JC Master Legal News Issue 842

Key Takeaways for This Issue

The China Securities Regulatory Commission has issued the Measures for the Administration of Private Asset Management Business by Securities and Futures Operating Institutions, along with its accompanying rules.

On October 22, 2018, the China Securities Regulatory Commission issued the Measures for the Administration of Private Asset Management Business by Securities and Futures Operating Institutions and the Regulations on the Operation and Management of Private Asset Management Plans by Securities and Futures Operating Institutions (hereinafter collectively referred to as the “Asset Management Detailed Rules”), which, as implementing rules accompanying the Guiding Opinions on Regulating Asset Management Business of Financial Institutions (hereinafter referred to as the “Guiding Opinions”), took effect from the date of their promulgation.

The Standing Committee of the National People’s Congress has adopted a decision to amend the Company Law, and the China Securities Regulatory Commission will, in accordance with the law, support share buybacks by listed companies.

The Sixth Meeting of the Standing Committee of the 13th National People’s Congress reviewed and adopted the “Decision of the Standing Committee of the National People’s Congress on Amending the Company Law of the People’s Republic of China” (hereinafter referred to as the “Amendment Decision”), which introduced specific amendments to Article 142 of the Company Law concerning the repurchase of company shares. The Amendment Decision shall take effect from the date of its promulgation.

How can the six special additional deductions be used to offset individual income tax?

On October 20, the Ministry of Finance and the State Taxation Administration published the “Interim Measures for Special Additional Deductions under the Individual Income Tax Law (Draft for Public Comment)” on their websites, inviting public input. The deadline for submitting comments is November 4. Following completion of the relevant procedures, the interim measures will come into effect on January 1, 2019, in accordance with the law.

Amendments to the Criminal Procedure Law: Refining the Plea Bargaining and Leniency System and Introducing a Trial-in-Absentia Procedure

On the afternoon of October 26, the Sixth Session of the Standing Committee of the 13th National People’s Congress adopted by vote the Decision on Amending the Criminal Procedure Law. The amended Criminal Procedure Law shall enter into force from the date of its promulgation.

China is accelerating pharmaceutical and healthcare legislation to prescribe a remedy for longstanding challenges in accessing medical care.

Recently, the draft Basic Medical and Health Care and Health Promotion Law, submitted to the Standing Committee of the National People’s Congress for its second deliberation, stipulates that the personal safety and dignity of medical and health-care personnel shall be inviolable; establishes a full‑cycle traceability system for pharmaceuticals; implements a scheduled immunization program; and employs legally binding measures to safeguard the rights and interests of both medical professionals and patients.

Table of Contents

Table of Contents

Finance & Capital Markets

The China Securities Regulatory Commission has issued the Measures for the Administration of Private Asset Management Business by Securities and Futures Operating Institutions, along with its accompanying rules.

The China Securities Regulatory Commission has issued the “Opinions on the Application of Relevant Provisions in Articles 18 and 19 of the Measures for the Administration of Major Asset Restructurings of Non‑Listed Public Companies — Securities”

Opinion on the Application of Law to Futures No. 14

The National Equities Exchange and Quotations Company has streamlined its systems for equity issuance and M&A restructuring, and established a market-maker evaluation mechanism.

The Shanghai Stock Exchange is deepening the functionality of its bond market to support the sound development of private enterprises.

The China Securities Regulatory Commission and the Japanese Financial Services Agency have signed a Memorandum of Understanding on Promoting Cooperation between the Two Countries’ Securities Markets.

Corporate & Commercial

The Standing Committee of the National People’s Congress has adopted a decision to amend the Company Law, and the China Securities Regulatory Commission will, in accordance with the law, support share buybacks by listed companies.

Premier Li Keqiang presided over an executive meeting of the State Council, which outlined measures to further advance the implementation of policies aimed at optimizing the business environment, based on findings from oversight inspections and concerns raised by enterprises.

The China Banking and Insurance Regulatory Commission is soliciting public comments on the “Administrative Measures for Equity Investments by Insurance Funds (Draft for Comments).”

A symposium on Party building in central enterprises was held in Beijing.

The Jiangsu Provincial Department of Finance has revised the Measures for the Administration of Award and Subsidy Funds for PPP Projects.

Taxation

How can the six special additional deductions be used to offset individual income tax?

State Taxation Administration: Since the beginning of this year, the tax-related business environment has continued to improve.

Controlling Dust Through Taxation, Safeguarding Clear Waters and Blue Skies — Taizhou City Has Pioneered the Nation by Issuing Regulations on the Determined Collection of Environmental Protection Taxes for Construction Dust.

Litigation & Arbitration

Amendments to the Criminal Procedure Law: Refining the Plea Bargaining and Leniency System and Introducing a Trial-in-Absentia Procedure

The appellate jurisdiction over patent and other related cases will be centralized in the Intellectual Property Court of the Supreme People’s Court.

The Organic Law of the Two Courts has undergone its first major revision in nearly 40 years, comprehensively afofficeing and consolidating the achievements of judicial reform.

Resolutely win, on schedule, the tough battle of “fundamentally resolving difficulties in enforcement.”

— On-site coverage of Zhou Qiang’s responses to a special inquiry by the Standing Committee of the National People’s Congress on addressing the challenge of enforcing court judgments.

Other

China is accelerating pharmaceutical and healthcare legislation to prescribe a remedy for longstanding challenges in accessing medical care.

The central bank will implement three major measures to enhance financial services for private enterprises.

Finance & Capital Markets

The China Securities Regulatory Commission has issued the Measures for the Administration of Private Asset Management Business by Securities and Futures Operating Institutions, along with its accompanying rules.

On October 22, 2018, the China Securities Regulatory Commission issued the Measures for the Administration of Private Asset Management Business by Securities and Futures Operating Institutions and the Regulations on the Operation and Management of Private Asset Management Plans by Securities and Futures Operating Institutions (hereinafter collectively referred to as the “Asset Management Detailed Rules”), which, as implementing rules accompanying the Guiding Opinions on Regulating Asset Management Business of Financial Institutions (hereinafter referred to as the “Guiding Opinions”), took effect from the date of their promulgation.

In terms of specific content, the “Detailed Rules on Asset Management” maintain a high degree of consistency with the “Guiding Opinions,” with certain regulatory indicators slightly relaxed compared to existing provisions. The key rules are organized around seven main areas: First, standardizing legal relationships and clarifying fundamental principles. The rules explicitly stipulate that all types of private‑placement asset management products are established under trust‑based legal relationships, and on this basis set forth core principles such as “the seller’s duty of care and the buyer’s own responsibility.” Second, systematically defining business forms and clarifying asset categories. The rules unify the existing terminology system, systematically delineating business models, product types, and both standardized and non‑standardized assets. Third, broadly harmonizing regulatory standards, covering institutional qualification requirements, manager responsibilities, operational norms, and internal control mechanisms. Fourth, appropriately drawing on public‑fund experience to improve the investment‑operation framework, including requirements for portfolio diversification, mandatory custody, comprehensive disclosure, and independent operation. Fifth, strengthening the principal responsibility of operating institutions by dedicating a separate chapter to comprehensively set out risk‑management and internal‑control requirements for securities and futures offices engaging in private‑placement asset management. Sixth, reinforcing targeted risk prevention and addressing regulatory gaps, with particular emphasis on liquidity‑risk management and curbing risks associated with related‑party transactions that may result in the transfer of benefits to controlling shareholders or actual controllers of managers or custodians. Seventh, bolstering frontline supervision and enhancing coordination between regulatory authorities and self‑regulatory bodies, by improving information‑reporting and information‑sharing mechanisms, strengthening the frontline oversight capabilities of branch institutions, and intensifying accountability measures.

With regard to transitional arrangements, the Measures on Asset Management, grounded in the current characteristics of market operations and the existing stock of asset management business, adopts a transition period identical to that set out in the Guiding Opinions and introduces flexible “new‑old separation” provisions. During this transition period, while securities and futures operating institutions are required to orderly reduce the overall scale of existing products that do not yet comply with the Measures, they are permitted to renew such non‑compliant products on a rolling basis, without imposing uniform deadlines for rectification. Institutions are thus allowed to proceed in an orderly manner, gradually bringing their operations into compliance and ensuring a smooth, systematic transition between the old and new regulatory frameworks. Upon expiration of the transition period, for existing non‑standardized debt‑type assets that, due to special circumstances, remain difficult to bring into compliance, as well as for outstanding non‑standardized equity‑type assets, appropriate measures may be adopted, subject to the approval of the China Securities Regulatory Commission, to ensure their proper handling.

Overall, the “Detailed Rules on Asset Management” refine the regulatory requirements for private asset management business conducted by securities and futures operating institutions, helping to stabilize market expectations, reduce market uncertainty, and ensure a smooth transition of existing asset management business. They also promote the harmonization of regulatory standards across similar asset management activities, further enhancing these institutions’ compliance management and risk‑control capabilities, thereby effectively safeguarding investors’ legitimate rights and interests and mitigating systemic risks.

