also adhere to China’s fundamental laws governing foreign investment within the country.

The Ministry of Finance has decided to implement an open underwriting system for local government bonds.
The Ministry of Finance recently issued the “Procedures for the Public Underwriting and Issuance of Local Government Bonds,” deciding to implement a public underwriting system for local government bonds.
An official from the Ministry of Finance stated that standardizing the public underwriting and issuance of local government bonds will help further refine the bond‑issuance process, enhance issuance efficiency, and ensure the smooth implementation of local government bond‑issuance activities.
Relevant authorities stated that local fiscal departments may establish dedicated underwriting syndicates for the public underwriting of local government bonds, or they may continue to utilize the syndicates established under the public tender process. When forming a dedicated syndicate, it may be set up either for the issuance of a single bond tranche or for bond issuances over a specified period, with the syndicate comprising no fewer than four members in principle. Upon establishing an underwriting syndicate, local fiscal departments shall enter into relevant agreements with its members, clearly defining the rights and obligations of each party.

Taxation TAXATATION
The State Taxation Administration has unveiled 10 concrete measures to optimize the tax-related business environment, precisely addressing pressing, bottlenecks, and difficult issues.
Recently, the State Taxation Administration issued the “Notice on Implementing the Spirit of the National Teleconference on Deepening the ‘Delegation, Regulation, and Service’ Reform and Transforming Government Functions to Optimize the Tax‑Related Business Environment” (hereinafter referred to as the “Notice”). The Notice introduces 10 concrete measures to precisely enhance the business environment, introducing more effective and practical “signature initiatives” to further foster a stable, fair, and transparent tax‑related business climate.
According to reports, the issuance of this Notice represents another round of in-depth reforms by the State Taxation Administration, building on its earlier implementation of the 30 measures under the “delegation, regulation, and service” reform and the “at most one visit” list for tax-related matters, and targeting the issues that taxpayers have most strongly and acutely raised.
Encourage multiple localities to take the lead in piloting and exploring ways to optimize the business environment.
In July 2017, the State Taxation Administration decided to launch a pilot program to optimize the business environment in the tax authorities of five provinces and municipalities—Beijing, Shanghai, Guangzhou, Shenzhen, and Jiangsu. According to Sun Yushan, Director-General of the Taxpayer Services Department of the State Taxation Administration, over the past year and more, the pilot units have formulated a total of 350 pioneering measures addressing taxpayers’ key bottlenecks, pain points, and challenges, thereby providing the national tax system with a wealth of replicable and scalable best practices.
To further leverage the pilot program’s leading role, the Notice stipulates that, by the end of September this year, building on the pilot initiatives in five provinces and municipalities, an additional 12 tax authorities—those of Zhejiang, Jiangxi, Hubei, Guangxi, Hainan, Chongqing, Shaanxi, Xinjiang, Dalian, Ningbo, Xiamen, and Qingdao—will be designated as the second batch of pilot units for optimizing the tax-related business environment. The Notice clarifies that these pilot units are expected to demonstrate boldness in innovation and serve as model examples, introducing a series of replicable and scalable measures to streamline tax administration and continuously enhance the tax‑related business climate.
Precisely addressing pain points and challenging issues to enhance tax administration convenience.
According to reports, under the “Internet Plus Taxation” action plan, this Notice addresses the issues that taxpayers find most burdensome by introducing innovative measures such as completing first-time invoice applications within one day and shortening the time required for tax procedures in real estate transactions, thereby further enhancing the convenience of tax administration.
Promote the completion of first-time invoice applications within one day. The State Taxation Administration has identified enhancing invoice‑service efficiency as key to alleviating congestion at tax service halls. The Notice stipulates that, by the end of October this year, pilot units will reduce the processing time for first‑time invoice applications by newly established enterprises that meet the eligibility criteria to one day, and encourages regions with the necessary conditions to implement instant issuance of first‑time invoices for new businesses.
Accelerate the development of the electronic tax bureau. An efficient and user-friendly tax administration information system serves as the key backbone for enhancing taxpayer services, managing tax risks, and standardizing tax enforcement. To deliver a better and more streamlined tax‑filing experience, the Notice mandates that, by the end of 2018, a unified and standardized electronic tax bureau be rolled out nationwide, offering an online tax service portal with enhanced functionality and greater convenience.
“By optimizing the functions of business information systems and offering a form-free service, we aim to reduce taxpayers’ need to visit government offices in person while increasing their online interactions,” said Rao Lixin, Director-General of the Tax Collection and Management and Science & Technology Development Department of the State Taxation Administration.
Shorten the tax-processing time for real estate transactions. In response to taxpayers’ needs to avoid repetitive data entry, the Notice explicitly calls for the vigorous promotion of information sharing between online contract signing and filing systems for real estate transactions and real estate registration records.
In addition, the Notice requires advancing the integration of online tax‑filing systems with enterprise financial software, opening up interfaces for such integration, and promoting the electronic submission of tax returns and financial statements over the network, thereby minimizing the time enterprises spend on tax compliance.
Professor Xu Zhengzhong of the National Academy of Administration believes that the measures outlined in the Notice squarely address taxpayers’ most pressing concerns, demonstrating strong relevance and effectiveness, and will play a crucial role in reducing enterprises’ institutional transaction costs.
Deepening the “delegation, regulation, and service” reform is driving a transformation in management and service delivery approaches.