The China Securities Regulatory Commission has issued the “Opinions on the Application of Relevant Provisions in Articles 18 and 19 of the Measures for the Administration of Major Asset Restructuring of Non‑Listed Public Companies—Opinion No. 14 on the Application of Securities and Futures Laws.”

In order to ensure the proper interpretation and application of Articles 18 and 19 of the Measures for the Administration of Major Asset Restructurings of Non‑Listed Public Companies (CSRC Order No. 103), the China Securities Regulatory Commission has formulated and promulgated the “Opinions on the Application of Relevant Provisions of Articles 18 and 19 of the Measures for the Administration of Major Asset Restructurings of Non‑Listed Public Companies—Opinion No. 14 on the Application of Securities and Futures Laws.”

I. For non-listed public companies issuing shares in a private placement to acquire assets, the number of subscribers is not subject to the 35‑person limit.

II. If any of the aforementioned subscribers does not meet the eligibility requirements for participating in the public transfer of shares of a company listed on the New Third Board, such subscriber shall be permitted to buy or sell only the shares of the non‑listed public company that it has subscribed for. Subscribers that are holding‑share platforms shall be prohibited from participating in the subscription.

III. These Provisions shall enter into force as of the date of their promulgation.

The National Equities Exchange and Quotations Company has streamlined its systems for equity issuance and M&A restructuring, and established a market-maker evaluation mechanism.

On October 26, 2018, the National Equities Exchange and Quotations Company (NEEQ) promulgated and implemented the newly formulated “Regulations on Matters Relating to Share Issuance by Listed Companies,” the “Guidelines No. 1–4 for Share Issuance Business of the National SME Share Transfer System,” and the revised “Guidelines for Share Issuance Business of the National SME Share Transfer System.” It also issued the “Guidelines for Major Asset Restructuring of Non‑Listed Public Companies on the National SME Share Transfer System,” the “Q&A on Major Asset Restructuring of Listed Companies,” and the “Q&A on Equity Changes and Acquisitions of Listed Companies.” In addition, the NEEQ released the “Provisional Measures for Evaluating Market Makers on the National SME Share Transfer System,” thereby optimizing and reforming existing frameworks such as the targeted share issuance regime, the merger and acquisition and restructuring regime, and the market maker system in the New Third Board market.

With regard to the stock issuance regime for listed companies, first, a parallel review mechanism has been implemented: external procedures such as entering into tripartite supervisory agreements, having an accounting office verify capital contributions, and obtaining opinions from the sponsoring securities office and legal counsel have been reorganized to operate in parallel. The National Equities Exchange and Quotations Company’s (NEEQ) review is now initiated at an earlier stage—during the disclosure of the issuance plan—and the review scope for issuing the filing registration letter has been streamlined to focus solely on verifying and cross-checking issuance data, thereby reducing the duration during which raised funds remain idle. Calculations indicate that the average idle period for funds raised by listed companies can be shortened by more than 20 days. Second, an authorized‑issuance regime has been introduced, stipulating that “the annual general meeting makes a single decision, while the board of directors implements it in stages,” thus enhancing the efficiency of decision‑making for small‑scale issuances. Following the introduction of this regime, the internal decision‑making time for small‑scale financing by listed companies can be reduced by over 15 days. Furthermore, estimates suggest that approximately 20% of listed companies’ financing needs could be met through the authorized‑issuance approach. Third, a negative‑list management framework has been maintained, with refinements to the requirements for overseeing raised funds. For issuances not directly aimed at raising capital, the requirement to conduct analyses of the necessity and reasonableness of fund‑use purposes has been lifted; and when proceeds are used to replenish working capital, quantitative calculations are no longer mandatory. Fourth, clear rules have been established regarding the recusal of related parties from voting, with detailed provisions on the application of vote‑recusal mechanisms under different circumstances, thereby preventing regulatory arbitrage. Fifth, specific scenarios triggering the termination of the filing‑review process, along with corresponding risk‑mitigation measures, have been defined to ensure effective rule‑based oversight.

With respect to the M&A and restructuring regime for listed companies, first, the criteria for identifying material asset restructurings have been refined, with specific provisions clarifying the forms of “asset transactions conducted through other means.” At the same time, it has been explicitly stipulated that purchases of land and buildings used in production and operations by listed companies will no longer be subject to the material asset restructuring framework, thereby further reducing the information‑disclosure burden on listed companies, lowering transaction costs, and enhancing transaction efficiency. Second, the suspension‑and‑resumption regime for material asset restructurings has been optimized, with detailed rules governing the review procedures and disclosure requirements for applications to extend the suspension period. Following the implementation of these new rules, the duration of trading suspensions related to restructuring can be effectively shortened, helping to prevent prolonged suspensions or indefinite non‑resumption and safeguarding investors’ trading rights. Third, the review process has been adjusted: insiders at companies without any prior trading history are exempted from filing obligations, further improving review efficiency. Fourth, the regulatory requirements and penalties pertaining to the raising of accompanying funds have been clarified, enhancing companies’ payment capacity in restructuring transactions, alleviating restructuring pressures, and strengthening the regulatory basis for self‑regulatory measures against violations in corporate restructurings. Fifth, the disclosure requirements for equity changes and acquisitions have been revised. Specifically, operational guidelines addressing equity‑change issues arising from “odd‑lot” trades—of widespread market concern—have been articulated, and the information‑disclosure obligations upon a change in the largest shareholder have been expressly defined, thereby filling certain regulatory gaps, reducing disclosure costs for market participants, and minimizing the risk of inadvertent non‑compliance. In addition to these adjustments, relevant legal interpretations issued by the China Securities Regulatory Commission clarify that, in material asset restructurings, the number of subscribers in share‑issuance transactions is no longer capped at 35, and holders of assets that do not meet the conditions for public transfer may participate in such offerings as restricted investors.

In terms of the market‑maker evaluation mechanism, first, building on the existing assessment framework for sponsoring securities offices’ professional quality, a separate evaluation system for market makers will be established. Second, taking into account the distinctive features of the New Third Board’s market‑making regime, the evaluation will focus on market‑maker activities and adopt a multidimensional approach, assessing market‑making performance across three dimensions: market‑making scale, liquidity provision, and quote quality. Third, emphasis will be placed on leveraging the results of market‑maker evaluations; based on these outcomes, eligible top‑performing market makers will receive appropriate reductions or exemptions from trading fees, thereby encouraging them to engage in active and compliant market‑making practices. According to preliminary calculations, once the formal market‑maker evaluation is implemented, the average transaction handling fees for all market makers across the market are expected to decline by 55%.

The Shanghai Stock Exchange is deepening the functionality of its bond market to support the sound development of private enterprises.

To implement the decisions and arrangements of the CPC Central Committee and the State Council on winning the tough battle of preventing and defusing risks, and to further strengthen policy measures supporting the sound development of private enterprises, the Shanghai Stock Exchange, under the unified leadership of the China Securities Regulatory Commission, has actively advanced reform and innovation in the exchange‑traded bond market, adopted multiple measures to alleviate financing challenges faced by private enterprises, and contributed to their healthy growth.

First, special-purpose bonds to provide relief have been introduced. Recently, local governments and industry associations have successively established relief funds and asset management schemes to help listed companies with promising prospects but temporarily facing operational difficulties alleviate the challenges posed by pledged equity. To further leverage the bond market’s role in providing support and broaden funding channels, the Shanghai Stock Exchange has launched special-purpose relief bonds, enabling relevant institutions to raise capital through the issuance of dedicated corporate bonds earmarked for mitigating stock‑pledge risks among listed offices. Moreover, entities that meet the requisite criteria are encouraged to issue M&A and restructuring bonds as well as hybrid equity‑debt products, thereby harnessing the proactive role of industry leaders in industrial restructuring. Today, Beijing Haidian Science and Technology Finance Capital Holdings Group Co., Ltd. successfully issued its special-purpose corporate bond on the Shanghai Stock Exchange, with a total issuance size of RMB 800 million. The proceeds will be primarily used to support the development of high‑quality private‑sector technology‑focused listed companies and to address the risks associated with stock pledges. In addition, special-purpose bonds issued by other financial institutions and local state‑owned enterprises participating in relief funds are also expected to be launched in the near future.

Second, we will support the continued financing of private enterprises. We will further refine the institutional framework for corporate bond refinancing, establish a dedicated review mechanism to enhance the relevance and efficiency of assessments, and assist private offices that maintain normal operations, possess promising growth prospects, yet face short-term liquidity challenges in applying for corporate bonds, thereby enabling them to roll over and renew their debt in line with their operational and debt‑management needs. At the same time, we will strengthen coordination with local governments and financial institutions, leverage the combined strengths of all stakeholders, deepen innovation in bond products, and adopt market‑based approaches to alleviate liquidity pressures on private enterprises.

Third, we will promptly introduce credit enhancement instruments. In response to market needs and drawing on both domestic and international experience, we will leverage the strengths and expertise of specialized institutions in risk identification and management, refine risk-sharing mechanisms, and roll out credit enhancement tools in the near term to alleviate the difficulties and high costs of financing faced by private enterprises.

Going forward, the Shanghai Stock Exchange will continue to implement the policies and directives of the CPC Central Committee and the State Council, in accordance with the unified deployment of the China Securities Regulatory Commission. Upholding the principle of “two unwavering commitments,” it will establish a green channel for reviewing special-purpose bonds aimed at providing relief, while also formulating and refining institutional frameworks for high-yield bonds and hybrid equity–bond products. Furthermore, it will enhance the supporting regulatory framework of the bond market, thereby better leveraging the exchange‑based bond market’s role in deepening direct financing and fostering the long-term, sound development of private enterprises.

The China Securities Regulatory Commission and the Japanese Financial Services Agency have signed a Memorandum of Understanding on Promoting Cooperation between the Two Countries’ Securities Markets.

On October 26, 2018, under the joint witness of Chinese Premier Li Keqiang and Japanese Prime Minister Shinzo Abe, Liu Shiyu, Chairman of the China Securities Regulatory Commission, and Toshihide Endo, Commissioner of the Financial Services Agency of Japan, signed in Beijing the Memorandum of Understanding on Promoting Cooperation Between the Two Countries’ Securities Markets. This marked the entry of cooperation between the securities and futures regulatory authorities of China and Japan into a new phase.

On the occasion of the 40th anniversary of the signing of the Treaty of Peace and Friendship between China and Japan, the securities and futures regulators of both countries will fully implement the important consensus reached by the leaders of the two nations, actively support, and steadily advance comprehensive, multi‑tiered, mutually beneficial, and pragmatic cooperation in their respective capital markets. In recent days, the relevant stock exchanges and industry associations of both countries have also signed memoranda of understanding to strengthen bilateral cooperation.

Commercial & Corporate

The Standing Committee of the National People’s Congress has adopted a decision to amend the Company Law, and the China Securities Regulatory Commission will, in accordance with the law, support share buybacks by listed companies.

The Sixth Meeting of the Standing Committee of the 13th National People’s Congress reviewed and adopted the “Decision of the Standing Committee of the National People’s Congress on Amending the Company Law of the People’s Republic of China” (hereinafter referred to as the “Amendment Decision”), which introduced specific revisions to Article 142 of the Company Law concerning the repurchase of company shares. The Amendment Decision shall take effect from the date of its promulgation. The China Securities Regulatory Commission will earnestly implement the Amendment Decision, regulating and supporting share repurchases by listed companies in accordance with the law.

To ensure the effective implementation of the revised Company Law, the China Securities Regulatory Commission will systematically review and streamline the rules governing share repurchases by listed companies. It will rigorously enforce those provisions that remain applicable, while promptly refining the corresponding ancillary regulations to address the new requirements introduced by the amendment. This will further clarify matters such as the circumstances, procedures, methods, information disclosure, holding of repurchased shares, transfer of repurchased shares, and cancellation of repurchased shares. Listed companies, together with their controlling shareholders, actual controllers, directors, supervisors, and senior management, are required to strictly comply with the Amendment Decision and related regulatory frameworks, amend their articles of association accordingly, and enhance their internal governance systems. They must carry out share repurchases in full compliance with the law, ensuring that such repurchases do not undermine the company’s ability to meet its debt obligations or its capacity for sustained operations. The CSRC will intensify regulatory oversight and enforcement, rigorously investigating and prosecuting, in accordance with the law, illegal and non‑compliant practices—including insider trading, market manipulation, violations of information disclosure requirements, “transfer of benefits,” and “deceptive” repurchases—so as to safeguard the orderly functioning of the share‑repurchase market, harness the positive role of the share‑repurchase mechanism, and promote the sustained, stable, and healthy development of the capital market.

Premier Li Keqiang presided over an executive meeting of the State Council, which outlined measures to further advance the implementation of policies aimed at optimizing the business environment, based on findings from inspections and concerns raised by enterprises.

On October 22, Premier Li Keqiang of the State Council presided over an executive meeting of the State Council, which outlined measures to further advance the implementation of policies aimed at optimizing the business environment, based on findings from inspections and concerns raised by enterprises. The meeting also decided to establish a bond‑financing support tool for private enterprises, employing market‑based mechanisms to help alleviate their financing difficulties, and approved the development of a national “Internet Plus Supervision” system to promote standardized, precise, and intelligent government oversight.

The meeting pointed out that, in the face of numerous challenges to China’s development stemming from changes in the external environment and other factors, it is essential, in accordance with the requirements of the CPC Central Committee and the State Council, to intensify efforts to optimize the business environment—anticipating enterprises’ needs and addressing their urgent concerns—ensure the effective implementation of all relevant policies, remove obstacles hindering enterprise development, and bolster business confidence and competitiveness. First, further reduce market access restrictions in the social capital sector. By year-end, revise and fully implement the new version of the Negative List for Market Access, ensuring widespread application of the “anything not prohibited is permitted” principle. By the end of March next year, comprehensively eliminate all market access restrictions on foreign investment that fall outside the Negative List, achieving uniform standards for both domestic and foreign investors. Second, further streamline administrative licensing and related procedures. Conduct a thorough review of existing licensing items, and by the end of March next year, revise and publish a new list of administrative licensing matters; any licensing outside this list will be deemed an unauthorized approval. Third, further simplify enterprise investment approval processes. Building on pilot programs, launch nationwide next year a reform of the project‑approval system covering the entire process and all sectors, enabling online, parallel processing of all types of investment approvals. By year-end, introduce measures to streamline the enterprise deregistration procedure. Fourth, further alleviate the tax and fee burden on businesses. Expedite research and propose concrete measures to continue reducing corporate tax rates and lowering social security contribution rates. By year-end, fully implement the “one inspection, one fee” policy for annual truck inspections, vehicle inspections, and exhaust‑emission testing, and eliminate or replace more than 10% of product categories currently subject to mandatory certification with a self‑declaration regime. Strengthen oversight of service fees in education, healthcare, notarization, seal‑making, and other sectors, and conduct inspections of fees charged by industry associations and chambers of commerce. Fifth, further enhance the efficiency of government services. Accelerate the standardization of public services, streamline administrative penalties, formulate guidelines to regulate discretionary powers, and resolutely rectify arbitrary enforcement and one‑size‑fits‑all approaches.

The meeting noted that private enterprises are important builders of socialism with Chinese characteristics and a key driving force behind economic and social development. It emphasized the need to uphold the “two unwavering commitments” and introduce more policies conducive to the stable and healthy growth of private enterprises. The meeting decided to increase support through relending and rediscounting for small and medium-sized financial institutions with market demand, thereby enhancing their capacity and quality of financial services for micro, small, and private enterprises. At the same time, in response to the current difficulties private enterprises face in accessing financing, market‑based measures will be employed to support their bond issuance. The People’s Bank of China will, in accordance with the law, provide initial funding to specialized institutions, which will, under market‑oriented operations and risk‑prevention principles, offer credit enhancement for bonds issued by private enterprises that are operating normally but experiencing temporary liquidity challenges. When conditions are ripe, commercial banks and insurance companies may be invited to participate voluntarily, establishing a mechanism for shared risk.

To improve ongoing and post‑event regulatory oversight and to strengthen and innovate regulatory approaches such as “double random inspections, one public disclosure,” the meeting decided to build an “Internet Plus Regulation” system based on the National Government Service Platform. This will enhance supervision of local and departmental regulatory efforts, enabling “regulation of regulation,” while leveraging the aggregation and sharing of various relevant data to promptly identify and mitigate emerging risks that cut across industries and regions. The meeting also called for strengthened overall coordination in advancing the initiative to ensure its synchronized launch and operation with the National Government Service Platform by the end of September next year.

The China Banking and Insurance Regulatory Commission is soliciting public comments on the “Administrative Measures for Equity Investments by Insurance Funds (Draft for Comments).”

To further enhance the quality and effectiveness of insurance funds in serving the real economy, standardize equity investments by insurance funds, and effectively guard against financial risks, the China Banking and Insurance Regulatory Commission has revised the Interim Measures for Equity Investments by Insurance Funds (CBIRC Document No. 79 [2010]) and is now soliciting public comments on the revised Measures for the Administration of Equity Investments by Insurance Funds (Draft for Comments) (hereinafter referred to as the “Equity Measures”).

The revised Equity Regulations comprise seven chapters and forty-four articles. The principal changes introduced in this revision eliminate sector‑specific restrictions on insurance funds’ equity investments, adopting a “negative list plus positive guidance” approach to enhance the ability of insurance capital to support the real economy. The Regulations no longer impose sectoral limits on financial‑type or strategic equity investments; instead, they require insurance companies to assess their own circumstances and make independent, prudent choices regarding industries and types of enterprises, while strengthening their capacity for equity investment and risk management.