“The tax authorities have consistently prioritized lowering barriers to employment and entrepreneurship as a key focus of the ‘delegation, regulation, and service’ reform,” said Sun Yushan. According to him, this Notice underscores the streamlining of inter‑regional relocation procedures: by the end of December 2018, taxpayers with no pending matters and classified as standard‑status entities will be able to complete intra‑provincial inter‑district relocations on an immediate basis, thereby facilitating the free movement of market entities and bolstering confidence in employment and business creation.
To further facilitate the exit of market entities, the Notice also requires tax authorities to proactively dismantle inter‑departmental and information silos, working in coordination with market regulation agencies to advance reforms aimed at streamlining the simplified deregistration process for enterprises, thereby maximizing convenience for market participants. Meanwhile, for individually owned businesses under the fixed‑amount taxation regime that have no outstanding tax (including fees and fines) liabilities, a commitment‑based tax deregistration procedure has been introduced: business owners need only submit a written undertaking assuming responsibility for settling any outstanding tax obligations, enabling immediate completion of the tax deregistration.
Taking the enhancement of taxpayers’ online self‑filing as an example, the Notice stipulates that, by the end of this year, a pilot program will be launched to allow taxpayers to make online self‑corrections to their tax returns. During the filing period, taxpayers will be able to independently amend their corporate income tax and value‑added tax return data and pay any outstanding taxes. By the end of 2019, this capability will be extended nationwide to all taxpayers and across all tax types, thereby reducing the number of in‑person visits to tax service halls, better safeguarding taxpayers’ legitimate rights and interests, and mitigating tax‑related risks.
Adhere to a problem-oriented approach, implement immediate corrections and actions, and ensure tangible results.
In response to the issues identified, the Notice explicitly mandates that, by establishing sound institutional mechanisms, we must effectively address the concerns and frustrations that hinder businesses and the public in handling tax-related matters.
“Holding accountable” strengthens responsibility. The Notice explicitly stipulates that both routine and ad hoc inspections—both overt and covert—be conducted to promptly identify and address bottlenecks and pain points hindering the implementation of the “delegation, regulation, and service” reform, ensuring that measures aimed at streamlining administration and empowering the people take root at the grassroots level. By the end of September 2018, a mechanism for handling taxpayer‑related issues at service windows and an accountability system shall be established, with a tiered interview system implemented to ensure rigorous pursuit of responsibility.
Time-bound resolution of “bottleneck issues.” In response to problems identified during preliminary surveys, the Notice mandates the establishment of a responsibility matrix to address, within set deadlines, the most pressing administrative bottlenecks reported by taxpayers. It calls for expeditious action on salient issues such as the repeated entry of basic information, and stipulates that, by the end of 2018, all tax‑related problems highlighted in the “Action Plan to Unblock One Hundred Key Bottlenecks in Public Services” will be fully resolved, ensuring timely responses to taxpayers’ concerns.
Li Wanfu, Director of the Tax Science Research Institute of the State Taxation Administration, stated that as the reform of the national and local tax collection and administration system continues to deepen, launching targeted campaigns to address bottlenecks and challenges faced by taxpayers in handling tax matters will help bridge the “last mile” of policy implementation and service delivery, thereby further enhancing taxpayers’ sense of gain and satisfaction.

Starting next year, social insurance premiums will be collected centrally by the tax authorities, ensuring robust system support, information sharing, and standardized operations.
On August 20, the State Taxation Administration and four other departments jointly convened a video conference in Beijing to mobilize and deploy the transfer of responsibilities for the collection and administration of social insurance premiums and non-tax revenues, making comprehensive arrangements to ensure the smooth implementation of this transition.
In accordance with the decisions and arrangements of the CPC Central Committee and the State Council, the transfer and handover of responsibilities for the collection and administration of social insurance contributions and the first batch of non-tax revenues are to be completed by December 10 of this year. Effective January 1, 2019, all social insurance contributions and the previously transferred non-tax revenues will be collected uniformly by the tax authorities.
An official from the State Taxation Administration stated that tax authorities at all levels must complete the reform tasks on schedule and to the highest standard, relying officely on the organizational leadership of governments at all levels and the support and collaboration of relevant departments. They should fulfill their duties conscientiously, take proactive measures, and work in concert to ensure the smooth handover and transition, the establishment of sound institutional frameworks, the development of information systems, and the continuous improvement of tax collection and administration services. This will guarantee seamless coordination, robust system support, effective information sharing, and standardized operations, while maintaining and enhancing service standards, service quality, and overall service performance—thereby continuously optimizing taxpayer services and steadily increasing the public’s sense of gain.
Relevant officials from the Chongqing Municipal Finance Bureau, the Shanxi Provincial Department of Human Resources and Social Security, and the Beijing Municipal Tax Service of the State Taxation Administration respectively outlined the preparatory work undertaken to transfer responsibilities for the collection and administration of social insurance contributions and non-tax revenues, as well as their plans for the next steps.

The draft Individual Income Tax Law is set for its second reading, with a high likelihood of lowering the 45% marginal tax rate.
The draft amendment to the Individual Income Tax Law is set for its second reading. At the 11th Chairpersons’ Meeting of the Standing Committee of the 13th National People’s Congress, it was decided that the Fifth Session of the Standing Committee will be held from August 27 to 31, with proposals to deliberate on the draft amendment to the Individual Income Tax Law, among other items. Whether the second‑reading draft will pass has become the market’s primary focus; experts believe that the likelihood and necessity of lowering the top marginal tax rate of 45% are both quite high.