Amending the Equity Investment Measures is an important step taken by the China Banking and Insurance Regulatory Commission to implement the spirit of the 19th National Congress of the Communist Party of China, the National Financial Work Conference, and the recent “Six Stabilities” directives issued by the CPC Central Committee and the State Council. First, it effectively enhances financial accessibility for private enterprises and small, medium, and micro‑enterprises. The Measures have removed sectoral restrictions on insurance funds’ direct equity investments, granting insurers greater investment autonomy, thereby providing more long-term capital to support the development of the private sector and fostering a favorable financing environment. Second, it helps increase the share of equity financing and direct financing, guiding insurance funds to inject more equity‑based capital into the real economy, further reducing leverage in the real sector and bolstering the economy’s medium‑ and long‑term resilience. Third, it contributes to optimizing the allocation of financial resources by encouraging insurance funds to play an active role as institutional investors, better supporting major national reform initiatives such as mixed‑ownership reform and market‑oriented, rule‑of‑law‑based debt‑to‑equity swaps. This approach prioritizes sectors and areas with strong market prospects and technological advantages, thus promoting higher quality and greater efficiency in economic growth.

Going forward, the China Banking and Insurance Regulatory Commission will, based on feedback from all sectors of society, further revise and refine the Equity Management Measures and issue them for implementation at an appropriate time. In addition, it will introduce complementary policies to support insurance funds’ investments in sectors and projects aligned with national policy priorities.

A symposium on Party building in central enterprises was held in Beijing.

On October 26, the symposium on Party building in central enterprises was held in Beijing. Chen Xi, a member of the Political Bureau of the CPC Central Committee and Minister of the Organization Department of the CPC Central Committee, attended the meeting and delivered a speech, while State Councilor Wang Yong chaired the event. Chen Xi emphasized the need to thoroughly study and implement Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, resolutely uphold General Secretary Xi Jinping’s core position on the Party Central Committee and in the Party as a whole, and officely safeguard the authority and centralized, unified leadership of the Party Central Committee. He also called for fully implementing the overarching requirements for Party building in the new era and the Party’s organizational line, comprehensively enhancing the quality of Party building in central enterprises, and providing strong guarantees for fostering world-class enterprises with global competitiveness.

Chen Xi emphasized the need to uphold the Marxist approach to scholarship and to thoroughly study, understand, and apply Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era. It is essential to grasp, from the standpoint of political awareness, the strategic positioning and aspirational goals of central enterprises in the new era; to draw on the experience gained since the 18th National Congress of the CPC in comprehensively strengthening Party self‑discipline within these enterprises; and to integrate upholding Party leadership and reinforcing Party building into every aspect of corporate reform and development, thereby using first‑rate Party building to guide and underpin the construction of world‑class enterprises. We must unify the strengthening of Party leadership with the improvement of corporate governance, and further advance the development of a modern state‑owned enterprise system with Chinese characteristics. We should establish sound principles for selecting and appointing personnel, ensure that those who take responsibility are held accountable, and provide support to those who get things done, thus stimulating and safeguarding the entrepreneurial spirit. We must vigorously implement a talent‑driven strategy, focus on overcoming critical core technologies, and accelerate the enhancement of our capacity and strength in independent innovation. Finally, we need to improve the organizational system, strengthen its political functions and organizational effectiveness, and mobilize and guide the broad ranks of Party members, cadres, and employees to contribute to the realization of the Two Centenary Goals and the Chinese Dream of national rejuvenation.

The Jiangsu Provincial Department of Finance has revised the Measures for the Administration of Award and Subsidy Funds for PPP Projects.

To implement the central government’s and the provincial Party Committee and provincial government’s directives on resolutely winning the “battle to prevent and defuse major risks,” further strengthen the management of public‑private partnership (PPP) projects in the new context, motivate all localities across the province to standardize PPP project implementation, and sustain high‑quality progress in Jiangsu Province’s PPP initiatives, the Provincial Department of Finance recently revised the Measures for the Administration of Award and Subsidy Funds for Public‑Private Partnership (PPP) Projects (Sufin Gui [2018] No. 16), thereby further clarifying the areas of support, application procedures, award and subsidy amounts, and eligible expenditure purposes.

The new management measures feature three key characteristics: First, they clearly delineate three major categories of grant and subsidy funds, covering the entire lifecycle of PPP projects. Pre‑project expense subsidies support early‑stage advisory services and related activities; implementation‑based grants and subsidies reward mid‑stage milestones such as contract signing and the establishment of project companies; and demonstration‑type grants emphasize compliance throughout the project’s progression, with a stronger focus on post‑implementation operational performance. Second, they significantly increase support for specific sectors, reflecting policy backing for private‑capital participation and green‑environmental‑friendly PPPs. To implement the requirements of documents such as the “Opinions on Further Encouraging and Supporting Private Capital Participation in Public‑Private Partnership (PPP) Projects” and the “Opinions on Deepening Green Financial Services to Promote High‑Quality Ecological and Environmental Development,” the grant and subsidy rates for projects involving private capital and those in the green‑environmental field are each raised by 10%, with both policies applicable concurrently. Third, the scope of eligible expenditures for these funds has been expanded, thereby motivating city‑ and county‑level finance departments to strengthen their management of PPP initiatives. In addition to being earmarked primarily for fiscal outlays across the full PPP lifecycle, implementation‑ and demonstration‑type grant and subsidy funds may also be centrally allocated by local finance authorities to cover a range of PPP‑related administrative tasks, including project feasibility studies, legal advisory services, oversight and inspection, performance evaluation, research projects, publicity and promotion, and professional training.

The revision of the management measures for this round of grant and subsidy funds reflects the Provincial Department of Finance’s policy orientation of encouraging pilot and demonstration projects, promoting rigorous and standardized practices, and advancing publicity and dissemination. This move has significantly strengthened the fiscal authorities’ oversight and will undoubtedly foster a competitive environment across cities and counties in the province, further driving high-quality, full‑life‑cycle development of PPP projects throughout Jiangsu Province.

Taxation TAXATATION

How can the six special additional deductions be used to offset individual income tax?

On October 20, the Ministry of Finance and the State Taxation Administration published the “Interim Measures for Special Additional Deductions under the Individual Income Tax Law (Draft for Public Comment)” on their websites, inviting public input. The deadline for submitting comments is November 4. Following completion of the relevant procedures, the interim measures will come into effect on January 1, 2019, in accordance with the law.

This year’s personal income tax reform is substantial: while raising the tax threshold, it also introduces, for the first time, special additional deductions for children’s education, continuing education, major medical expenses, housing loan interest or rent, and support for elderly parents. Given the breadth and complexity of the reform package, its implementation will proceed in two phases: starting October 1, the tax threshold will be increased from the previous 3,500 yuan to 5,000 yuan, allowing many taxpayers to benefit from the reform; the special additional deductions will take effect on January 1, 2019. How these deductions are applied and by how much they can reduce individual tax burdens have drawn widespread public attention. The draft interim measures now open for public comment clarifies the principles and standards governing the six major categories of special deductions, and relevant experts have provided interpretations.

Expenses such as children’s education and elderly care are all deductible from individual income tax.

Under the Provisional Measures, individual income tax special additional deductions shall adhere to the principles of fairness and reasonableness, simplicity and practicality, tangible tax relief, and improvement of people’s livelihood. The specific deduction standards are as follows:

Education of Children: Expenses incurred by taxpayers for their children’s preschool and formal education are eligible for a standard deduction of RMB 12,000 per child per year (RMB 1,000 per month).

Continuing Education: Expenses incurred by taxpayers for continuing education—whether degree‑granting or non‑degree‑granting—may be deducted at a fixed annual rate of RMB 4,800 or RMB 3,600, as applicable, during the prescribed period.

Major Medical Expenses: For taxpayers, the portion of out-of-pocket medical expenses incurred within a tax year that exceeds RMB 15,000 may be deducted on an actual‑cost basis, up to a yearly cap of RMB 60,000.

Housing loan interest: For the first housing loan incurred by the taxpayer or their spouse, a standard deduction of RMB 1,000 per month may be claimed.

Housing Rental Expenses: If neither the taxpayer nor their spouse owns a home in the taxpayer’s primary place of employment, the rental expenses incurred for renting a residence in that city may be deducted on a fixed monthly basis, ranging from RMB 800 to RMB 1,200, depending on the city where the rented housing is located.

Supporting elderly parents: Taxpayers who support parents aged 60 or older may claim a standard deduction of RMB 2,000 per month.

“Judging from the standards of these special additional deductions, the overarching principle is ‘broad‑based,’ which effectively upholds the principles of fairness and reasonableness, tangible tax relief, and improved living standards,” said Sun Gang, a researcher at the Chinese Academy of Fiscal Sciences. He noted that the individual income tax reform affects hundreds of millions of people, each with unique circumstances, making the question of how and how much to deduct a significant challenge. From an operational standpoint, the proposed plan seeks to simplify complex issues as much as possible, ensuring clarity for taxpayers while enabling tax authorities to implement it in a straightforward and efficient manner.

“Among the six deductions listed above, only the housing‑rental deduction is tiered by region; the other deductions all apply a uniform national standard, which significantly simplifies administrative procedures,” said Liu Yi, a professor at Peking University. “In particular, with respect to children’s education, the scope of the deduction spans from preschool through doctoral studies, covering virtually all educational stages from age three to 30—a remarkably generous measure.”

Assuming a monthly income of 20,000 yuan and eligibility for four additional tax deductions, individual income tax could be reduced by as much as 70%.

Many middle-aged individuals have elderly parents to support, young children to raise, and a mortgage to pay; as a result, they may qualify for more than one special additional deduction. So, if a person claims several deductions at the same time, how much tax can they save in total?

Experts have worked out the following: For most people, major medical expenses are not a regular outlay, so they can be set aside for now. Of the remaining five deductions, you can choose only one between loan interest and housing rent—these two special deductions cannot be claimed simultaneously. Therefore, the four deductions that can be claimed at the same time are: children’s education, continuing education, housing rent or mortgage interest, and eldercare.

Suppose this taxpayer’s monthly salary is RMB 20,000 (excluding the three insurances and one housing fund). Before the personal income tax reform, the tax threshold was RMB 3,500, and he would have been required to pay RMB 3,120 in personal income tax each month.

For wages earned on or after October 1 this year, calculated using the monthly basic deduction of RMB 5,000 and the revised tax rate schedule, the personal income tax payable is RMB 1,590, representing a reduction in the tax burden of nearly 50%.

Starting from January 1, 2019, for wages earned each month, taxpayers can claim four additional special deductions: a child education deduction of 1,000 yuan, a continuing education deduction of 400 yuan, a housing rent deduction of 1,200 yuan, and a elder‑care deduction of 2,000 yuan, totaling 4,600 yuan. In other words, after the 5,000-yuan tax threshold is applied, this taxpayer’s income will be further reduced by 4,600 yuan before any personal income tax is calculated. As a result, the monthly tax liability amounts to 830 yuan, representing a further reduction of 760 yuan compared with October.

“With a monthly income of 20,000 yuan, before the individual income tax reform, the monthly tax liability would have been 3,120 yuan. After the reform—thanks to the increased tax threshold and four additional deductions—the taxpayer can reduce their tax burden by 2,290 yuan, representing a 73.40% decrease in tax rates. Such substantial tax relief is something ordinary people can clearly feel,” said Gan Li, Director of the Institute of Economics and Management at Southwestern University of Finance and Economics. Of course, the extent of the tax cut varies from person to person, depending on their salary and the number of eligible additional deductions they can claim. Overall, the heavier a household’s financial burden, the greater the deductions it can enjoy.

Based on changes in public livelihood expenditures, the scope and standards of deductions will be adjusted as appropriate.

“The personal income tax reform is closely tied to the vital interests of the people, and it has drawn widespread public attention. The public has put forward numerous constructive suggestions and innovative ideas, offering practical solutions to address the challenges at hand. Following the release of the draft, further public consultation was conducted, demonstrating the spirit of open lawmaking.”

Professor Xu Jianguo of Zhongnan University of Economics and Law stated that, during the drafting of these Provisional Measures, the fiscal and tax authorities adopted an open‑consultation approach, soliciting opinions from experts and scholars as well as representatives of the public across the country. He himself also attended a symposium in Hubei and was deeply moved by the experience.

“From the perspective of tax collection and administration, a key feature of the Provisional Measures is their emphasis on trust in taxpayers and convenience for them,” said Xu Jianguo. He added that when a taxpayer claims a special additional deduction for the first time, they must submit relevant information, including personal details about themselves, their spouse, minor children, and elderly dependents. There are two submission channels: taxpayers may provide this information to the withholding agent or submit it directly to the tax authorities, thereby striking an appropriate balance between taxpayer convenience and privacy protection.

“Large-scale special additional deductions under the individual income tax system, coupled with taxpayers’ self‑declaration and payment, are both unprecedented for tax administration. There remain many areas that require refinement and coordination, so everyone should be mentally prepared,” said Sun Gang. He added that the special additional deductions involve numerous procedural steps; whether online systems will become overloaded when individuals file their returns, whether information submissions will succeed, and whether tax refunds will be credited promptly—these are all issues that will be gradually improved as implementation progresses. Only with public understanding, cooperation, and support can the benefits of the individual income tax reform be fully realized, ensuring that more taxpayers reap its rewards.

State Taxation Administration: Since the beginning of this year, the tax-related business environment has continued to improve.

On October 22, 2018, the State Taxation Administration held a press conference. Fu Shulin, Director of the Tax Publicity Center and Deputy Director of the General Office of the Administration, stated that since the beginning of this year, the tax authorities have remained committed to a problem‑oriented approach, continuously deepened the “delegation, regulation, and service” reform, and further improved the business environment for taxation.

— Continuously advancing “one‑stop service” and “one‑click consultation” to further streamline tax filing for taxpayers. At present, tax service halls nationwide, building on the implementation of “one‑stop service,” are gradually transitioning from “single‑window service” to “single‑window, single‑officer service,” significantly reducing taxpayers’ processing time. The 12366 taxpayer service hotline in all 36 provinces, autonomous regions, municipalities directly under the central government, and separately planned cities has fully rolled out “one‑click consultation” and established a dedicated line for individual taxpayer inquiries, ensuring that taxpayers can promptly access information on policies related to the personal income tax reform.

— The scope of the pilot program to improve the tax-related business environment has been expanded, further reducing the time required to file and pay taxes. In late August, the State Taxation Administration issued ten measures to optimize the tax‑related business environment, subsequently extending the pilot program from five provinces and municipalities to 18. In early September, it released the “Action Plan for Further Optimizing the Tax‑Related Business Environment Across the National Tax System (2018–2022),” covering five areas—including reducing the number of tax filings and shortening tax compliance times—and introducing 58 specific measures.

— Streamline the corporate tax deregistration process to further address the challenges of business closure. By optimizing the procedures and rigorously enforcing time‑limit requirements, we will facilitate the orderly exit of market entities. For taxpayers who are not under tax inspection, have no outstanding taxes (including late payment penalties) or fines, and have already cancelled their special VAT invoices and tax control devices, a “commitment‑based” approach will be adopted to allow processing with missing documents, while enhancing instant‑completion services. Additionally, for taxpayers who have already registered using their real names, submission of tax registration certificates and personal identification documents will be waived, further simplifying the documentation required for tax-related procedures.

— Establishing a mechanism for handling tax service issues at service windows to further enhance the quality and efficiency of front-line services. “The tax authorities have put in place a closed-loop processing system covering the collection of issues, investigation and verification, corrective action, oversight and accountability, and regular reporting,” said Fu Shulin. In addition, the tax authorities have launched targeted efforts to identify and address bottlenecks and difficulties faced by taxpayers, with local agencies conducting immediate inspections and rectifications while imposing strict accountability, thereby effectively resolving the concerns and frustrations that trouble taxpayers.

Controlling Dust Through Taxation, Safeguarding Clear Waters and Blue Skies — Taizhou City Has Pioneered the Nation by Issuing Regulations on the Determined Collection of Environmental Protection Taxes for Construction Dust.

To control construction‑related dust pollution, protect and improve air quality, and strengthen the administration of environmental protection tax collection, the “Taizhou Municipal Measures for the Determination and Collection of Environmental Protection Tax on Construction Dust” (hereinafter referred to as the “Measures”) was issued by the General Office of the Taizhou Municipal People’s Government on September 10 and came into effect on January 1, 2018. According to available information, Taizhou is the first prefecture‑level city nationwide to introduce such measures.

Earlier this year, with the official implementation of the Environmental Protection Tax Law and the steady advancement of the “fee-to-tax” reform across various regions, the authorities responsible for dust‑pollution prevention and control lacked appropriate procedures for assessing and determining dust‑reduction coefficients, while the tax authorities likewise lacked corresponding administrative measures for levying the environmental protection tax on dust emissions. As a result, the function of using taxation to curb dust pollution could not be effectively fulfilled. To ensure seamless integration between fees and taxes and to leverage tax policy as a tool for strengthening the management of construction‑site dust, the Taizhou Municipal Tax Service Bureau, in collaboration with the Housing and Urban–Rural Development Bureau and other relevant departments, conducted intensive research and jointly drafted the Measures. After undergoing multiple stages—including soliciting public input, expert review, risk assessment, and deliberation at an executive meeting of the municipal government—the Measures were officially promulgated by the General Office of the Taizhou Municipal Government on September 10.

This Measures first demonstrates a spirit of innovation. It links the results of construction‑related dust‑control supervision and assessment with the administration and collection of environmental protection taxes, thereby leveraging the tax‑based pollution‑control mechanism: those who emit more pay more; those who emit less pay less; and those who emit nothing pay nothing—thus incentivizing market entities to increase investment in environmental protection facilities and reduce pollutant emissions. Most critically, the Measures rationally and scientifically establish specific dust‑reduction coefficients for major sources of fugitive dust—namely, construction sites, municipal worksites, demolition sites, transportation projects, and water‑conservation construction sites—thereby removing technical barriers to the administration and enforcement of the environmental protection tax on construction‑related dust.