According to reports, the draft Individual Income Tax Law was open for public comment for 30 days, during which more than 130,000 submissions were received. Experts, scholars, and members of the public generally expressed support for the provision in the draft that raises the personal income tax threshold; many also suggested further increasing the threshold, while some argued that a threshold of 5,000 yuan is appropriate. However, the majority of opinions favored lowering the 45% marginal tax rate.
Wang Changyong, Executive Director of the Changping Institute of Economic Research, stated that, using the 2011 threshold of RMB 3,500 as a benchmark, the personal income tax exemption threshold for wages and salaries should be raised to at least RMB 8,000 in order to meet public expectations regarding an exemption level that has remained unchanged for seven years.
Jiang Zhen, an associate researcher at the Institute of Financial Strategy of the Chinese Academy of Social Sciences, stated that it is unlikely that the second reading will once again raise the personal income tax threshold.
Du Li, a professor at the School of Economics of Fudan University, stated that the adjustment of the tax exemption threshold has been highly controversial. The main rationale for raising it is to account for rising consumer spending and inflation; however, such an increase would indeed diminish the redistributive effect of personal income tax.
On the issue of special additional deductions, Jiang Zhen believes that such deductions are highly meaningful but pose considerable operational challenges. Du Li, meanwhile, argues that these deductions would substantially increase costs for both tax authorities and taxpayers, expand opportunities for tax planning, and raise questions about whether they can truly deliver fairness. Accordingly, she contends that the number of special additional deduction items should be kept limited rather than expanded, and recommends piloting them first before scaling up.
Experts recommend moderately reducing the marginal tax rates under the individual income tax’s comprehensive income system and widening the brackets for these rates. Jiang Zhen argues that the top marginal rate of 45% applied to labor income should be lowered.
“The likelihood and necessity of reducing the 45% marginal tax rate are both greater,” said Du Li. She added that the 45% top marginal tax rate is detrimental to boosting workers’ innovation incentives and undermines China’s ability to maintain a competitive edge in the global talent market.
Wang Changyong stated that setting the top marginal tax rate at 30%, slightly higher than the rates on capital income and corporate income, would both reduce the tax burden on talented individuals and effectively incentivize innovation, while also helping to curb the practice of some taxpayers structuring their affairs through corporate entities to evade personal income tax.
Du Li pointed out that, in the early stages of reform and opening-up, when capital was scarce and labor was abundant, China’s personal income tax system—imposing heavy taxes on labor while levying light taxes on capital—was reasonable. However, in recent years, China’s economy has shifted from investment-driven growth to innovation-driven development. At the same time, on the global stage, national competitiveness is increasingly defined by competition for talent. Consequently, maintaining the top marginal rate on wages and salaries at 45%—far higher than the 20% maximum rate applicable to capital income such as dividends and interest, and even exceeding the personal income tax rates of traditionally high-tax countries like the United States—is clearly inconsistent with the national strategy of promoting innovative development.
Du Li stated that, in fact, local governments at all levels are vying to attract top-tier talent by offering a wide array of subsidies and preferential policies. Meanwhile, high-income individuals in industries such as film, television, and entertainment are increasingly circumventing the high marginal tax rates on personal income through mechanisms like establishing corporations. As a result, the top marginal tax rate of 45% fails to effectively regulate high-income groups.

LITIGATION & ARBITRATION
Making Financial Adjudication More Professional: The Shanghai Financial Court Officially Unveiled
China’s first specialized financial court—the Shanghai Financial Court—was officially inaugurated on August 20. On its very first day of operation, the court accepted 20 cases with a total litigation value exceeding RMB 1 billion.
The establishment of the Shanghai Financial Court will bolster the governance of the financial order and refine its jurisdictional scope. By bringing new types of financial civil and commercial cases, as well as financial market infrastructure, within its purview, it will further enhance the diversified dispute-resolution mechanisms for financial matters.
At a press conference held on August 21, Sheng Yongqiang, Deputy Secretary of the Party Leadership Group and Vice President of the Shanghai Higher People’s Court, stated that establishing a financial court and implementing specialized jurisdiction over financial cases is of great significance for supporting the development of Shanghai as an international financial center, ensuring the stable and orderly functioning of the financial market, and achieving the goal—by 2020—of basically establishing an international financial center commensurate with China’s economic strength and the international status of the renminbi.
Emphasize the professionalism of finance.
“Financial adjudication is highly specialized and differs significantly from general civil and commercial law. Without substantial expertise in the financial sector and years of judicial experience, handling financial cases lacks the requisite level of professional rigor,” a legal expert noted. Given the current trajectory of economic and financial development, establishing a dedicated financial court is highly meaningful. The field’s unique characteristics mean that sound, professional adjudication can effectively mitigate risks and play a crucial role in establishing industry standards.
On March 28 this year, the first meeting of the Central Commission for Comprehensively Deepening Reform reviewed and approved the “Plan on Establishing the Shanghai Financial Court.” The meeting emphasized that the establishment of the Shanghai Financial Court aims to improve the financial adjudication system and foster a sound legal environment for finance. It is necessary to align with the tasks of serving the real economy, preventing and controlling financial risks, and deepening financial reform, thereby giving full play to the functions and roles of the people’s courts, implementing centralized jurisdiction over financial cases, advancing reforms of the financial adjudication system and mechanisms, elevating the level of professionalization in financial adjudication, and building a fair, efficient, and authoritative financial adjudication system.