For example, at a construction site, the dust‑generation coefficient is set at 1.01 kg/m²·month, while dust‑control measures include paving roads, erecting perimeter barriers, covering exposed soil, enclosing dusty materials, and washing transport vehicles. The corresponding partial reduction coefficients for these measures are 0.071, 0.047, 0.047, 0.025, and 0.31 kg/m²·month, respectively. Dust‑reduction coefficients are calculated on a monthly basis: if, during a given month, the site’s road‑paving meets the standard, the base coefficient of 1.01 kg/m²·month is reduced by 0.071 kg/m²·month; if vehicle‑washing also complies with the standards, an additional 0.31 kg/m²·month is subtracted, and so on. By iteratively applying these reductions, the monthly assessment coefficient is determined, which in turn is used to calculate the construction‑dust environmental tax payable for that month. For a 100,000‑m² construction site, the quality of dust control can result in monthly differences of over RMB 80,000 in environmental taxes—nearly RMB 1 million annually—thereby encouraging both project owners and contractors to strengthen their environmental responsibility.

Moreover, the Measures reflect Taizhou City’s local characteristics. By integrating tax authorities with departments such as housing and urban–rural development, transportation, and water resources into a coordinated task force for dust‑pollution prevention and control, the city has established a powerful mechanism to strengthen oversight. At the same time, dust emissions from municipal engineering, transportation projects, water‑conservation works, and demolition activities have all been brought under regulatory scrutiny, ensuring that Taizhou’s clear waters and blue skies are effectively protected.

Litigation & Arbitration

Amendments to the Criminal Procedure Law: Refining the Plea Bargaining and Leniency System and Introducing a Trial-in-Absentia Procedure

On the afternoon of October 26, the Sixth Session of the Standing Committee of the 13th National People’s Congress adopted by vote the Decision on Amending the Criminal Procedure Law. The amended Criminal Procedure Law shall enter into force from the date of its promulgation.

The newly amended Criminal Procedure Law has refined the system of lenient treatment for defendants who plead guilty and accept punishment, and introduced provisions on summary procedures, among other measures. These reforms are of great significance in implementing the CPC Central Committee’s decisions and arrangements to deepen the reform of the national supervision system, combat corruption by pursuing fugitives and recovering illicit proceeds, and further advance judicial system reform.

Improve the system of lenient punishment for guilty pleas and increase provisions governing summary procedures.

“Improving the system of lenient treatment for criminal defendants who plead guilty and accept punishment, and expanding the summary procedure, are the most significant reform measures of this round of judicial system reform, as well as key lessons learned. Codifying these reforms in law is the primary task of this legislative amendment,” said Shen Yueyue, Vice Chairperson of the Standing Committee of the National People’s Congress, during the panel deliberations.

With regard to the system of leniency for guilty pleas and acceptance of punishment in criminal cases, the law provides: “When a defendant pleads guilty and accepts punishment, the presiding judge shall inform the defendant of the procedural rights to which the defendant is entitled and of the legal provisions governing guilty pleas and acceptance of punishment, and shall review the voluntariness of the plea and the authenticity and legality of the contents of the written statement of guilty plea and acceptance of punishment.”

With respect to cases involving guilty pleas and acceptance of punishment, the law provides that, when rendering a judgment in accordance with the law, the people’s court shall generally adopt the charges and sentencing recommendations put forward by the people’s procuratorate, except in the following circumstances: where the defendant’s conduct does not constitute a crime or where criminal liability should not be pursued; where the defendant pleaded guilty and accepted punishment against his or her will; where the defendant denies the alleged criminal facts; where the charges brought in the indictment differ from those established during the trial; or in other situations that may compromise the fairness of the trial.

At the same time, the law has added a section on “summary procedure,” providing that, for cases under the jurisdiction of basic people’s courts that may be sentenced to a term of imprisonment of three years or less, if the facts are clear, the evidence is solid and sufficient, and the defendant pleads guilty and accepts punishment and consents to the application of the summary procedure, such cases may be tried under the summary procedure by a single judge.

At the same time, it specifies circumstances in which the summary procedure shall not apply: where the defendant is blind, deaf, or mute, or a person with a mental disorder who has not yet completely lost the capacity to recognize or control his or her conduct; where the defendant is a minor; where the case has a significant social impact; in cases of joint crime, where some defendants object to the alleged facts of the offense, the charges, the proposed sentence, or the application of the summary procedure; where the defendant and the victim or the victim’s legal representative have failed to reach a mediation or settlement agreement on matters such as compensation in an ancillary civil action; and other situations where the summary procedure is deemed inappropriate.

Furthermore, the newly amended Criminal Procedure Law provides that, during the course of trial, if the people’s court finds that the defendant’s conduct does not constitute a crime or that criminal liability should not be pursued, or that the defendant has pleaded guilty and accepted punishment against his or her will, or that the defendant denies the alleged criminal facts, or in any other circumstances where the summary procedure is inappropriate, the court shall retry the case in accordance with the provisions governing ordinary proceedings.

Incorporating in absentia trial procedures into law to advance the fight against corruption through the rule of law.

The revised Criminal Procedure Law has added a chapter on “Trial in Absentia.” During the group deliberations at this session of the Standing Committee of the National People’s Congress, members of the Standing Committee noted that the newly added chapter on trial in absentia in the third draft is of great significance for advancing Party conduct and integrity building and the fight against corruption in accordance with the rule of law.

The law provides that, in cases of corruption and bribery, as well as in serious crimes endangering national security and terrorist activities that require prompt adjudication and have been approved by the Supreme People’s Procuratorate, if the suspect or defendant has fled abroad and the supervisory or public security organs have referred the case for prosecution, the people’s procuratorate, upon determining that the facts of the crime have been ascertained and that the evidence is solid and sufficient to warrant criminal liability under the law, may institute public prosecution before the people’s court.

To ensure that the courts exercise strict oversight at the stage of case‑entry review, the law provides that, following such review, if the indictment sets forth specific allegations of criminal facts and meets the conditions for applying the procedure of trial in absentia, the people’s court shall order that the case be heard.

Committee Member Naiyimu Yasin stated that the dedicated chapter on absentia trial procedures plays a crucial role in rigorously combating and punishing crimes such as corruption and bribery, offenses endangering national security, and violent terrorist acts, thereby helping to foster a clean, upright, stable, and harmonious social environment.

Furthermore, the law provides that if a defendant is unable to appear in court due to a serious illness: “If proceedings have been suspended for more than six months and the defendant remains unable to appear, upon application by or with the consent of the defendant, his or her legal representative, or close relatives, the people’s court may proceed in absentia and render a judgment in accordance with the law.”

To fully safeguard the rights and interests of the defendant, the law provides that, in cases tried in absentia by the people’s courts, the defendant has the right to appoint a defense counsel, and the defendant’s close relatives may act on their behalf to appoint such counsel. If neither the defendant nor their close relatives appoint a defense counsel, the people’s court shall notify the legal aid agency to designate an attorney to provide defense.

At the same time, it is stipulated that the people’s court shall serve the judgment on the defendant, the defendant’s close relatives, and the defense counsel. If the defendant or his or her close relatives disagree with the judgment, they have the right to file an appeal with the next higher people’s court. With the consent of the defendant or his or her close relatives, the defense counsel may also file an appeal.

If the People’s Procuratorate finds that a judgment of the People’s Court is indeed erroneous, it shall file a protest with the next higher-level People’s Court.

The China Coast Guard holds the status of an investigative authority, ensuring that maritime crimes are prosecuted in accordance with the law.

In June this year, the Third Session of the Standing Committee of the 13th National People’s Congress adopted the Decision of the Standing Committee of the National People’s Congress on the Exercise by the China Coast Guard of Its Powers of Law Enforcement for Maritime Rights and Interests Protection.

On October 22, a responsible official from the Constitution and Law Committee of the National People’s Congress, while presenting an update on the revisions to the draft amendment to the Criminal Procedure Law, stated that, in order to ensure seamless alignment with the Decision and to guarantee the lawful and smooth conduct of efforts to combat maritime crimes, the Legal Affairs Bureau of the Central Military Commission and relevant members of the public have proposed adding corresponding provisions to the Criminal Procedure Law to explicitly recognize the China Coast Guard as an investigative authority.

The newly amended Criminal Procedure Law adds a provision in its supplementary provisions, stipulating that the China Coast Guard shall perform maritime rights‑protection and law‑enforcement duties and exercise investigative powers over criminal cases occurring at sea.

The appellate jurisdiction over patent and other related cases will be centralized in the Intellectual Property Court of the Supreme People’s Court.

At its sixth session held on the afternoon of October 26, the Standing Committee of the 13th National People’s Congress adopted by vote the “Decision on Several Issues Concerning the Litigation Procedures in Patent and Other Cases” (hereinafter referred to as the “Decision”), which was submitted for deliberation by the Supreme People’s Court. The Decision shall enter into force on January 1, 2019.

What are the main provisions of the Decision? What impact will it have on China’s implementation of the innovation-driven development strategy? And how will it advance the harmonization of adjudicatory standards in intellectual property cases?

Establishing a national-level appellate review mechanism for intellectual property cases is of great significance.

Establishing a national-level appellate review mechanism for intellectual property cases was a major initiative adopted at the first meeting of the 19th CPC Central Committee’s Leading Group for Comprehensively Deepening Reform.

Recently, the Central Committee approved the establishment of an Intellectual Property Court within the Supreme People’s Court, which will centrally adjudicate nationwide appellate cases involving highly technical matters such as patents. This move aims to promote specialization in the adjudication of intellectual property cases, centralized jurisdiction, streamlined procedures, and professionalized personnel, thereby providing robust judicial support and safeguards for building China into a strong nation in both intellectual property and science and technology.

On October 22, Chief Justice Zhou Qiang of the Supreme People’s Court stated in his report to the Congress that establishing a national-level appellate review mechanism for intellectual property cases is essential for incentivizing and protecting technological innovation, fostering a favorable business environment, and ensuring uniformity and standardization in judicial adjudication.

Centralizing the adjudication of appellate cases involving invention and utility‑model patents before the Intellectual Property Court of the Supreme People’s Court will help strengthen the lawful and equal protection of intellectual property rights for both domestic and foreign enterprises, foster a business environment that is rule‑based, internationalized, and convenient, better serve the overarching domestic and international agendas, and advance the development of a new pattern of comprehensive opening‑up.

Centralizing the appellate jurisdiction over civil and administrative cases involving patents at the Intellectual Property Court of the Supreme People’s Court will align the two major procedural frameworks—judicial determination of validity and infringement—and harmonize their respective standards of adjudication. This reform will help address, at the institutional level, issues such as inconsistent judicial standards that hinder scientific and technological innovation, enhance the quality and efficiency of intellectual property adjudication, strengthen judicial protection of intellectual property rights, and effectively bolster public confidence in the judiciary.

Primarily handles appellate cases involving invention and utility model patents, among others.

The Decision stipulates—

Where a party, dissatisfied with the first-instance judgment or ruling in a civil intellectual property case involving highly technical matters—such as invention patents, utility model patents, new plant varieties, integrated circuit layout designs, trade secrets, computer software, or monopoly—files an appeal, the case shall be reviewed by the Supreme People’s Court.

Where a party, dissatisfied with the first-instance judgment or ruling in an administrative case involving highly technical intellectual property matters—such as patents, new plant varieties, integrated circuit layout designs, trade secrets, computer software, and antitrust—files an appeal, the case shall be reviewed by the Supreme People’s Court.

From the perspective of judicial practice in China, intellectual property cases primarily encompass patents, trademarks, copyrights, as well as plant varieties, integrated circuit layout designs, trade secrets, and antitrust matters. Among these, patents are further classified into three types: invention patents, utility model patents, and design patents.

The Intellectual Property Court of the Supreme People’s Court primarily hears appellate cases involving patents for inventions and utility models, among other technology‑related matters, because such cases are characterized by greater technical complexity, demand higher standards of adjudication, are more closely linked to scientific and technological innovation, and hold greater significance for building an innovative nation.

The provisions in Articles 1 and 2 of the Decision concerning the types of cases under review take into account, in a comprehensive manner, the functions, staffing, and personnel of China’s courts, as well as the classification, characteristics, and caseload of intellectual property cases. The Supreme People’s Court will issue judicial interpretations to further refine and clarify issues such as the jurisdiction of the Intellectual Property Courts.

Appeals from first-instance judgments of the intermediate people’s courts shall no longer be heard by the higher people’s courts.

The Decision stipulates—

With respect to the first-instance judgments, rulings, and mediation agreements in the aforementioned cases that have already attained legal effect, applications for retrial or protests filed in accordance with the law, as well as other matters subject to the trial supervision procedure, shall be reviewed by the Supreme People’s Court. The Supreme People’s Court may also, in accordance with the law, instruct lower people’s courts to conduct a retrial.

Under the current legal framework, first-instance civil and administrative cases involving highly specialized technical matters, such as patent disputes, fall under the jurisdiction of the intermediate people’s courts. Appeals against the first-instance judgments of the intermediate people’s courts are heard by the higher people’s courts in the same jurisdiction.

Accordingly, following the establishment of the Intellectual Property Court of the Supreme People’s Court, appellate cases involving patents and other matters are now heard centrally. Appeals against first-instance judgments rendered by intermediate people’s courts will no longer be reviewed by the corresponding higher people’s courts; instead, the Standing Committee of the National People’s Congress must adopt a decision to clarify issues such as the appellate procedure.

Appeals filed against first-instance judgments and rulings of the Intellectual Property Courts concerning patents, among other matters, shall be heard by the Supreme People’s Court’s Intellectual Property Division.

On August 31, 2014, the Standing Committee of the National People’s Congress adopted the Decision on the Establishment of Intellectual Property Courts in Beijing, Shanghai, and Guangzhou. Article 4 stipulates that appeals against first-instance judgments and rulings rendered by the intellectual property courts shall be heard by the higher people’s courts in the jurisdictions where those courts are located.

Since the first-instance judgments and rulings of the Intellectual Property Courts cover both cases involving invention and utility model patents, as referred to in this Decision, and cases involving copyright, trademarks, and other matters, upon the entry into force of this Decision as a new law: appeals filed against first-instance judgments and rulings of the Intellectual Property Courts concerning invention and utility model patents shall be heard by the Intellectual Property Division of the Supreme People’s Court; whereas appeals against first-instance judgments and rulings of the Intellectual Property Courts on other types of cases shall continue to be heard by the higher people’s courts in the jurisdictions where those courts are located.

In three years, a pilot special report will be submitted to the Standing Committee of the National People’s Congress.

The Decision stipulates—

Upon the expiration of three years from the date this Decision takes effect, the Supreme People’s Court shall submit a report to the Standing Committee of the National People’s Congress on the implementation of this Decision.

To date, more than ten countries worldwide have established specialized intellectual property courts, all adopting a model characterized by national-level jurisdiction, higher‑court oversight, and patent‑focused adjudication. The primary objective of these institutions is to strengthen patent protection and resolve conflicts in judicial outcomes arising from discrepancies in the application of law across different trial courts.

As a pioneering initiative, the Central Committee approved the establishment of an Intellectual Property Court within the Supreme People’s Court. Three years later, on the basis of a more comprehensive review of the pilot program, the Supreme People’s Court submitted a report to the Standing Committee of the National People’s Congress.

The Organic Law of the Two Courts has undergone its first major revision in nearly 40 years, comprehensively afofficeing and consolidating the achievements of judicial reform.

On the afternoon of the 26th, the Sixth Session of the Standing Committee of the 13th National People’s Congress adopted by a large majority the Organic Law of the People’s Courts and the Organic Law of the People’s Procuratorates. According to reports, this marks the first major revision of these two laws in nearly four decades since their implementation, comprehensively afofficeing and consolidating the achievements of judicial system reform in recent years.

At a press conference held by the General Office of the Standing Committee of the National People’s Congress, it was learned that this revision of the Organic Laws of the Supreme People’s Court and the Supreme People’s Procuratorate is extensive, with changes affecting both their structural framework and substantive content. Notably, only three articles of the Organic Law of the People’s Courts remained unchanged, while all provisions of the Organic Law of the People’s Procuratorates were amended. However, these amendments are purely supplementary and refinements, without altering the nature, status, fundamental powers, basic organizational structure, or core procedural rules of the two organs’ organic laws.

“This revision of the Organic Laws of the Supreme People’s Court and the Supreme People’s Procuratorate is primarily aimed at enhancing public trust in the judiciary and ensuring impartial justice, thereby afofficeing and consolidating the achievements of judicial reform over the years—especially those made since the 18th National Congress of the Communist Party of China,” said Tong Weidong, Deputy Director of the Department of National Law at the Legislative Affairs Commission of the Standing Committee of the National People’s Congress. He added that this amendment has refined the organizational structure and powers of the courts and procuratorates; for instance, under the Organic Law of the People’s Courts, the Supreme People’s Court may establish circuit courts and specialized courts for intellectual property and financial matters—both of which represent significant advances in judicial reform as they pertain to court organization.

With regard to enhancing the effectiveness of legal supervision, the Organic Law of the People’s Procuratorates provides that, in accordance with the needs of procuratorial work, the people’s procuratorates may establish procuratorial offices in prisons, detention centers, and other such facilities to exercise certain powers delegated by the procuratorate that dispatched them, and may also conduct roving inspections of the aforementioned institutions.