According to reports, Shanghai’s courts have now established a relatively independent financial adjudication system. Since 2009, the Shanghai Higher People’s Court, the First Intermediate People’s Court, the Second Intermediate People’s Court, and eight primary-level people’s courts have set up specialized financial tribunals, while other primary-level courts have also established ad hoc collegial panels dedicated to financial cases.
Taking financial and commercial cases as an example, from 2013 to 2017, the number of financial-related cases accepted by Shanghai courts grew at an average annual rate of 51%. Over the past five years, Shanghai courts have concluded a total of 478,000 first-instance financial cases. In addition to their sheer volume, Shanghai courts have also adjudicated a large number of significant, difficult, and complex cases, attracting widespread attention both domestically and internationally.
Jurisdiction in Five Areas
So, what makes the establishment of the Shanghai Financial Court particularly distinctive? According to industry experts, in recent years, the financial sector has experienced rapid growth and robust innovation. It is evident that financial innovation drives development across other industries, yet it also gives rise to spillover risks. Given the inherent lag in financial legislation, when issues emerge in specific sub‑sectors due to legislative delays, it becomes necessary to apply existing financial laws and regulations, drawing on the objective principles governing the financial industry and relying on past specialized judicial practice to adjudicate such cases with professional rigor.
In China, judicial organs that hear cases within a specific jurisdiction are designated as specialized people’s courts; the Shanghai Financial Court is one such court. Its jurisdiction encompasses five principal areas: first-instance financial and commercial civil and commercial cases within the administrative boundaries of Shanghai that would otherwise fall under the purview of an intermediate people’s court; financial administrative cases in which financial regulatory authorities located within Shanghai are defendants; and first-instance financial and commercial civil and commercial cases, as well as financial administrative cases, involving financial market infrastructure entities domiciled in Shanghai as defendants or third parties, in connection with the performance of their official duties.
Among these, the first category—first-instance financial and commercial cases that should be heard by intermediate people’s courts—is further subdivided into five specific areas: first, disputes involving securities and futures trading, trusts, insurance, negotiable instruments, letters of credit, financial loan contracts, bank cards, finance lease contracts, entrusted wealth management contracts, and pawnbroking; second, emerging financial and commercial disputes such as independent guarantees, factoring, private equity funds, online payments by non-bank payment institutions, online lending, and internet‑based equity crowdfunding; third, bankruptcy disputes in which a financial institution is the debtor; fourth, judicial review proceedings concerning arbitration awards in financial and commercial matters; and fifth, applications for the recognition and enforcement of judgments and orders rendered by foreign courts in financial and commercial disputes.
Demonstrative in nature
As evident from the aforementioned jurisdictional scope, the Financial Court hears only cases involving financial disputes, with a primary focus on civil and commercial financial matters, further subdivided into distinct areas in accordance with market characteristics. Its purview encompasses both the 11 categories of civil and commercial financial cases already defined by existing cause‑of‑action provisions—such as securities, futures, trusts, and insurance—and also includes bankruptcy disputes where financial institutions are debtors, judicial review proceedings, and judgments or rulings arising from civil and commercial financial disputes adjudicated by foreign courts. By addressing both substantive and procedural issues, the Court fully leverages its specialized adjudicatory functions.
In addition, the Shanghai Financial Court has proactively addressed the needs of current financial litigation practice by, for the first time, identifying new categories of civil and commercial financial disputes, including independent guarantees, factoring, private equity funds, online payments by non-bank payment institutions, online lending, and internet-based equity crowdfunding, thereby further regulating the development of the financial sector.
In addition to adjudicating novel financial and commercial disputes, the Shanghai Financial Court has innovatively brought financial market infrastructure entities domiciled in Shanghai within its jurisdiction. Previously, such infrastructure was subject to centralized jurisdiction under judicial interpretations issued by the Supreme People’s Court. This measure creates room for the practical evolution of financial adjudication and safeguards the orderly development of the financial sector.
Outside observers believe that, in areas such as the scope of case acceptance, the identification of parties, and the application of adjudicatory rules, the Shanghai Financial Court holds extremely significant reference value for resolving civil, commercial, and financial disputes. “As an international financial center with well‑developed and mature financial infrastructure and a robust array of financial institutions, the establishment of the Shanghai Financial Court will undoubtedly serve as a model for financial adjudication nationwide,” emphasized relevant experts.

The High People’s Court of Jiangsu Province has issued a notice on several issues concerning the handling of criminal cases involving refusal to enforce judgments and rulings.
On August 24, the Higher People’s Court of Jiangsu Province issued a notice on several issues concerning the handling of criminal cases involving refusal to enforce judgments and rulings. The specific contents are as follows:
To the Intermediate People’s Courts of all cities, the Xuzhou Railway Transport Court, and the Primary People’s Courts:
In order to address the difficulty of enforcement, comprehensively crack down, in accordance with the law, on criminal acts of refusing to comply with judgments and rulings, and ensure the lawful execution of judgments and rulings rendered by the people’s courts, and pursuant to the instructions of the court leadership and following a specialized research study, the following clarifications are hereby issued regarding several issues encountered by courts across the province in handling criminal cases involving refusal to enforce judgments and rulings, for reference and application in judicial proceedings:
I. Scope of “Judgments and Rulings of the People’s Courts”
1. On the scope of “judgments and rulings of the people’s courts.” According to the Interpretation of the Standing Committee of the National People’s Congress on Article 313 of the Criminal Law of the People’s Republic of China (hereinafter referred to as the Legislative Interpretation), the “judgments and rulings of the people’s courts” referred to in Article 313 of the Criminal Law mean judgments and rulings rendered by the people’s courts in accordance with the law, which contain enforceable provisions and have already attained legal effect. Rulings issued by the people’s courts for the lawful enforcement of payment orders, effective mediation agreements, arbitration awards, notarized debt instruments, and the like, also fall within the scope of the rulings stipulated in that article.
Accordingly, mediation agreements rendered under the auspices of the people’s courts, execution notices issued during enforcement proceedings, arbitral awards, notarized debt instruments, and the like do not, in themselves, constitute “judgments or rulings of the people’s courts.” However, where a ruling issued by the people’s court expressly provides for the enforcement of other legally effective documents, such a ruling shall be deemed to qualify as a “judgment or ruling of the people’s courts” that contains enforcement provisions.
2. Rulings issued by the people’s courts for the lawful enforcement of administrative disposition decisions or administrative penalty decisions, among others, shall be deemed to fall within the scope of “rulings” under the crime of refusing to enforce judgments or rulings. Such rulings issued by the people’s courts for the lawful enforcement of administrative disposition decisions and the like contain enforceable provisions and thus conform to the interpretation in the legislative interpretation that “judgments and rulings of the people’s courts” encompasses such measures.
II. Determination of Obligations to Be Enforced
3. On the determination of the time when enforcement obligations arise: From the perspectives of the eligibility of the obligor and subjective awareness, the timing of the emergence of enforcement obligations should be differentiated according to the respective parties involved. For judgment debtors, guarantors, third parties, and others whose enforcement obligations are expressly set forth in the judgment or ruling, such obligations become fixed upon the legal effectiveness of the judgment or ruling, at which point they must comply with those obligations. By contrast, for persons obligated to assist in enforcement, their obligation arises only upon receipt of the court’s notice of assistance, at which point they become aware of the content of the judgment or ruling.
With respect to acts such as the transfer or concealment of property committed by the obligor prior to the arising of the enforcement obligation, which render a judgment or ruling unenforceable, since the enforcement obligation had not yet become definite at the time of such conduct, it is inappropriate to characterize these acts as refusal to enforce. If the conduct satisfies the elements of the crime of illegally disposing of seized, detained, or frozen property, it may be prosecuted under that offense. Where no other criminal offense is established, relief may be sought through civil proceedings.
With respect to rulings issued by the people’s courts for the enforcement of effective mediation agreements, arbitral awards, or notarized debt instruments, where the obligation to perform has already been established upon the entry into force of such documents, if the obligor subsequently engages in acts such as transferring or concealing property, thereby rendering the judgment or ruling unenforceable, such conduct shall be deemed an act of refusal to enforce.
4. Requirements for the service of legal documents. The determination of an enforcement obligation is contingent upon the obligor’s receipt of the judgment or ruling; evidence must demonstrate that the obligor has received, or should have received, the final judgment or ruling. If the recipient has signed a conofficeation of the service address, and the court serves the final judgment or ruling at that address, the relevant legal document shall be deemed to have been duly served on the recipient.
Where the actor can provide evidence demonstrating that he or she indeed did not receive the effective judicial document, and if there was no fault on his or her part, such person should not be deemed to have an obligation to enforce the judgment. However, if the actor receives the effective judicial document during the enforcement process and, after a certain period, still refuses to comply, this may constitute the crime of refusing to execute a judgment or ruling.
5. Service of legal documents such as property reporting orders and consumption restriction orders. With respect to individuals who refuse to report or falsely report their assets, or who violate court‑imposed restrictions on high‑value consumption and related consumption orders, if their conduct constitutes the crime of refusing to enforce a judgment or ruling, it shall be required that evidence demonstrate that the individual has received, or should have received, the relevant property reporting order, consumption restriction order, or other such legal document. Where information on persons subject to consumption restrictions has been published on the China Execution Information Disclosure Website, such publication shall be deemed sufficient proof that the individual was deemed to have received the consumption restriction order.
III. Understanding and Application of “Serious Circumstances”
6. On the monetary threshold for determining “serious circumstances.” Neither the legislative interpretation nor the Supreme People’s Court’s 2015 Interpretation on Several Issues Concerning the Application of Law in the Trial of Criminal Cases Involving Refusal to Execute Judgments and Rulings (hereinafter referred to as the Judicial Interpretation) sets forth a specific monetary standard for the “serious circumstances” element of the crime of refusing to execute judgments and rulings. Moreover, the legal interest protected by this offense is the authority and enforceability of judicial decisions, which are not directly linked to the amount at issue in the enforcement proceedings. Accordingly, neither the total amount of the enforcement obligation left unfulfilled nor the proportion of that obligation remaining unmet bears on the conviction or sentencing for this offense. However, if the offender has already fulfilled the vast majority of the enforcement obligations and only a very small portion remains unpaid, such circumstances may be deemed significantly minor and thus not subject to criminal prosecution.
7. Considerations in Determining “Serious Circumstances.” Legislative and judicial interpretations specify twelve scenarios constituting “having the ability to enforce yet refusing to do so, where the circumstances are serious.” Based on these twelve scenarios, correctly assessing the standard of “serious circumstances” requires taking into account the following two factors: first, the means employed—namely, that the actor must have engaged in conduct aimed at evading or resisting enforcement obligations, such as concealing or transferring assets, openly defying or violently resisting enforcement, or refusing to report or violating prohibitions on high‑end consumption; second, the consequences of such conduct—specifically, that the refusal to comply has resulted in the inability to enforce judgments or rulings, the suspension of enforcement proceedings, or substantial losses suffered by creditors.
8. Interpretation and Application of “rendering a judgment or ruling unenforceable.” Rendering a judgment or ruling unenforceable refers to the situation where the commission of an act of refusal to enforce results in the failure to promptly and effectively satisfy the enforcement obligations set forth in the judgment or ruling. Where, following such refusal to enforce that has prevented the timely and effective execution of the judgment or ruling, the people’s court subsequently takes separate enforcement measures to ensure that the judgment or ruling is enforced, this does not affect the determination that the judgment or ruling was rendered unenforceable.
9. Determination of “rendering a judgment or ruling unenforceable” in cases involving the enforcement of conduct. In enforcement‑type cases concerning the relocation from a residence or the withdrawal from land, for an offender to be found guilty of the crime of refusing to enforce a judgment or ruling, it must be established that the enforcement authority has fully discharged its obligation to notify the party of the enforcement measures, and that the offender has taken steps to resist such enforcement. If, after being notified by the people’s court, the obligor merely fails to voluntarily vacate the premises or relinquish the land, without engaging in any conduct aimed at obstructing enforcement, this does not yet amount to “rendering a judgment or ruling unenforceable,” and therefore should not be deemed to constitute the crime of refusing to enforce.
10. With respect to the act of an obligor illegally leasing or altering real property that has already been subject to seizure, the degree to which such leasing or alteration obstructs the enforcement of judgments and rulings shall be assessed. If, due to the occupancy by bona fide third parties or the renovation of the premises, the judicial costs of enforcement are significantly increased, resulting in the failure to enforce judgments and rulings in a timely and effective manner and undermining judicial authority, such conduct may be deemed to have rendered the judgment or ruling unenforceable. However, if the leasing or alteration causes only a minor obstruction to enforcement, it need not be classified as refusal to enforce.
11. With respect to real estate and other assets that are difficult to liquidate—such as those subject to court seizure, detention, or freezing—which are sufficient to satisfy the debt determined by an effective legal document, if the judgment debtor nevertheless transfers cash, fails to perform the monetary obligation, or refuses to surrender readily convertible assets such as vehicles, since the seized, detained, or frozen property is adequate to discharge the debt specified in the effective legal document, such conduct generally does not reach the level of rendering the judgment or ruling unenforceable and should not be deemed to constitute the crime of refusing to enforce a judgment.
12. Where an obligor unlawfully disposes of property that has been sealed or seized by the court but subsequently voluntarily complies with the effective judgment, such conduct does not constitute the crime of refusing to enforce a judgment or ruling, since the obligor has already fulfilled the obligation. As for whether the conduct amounts to the crime of illegally disposing of sealed or seized property, according to the interpretation of the relevant statutory provision issued by the Legislative Affairs Commission of the National People’s Congress, “serious circumstances” in this offense primarily refer to situations where the perpetrator conceals, transfers, sells off, or intentionally damages property that has been sealed, seized, or frozen by judicial authorities, thereby seriously obstructing the normal course of litigation or causing substantial losses to the interests of the state, collectives, or citizens. Accordingly, although the perpetrator may have unlawfully disposed of the sealed or seized property, if he or she voluntarily complies with the effective judgment, this may be regarded as not yet having seriously impeded the proceedings and thus not qualifying as “serious circumstances.” However, if the people’s court is able to enforce the judgment only by resorting to compulsory execution against other assets, such conduct may be deemed to constitute “serious circumstances.”
13. With regard to Items 6 and 7 of Article 2 of the Judicial Interpretation: If the party subject to enforcement engages in conduct such as seizing enforcement materials or verbally abusing others—acts that seriously obstruct enforcement and render it impossible to proceed—such conduct shall be deemed “serious.” By contrast, minor acts of non‑cooperation that do not substantially impede enforcement should not be classified as “serious.” Verbal abuse directed at the court constitutes an act of resisting enforcement; so long as such conduct obstructs enforcement and renders it impossible to carry out, it shall be deemed “serious.”
IV. Issues in the Determination of Criminal Charges
14. On the issue of alternative charges: This offense does not constitute an alternative charge; in judicial documents, it is uniformly designated as the crime of refusing to enforce judgments or rulings.
15. On the concurrence between this offense and the crime of obstructing official duties: Where a person who has an obligation to enforce a judgment or order uses violence or threats to obstruct enforcement, thereby rendering the enforcement process impossible, such conduct satisfies the elements of both the crime of obstructing official duties and this offense. In accordance with the principle that special law prevails over general law, conviction and sentencing should generally be imposed under this offense. If a person who does not have an enforcement obligation uses violence or threats to impede enforcement and thereby constitutes joint criminal liability with the person obligated to enforce, conviction and sentencing shall be imposed under this offense; if no joint criminal liability is established but the conduct nevertheless meets the criteria set forth in Article 277 of the Criminal Law, it shall be prosecuted as the crime of obstructing official duties.
16. On the concurrence between this offense and the crime of illegally disposing of property that has been sealed, seized, or frozen: During the trial phase, if a party unlawfully disposes of property that has been sealed, seized, or frozen and the circumstances are serious, such conduct shall be prosecuted as the crime of illegally disposing of sealed, seized, or frozen property. After a judgment or ruling has taken legal effect, if a party disposes of property that was sealed or seized by the people’s court during the trial or enforcement phase, thereby rendering the judgment or ruling unenforceable, such conduct shall be prosecuted under this offense.
17. On the concurrence between this offense and the crime of false litigation: During the enforcement process, if a judgment or ruling is rendered unenforceable through the use of false litigation, such conduct constitutes multiple offenses arising from a single act; the more serious offense shall be selected for prosecution.
V. Other Issues of Legal Application
18. Handling of cases where the party subject to enforcement voluntarily performs its obligations after a case has been filed. Where a person obligated to enforce a judgment or ruling is placed under investigation for, or subjected to coercive measures on suspicion of the crime of refusing to enforce a judgment or ruling, and subsequently voluntarily fulfills the obligation, or does so with the assistance of relatives or friends, leniency may be granted in accordance with the provisions of the judicial interpretation. In the case of a private prosecution, the parties may reach a settlement, whereby the private prosecutor withdraws the complaint.
VI. Job Requirements
(1) Strengthen communication and coordination
With regard to internal working mechanisms, criminal trial departments at all levels of the courts should strengthen communication and coordination with enforcement departments, establish long-term working mechanisms, and, in collaboration with the enforcement departments, promptly review relevant case materials and put forward recommendations for handling. When referring case leads, enforcement departments may seek the opinions of the criminal trial departments. Meanwhile, criminal trial departments should enhance communication with public security and procuratorial organs, address difficult issues arising in the handling of criminal cases involving refusal to enforce judgments or rulings, and establish a consultation mechanism to align understanding and bolster enforcement efforts.
(II) Strengthening Evidence-Gathering Guidelines
Criminal adjudication departments of courts at all levels shall strengthen legal clarification and guidance for parties in private prosecution cases regarding the investigation and collection of evidence, thereby enhancing the quality of case handling. With respect to evidence that a party in a private prosecution case is unable to obtain due to objective reasons and requests the people’s court to subpoena, the criminal adjudication division shall review such requests and, if deemed necessary, promptly order the relevant evidence to be obtained.
(3) Strengthening Enforcement Efforts
Criminal adjudication departments at all levels of the courts must attach great importance to the trial of crimes involving refusal to enforce court orders. Defendants who are repeat offenders, have repeatedly engaged in acts of refusal to enforce, or whose refusal has been particularly egregious and has resulted in serious consequences shall be sentenced more severely. Emphasis should be placed on advancing enforcement proceedings by cracking down on such offenses, thereby providing robust support for the people’s courts in securing a decisive victory in the campaign to fundamentally resolve difficulties in enforcement.

Other
Real estate registration networking is accelerating across multiple provinces; experts say the property tax is drawing nearer.
The “Division of Key Tasks for the National Teleconference on Deepening the ‘Delegation, Regulation, and Service’ Reform and Transforming Government Functions,” recently issued by the State Council, stipulates that by the end of June 2019, all municipalities directly under the central government, sub-provincial cities, and provincial capitals will fully implement the “Internet Plus Real Estate Registration” initiative.
“Although we cannot say that establishing a unified real estate registration system is aimed at levying a property tax, as this system is gradually refined and fully implemented, its vast repository of real estate information has objectively become the foundational infrastructure for introducing such a tax,” said Zhang Yiqun, Director of the Jilin Provincial Institute of Fiscal Science. He added that the establishment of a unified real estate registration system and a nationwide networked data platform signifies that the property tax is drawing ever closer.
According to reports, several provinces have recently unveiled plans to streamline real estate registration. For instance, on August 17, Hebei Province issued the “Guiding Opinions on Promoting the ‘At Most One Visit’ Reform for Real Estate Registration,” which calls for enhanced coordination among housing transactions, tax and fee collection, and real estate registration processes; the implementation of “one-window acceptance and parallel processing” and “Internet Plus Real Estate Registration”; and the phased achievement of a “maximum one visit” policy for real estate registration. Furthermore, efforts will be made to fully integrate the foundational platform for real estate registration information management with the housing transaction management information platform, ensuring the continuity, security, and convenience of related procedures. When handling tax-related matters in real estate transactions, tax authorities may directly access shared land and property registration data to collect taxpayer‑related information, while retaining records of such data access conofficeed by the taxpayer.
On August 10, Shandong Province issued the “Special Action Plan for Optimizing Real Estate Registration,” which stipulates that the land and resources authorities, while safeguarding personal property privacy and commercial secrets, shall provide real estate registration-related outcome information pertaining to residential properties to the housing and urban–rural development (housing management) authorities in real time, thereby enabling these authorities to effectively carry out real estate market monitoring, supervision, and regulation. Following receipt of a real estate registration application, the real estate registration agency shall promptly share tax‑collection review documents and relevant data with the tax authorities, ensuring that the latter can implement tax policies and collect taxes accurately. The housing and urban–rural development (housing management) and tax authorities are required to transmit, in real time, information on the filing of pre-sale contracts for newly built commercial properties and on tax payment status to the real estate registration agency, thus meeting the needs of real estate registration work. Furthermore, it is encouraged that the land and resources authorities establish network connectivity with the housing and urban–rural development and planning departments; when handling matters such as initial real estate registration, real estate registration agencies may directly obtain, via the network, supporting documentation verifying compliance with planning requirements and acceptance criteria, thereby enhancing operational efficiency.
Liu Zhe, deputy director of the Wanbo Institute for New Economy, stated that advancing “Internet Plus Unified Real Estate Registration” is one of the measures to deepen the “delegation, regulation, and service” reform. By strengthening information management systems, this initiative will enhance the efficiency of government services.
Zhang Yiqun believes that the unified real estate registration system, within the framework of a market economy, serves both as a means of afofficeing property rights and as a mechanism for safeguarding them. It clarifies the legal legitimacy of property ownership, providing holders with the most comprehensive, standardized, and credible evidence to facilitate property transactions, resolve disputes, and establish clear property boundaries. After several years of concerted effort, China has gradually established a unified real estate registration system. This not only furnishes the government with first-hand, accurate, and comprehensive data to strengthen real estate management but also helps accelerate the development of a robust real estate tax collection and administration framework, thereby offering solid data support for the introduction of such a tax.
Zhang Yiqun stated that, of course, the introduction of a property tax still requires completing a series of legislative procedures, including drafting the bill, soliciting public input, revising and refining it, and securing parliamentary approval. The enactment of the property tax is like turning on a faucet, while real‑estate registration is akin to laying the water pipes: once the “pipes” of real‑estate registration are in place, all that remains is to turn the “faucet” of legislation, at which point the conditions for levying the property tax will be fully met. At the same time, the vast amount of data generated by the real‑estate registration system can effectively reduce the administrative costs of implementing the property tax, prevent revenue leakage and ensure transparency in the tax burden, thereby contributing to a comprehensive enhancement of government governance capacity and efficiency.
“Whether leveraging the unified real estate registration network to provide data support for the property tax, thereby enhancing the efficiency of its collection, is a question worthy of study,” said Liu Zhe.

Five ministries and commissions: Prevent illegal fundraising conducted under the guise of “blockchain”
On August 24, the China Banking and Insurance Regulatory Commission, the Cyberspace Administration of China, the Ministry of Public Security, the People’s Bank of China, and the State Administration for Market Regulation jointly issued the “Risk Alert on Preventing Illegal Fundraising Under the Guise of ‘Virtual Currency’ and ‘Blockchain,’” stating that recently, some unlawful actors have been exploiting the banners of “financial innovation” and “blockchain” to raise funds by issuing so‑called “virtual currencies,” “virtual assets,” and “digital assets,” thereby infringing upon the legitimate rights and interests of the public. Such activities are not genuinely based on blockchain technology; rather, they capitalize on the blockchain concept to engage in illegal fundraising, pyramid schemes, and fraud, exhibiting the following key characteristics:
First, these activities are markedly networked and cross-border. Transactions are conducted via the internet and messaging apps, with funds flowing in and out through online payment platforms, resulting in a broad reach and rapid spread of risks. Some criminals rent overseas servers to set up websites, effectively targeting domestic residents while remotely controlling operations to carry out illegal activities. Additionally, certain individuals in chat group forums claim to have secured investment quotas for high‑quality blockchain projects abroad and offer to invest on behalf of others—such claims are highly likely to be scams. Moreover, much of the illicit proceeds flows overseas, making regulation and tracking extremely challenging.
Second, these schemes are highly deceptive, enticing, and concealed. They exploit trending concepts to hype up projects, concocting a myriad of “high‑end” theories; some even enlist celebrities and prominent online influencers to lend credibility, luring investors with promises such as free “candy” airdrops, while touting claims like “the currency’s value will only rise, never fall,” or “short investment cycles, high returns, and low risk,” thereby exerting strong persuasive power. In practice, illicit actors manipulate the price movements of so‑called virtual currencies behind the scenes and impose artificial hurdles for profit‑taking and withdrawals, all in order to amass illegal profits. Moreover, certain criminals issue tokens under ever‑evolving guises—such as ICOs, IFOs, and IEOs—or, under the banner of the sharing economy, conduct virtual‑currency speculation through IMO schemes, further enhancing their concealment and deceptiveness.
Third, multiple legal risks exist. Criminals engage in public promotion, luring the public to invest by offering “static returns” (profit from cryptocurrency price appreciation) and “dynamic returns” (profit from recruiting downline members), while enticing investors to recruit others to join, thereby continuously expanding their funding pool. Such activities exhibit hallmarks of illegal fundraising, pyramid schemes, and fraud.
Five government departments have warned that such activities, marketed under the banner of “financial innovation,” are in fact Ponzi schemes that rely on “rolling over old debts with new funds,” making their sustainability unsustainable over the long term. The public is urged to approach blockchain technology with a rational mindset, avoid blindly trusting overly optimistic promises, cultivate sound monetary and investment principles, and strengthen their risk awareness. Any leads regarding illegal or criminal activities should be promptly reported to the relevant authorities.

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