“One of the key advantages of circuit prosecution is that the personnel conducting it are less likely to develop familiar, informal relationships with those they oversee, thereby reducing the risk of being co-opted or becoming complacent. This helps prevent problems such as corruption arising from familiarity, laziness stemming from routine, and desensitization to misconduct. By organically combining stationed procuratorial offices with circuit prosecution—each complementing the other’s strengths—the procuratorial organs can better leverage their overall capacity for legal supervision,” said Wang Jianping, Deputy Director of the Legal Policy Research Office of the Supreme People’s Procuratorate. He added that the recent amendment to the Organic Law of the People’s Procuratorates has enshrined the circuit prosecution system at the legislative level, which will be of great and positive significance for procuratorial organs at all levels as they continue to explore and refine methods of legal supervision in judicial practice.

In addition, the Organic Laws of the two courts have further strengthened safeguards for the exercise of powers by the courts and the procuratorates. Under the law, no organization or individual may require judges or prosecutors to perform duties that fall outside the scope of their statutory responsibilities. With respect to interference in judicial activities or meddling in the handling of specific cases by leading cadres or other officials, or to inquiries about case matters by personnel within the courts or procuratorates, case-handling personnel are required to maintain comprehensive and truthful records and report such instances; where violations of laws or disciplinary rules are found, the relevant authorities shall hold the responsible parties accountable in accordance with the severity of the circumstances.

The amended Organic Law of the People’s Courts and the Organic Law of the People’s Procuratorates shall come into force on January 1, 2019.

Resolutely win, on schedule, the tough battle of “fundamentally resolving difficulties in enforcement.”

— On-site coverage of Zhou Qiang’s responses to a special inquiry by the Standing Committee of the National People’s Congress on addressing the challenge of enforcing court judgments.

On the morning of October 25, the Sixth Meeting of the Standing Committee of the 13th National People’s Congress held a joint panel session, conducting, for the first time, a special inquiry into the work of the Supreme People’s Court and the Supreme People’s Procuratorate. Chief Justice Zhou Qiang of the Supreme People’s Court answered questions from members of the Standing Committee on the courts’ efforts to address the difficulty of enforcement. Liu Guixiang, a full-time member of the Judicial Committee of the Supreme People’s Court, also took part in the special inquiry.

What are the criteria for “basically resolving the difficulty of enforcement”? Who will determine whether these standards have been met? How can we overcome the challenges of locating individuals and tracing assets?… The questions got straight to the heart of the matter, the comments hit the nail on the head, and the responses were direct, candid, and to the point, creating a highly spirited atmosphere.

Zhou Qiang expressed his gratitude to all members and deputies for their vigorous oversight, as well as their care and support, for the work of the people’s courts, particularly in addressing the challenge of ensuring effective enforcement. He stated that the people’s courts will steadfastly uphold Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as their guiding principle, fully leverage China’s political and institutional strengths, officely maintain the leadership of the Party, rely closely on the oversight of the National People’s Congress and its Standing Committee, adhere to a problem‑oriented approach, tackle tough challenges head‑on, implement immediate corrective measures, and resolutely win, on schedule, the arduous battle to fundamentally resolve the difficulties in enforcement.

What are the criteria for “basically resolving the difficulty of enforcement,” and who will determine whether these criteria have been met—internal, external, tangible, intangible?

Zhang Sujun, a member of the Standing Committee of the National People’s Congress, Deputy Director of the Supervision and Judicial Affairs Committee, and Vice President of the China Law Society, began by asking: What constitutes a fundamental resolution of the difficulties in enforcement, and what are the criteria?

Zhou Qiang summarized it vividly in four characters: “internal, external, with, without.”

“Inside”: Uphold a self‑critical approach, first addressing the issues of passive enforcement, selective enforcement, and arbitrary enforcement within the courts themselves. “Outside”: Optimize the external environment so that attempts by judgment debtors to evade or resist enforcement, as well as external interference, are effectively curbed. “With”: For cases where assets are available for enforcement, ensure that enforcement is substantially completed within the statutory time limit. “Without”: For cases in which no assets are available for enforcement, fundamentally resolve problems such as lax adherence to closure criteria and difficulties in resuming enforcement; it is impermissible to categorize all unenforceable cases under the rubric of “unenforceability.”

On the morning of October 24, while reporting to the Standing Committee of the National People’s Congress on the work of people’s courts in addressing difficulties in enforcement since 2016, Zhou Qiang stated that the overarching goal of “basically resolving enforcement difficulties” is to achieve “four fundamentals.” The Supreme People’s Court has translated these “four fundamentals” into specific, quantified core targets—“four 90% figures and one 80% figure”—as interim objectives: more than 90% of cases with assets available for enforcement must be concluded within the statutory time limit; more than 90% of cases with no assets available for enforcement must have their current enforcement proceedings terminated in compliance with regulatory requirements; more than 90% of enforcement-related complaints and petitions must be resolved or closed; over 90% of courts nationwide must meet the required standards; and the overall case‑closure rate for enforcement matters over the past three years must exceed 80%.

Who is responsible for evaluating this standard?

“The courts must not act on their own; they must steadfastly take public satisfaction as the benchmark,” said Zhou Qiang. The Supreme People’s Court commissioned the Chinese Academy of Social Sciences to lead a third-party evaluation team, comprising four government departments, 13 media outlets, and 15 experts and scholars, which conducted an assessment and promptly released the findings to the public.

What should be done after the goal of “fundamentally resolving difficulties in enforcement” has been achieved? How can we consolidate these interim gains? And how can we prevent a resurgence of problems?

Zhou Qiang stated, “We must consolidate our interim achievements and establish long-term mechanisms.” It is essential to continue deepening reform and unswervingly advance the development of smart courts—leveraging technologies such as blockchain—to promote the sustained, high‑level advancement of enforcement work at a higher level, ensure its continued efficient operation, and foster a virtuous cycle. At the same time, we must build an enforcement team that is politically steadfast, professionally proficient, and characterized by exemplary conduct; resolutely combat judicial corruption; earnestly improve judicial work styles; eliminate irregular and arbitrary enforcement practices; and forge an elite, ironclad enforcement force.

How to solve the challenge of locating people and tracing assets—by weaving an extensive surveillance and control network, striving to bring every target to justice.

Some judgment debtors go into hiding, disappear altogether, or conceal their assets, thereby increasing the difficulty of enforcement. Li Yuefeng, a member of the Standing Committee of the National People’s Congress and deputy director of the Supervision and Judicial Affairs Committee, is focused on how to better leverage the functions and roles of various departments to effectively address the challenges of locating individuals and tracing assets.

In 2014, the Supreme People’s Court established the National Enforcement Information Inquiry System. To date, it has been connected to 16 government agencies—including the Ministry of Public Security, the Ministry of Civil Affairs, the Ministry of Natural Resources, the Ministry of Transport, the People’s Bank of China, and the China Banking and Insurance Regulatory Commission—as well as more than 3,900 banking and financial institutions, enabling the inquiry of 25 types of information across 16 categories nationwide pertaining to persons subject to enforcement.

“As long as a person subject to enforcement who has lost trust makes a purchase, we can trace the transaction through big data, track it down, and impose sanctions,” said Zhou Qiang.

Liu Guixiang cited an example: “There was once a judgment debtor who owed others 40 to 50 million yuan and resorted to plastic surgery in an attempt to evade his debts.” In response, the people’s courts, while building an integrated information‑based enforcement and asset‑tracing network, have also implemented coordinated credit‑based sanctions, placing such individuals on the list of discredited judgment debtors and imposing multi‑agency joint punitive measures.

“As for rural areas, many residents do not rely on the modern methods used in cities to safeguard their assets. Therefore, we also employ traditional investigative techniques—such as stakeouts and searches conducted in accordance with the Civil Procedure Law—which have proven effective,” said Liu Guixiang.

Liu Guixiang stated that, going forward, efforts will be intensified to leverage big data analytics to combat attempts to evade enforcement, and cooperation with public security authorities and the information technology sector will be strengthened to track down the whereabouts of persons subject to enforcement within the bounds of the law.

How to further leverage information technology to effectively address the challenges of enforcement—advancing a comprehensive upgrade of digitalization.

“What specific measures will the Supreme People’s Court take next to further leverage modern information technologies such as cloud computing and big data, so as to better serve and safeguard enforcement work?” asked Li Wei, a member of the Standing Committee of the National People’s Congress.

“Through information technology, we have first brought our own operations under strict control,” Zhou Qiang stated. “Engaging in shady practices or backroom dealings is unacceptable. The extent and volume of enforcement are fully tracked, with every stage of the process integrated into a ‘data cage.’ By leveraging management information systems, courts across the country operate on a single network, making the status of enforcement work transparent at a glance.”

“What should we do next?” Zhou Qiang emphasized that, first, we must unswervingly strengthen standardized practices, ensuring that enforcement measures are carried out in strict accordance with the law. The people’s courts consistently attach great importance to protecting citizens’ personal information and may only access information pertaining to individuals who have lost credibility and failed to comply with court orders; any deviation will be met with severe punishment. Second, by building Smart Court Version 3.0, we will advance a comprehensive upgrade of court informatization. In the field of enforcement, we will promote the application of blockchain technology, enabling real-time sharing across society of information on the progress and extent of case enforcement, as well as details regarding defaulters. We must continuously refine our working mechanisms, make full use of modern technological tools, and steadily deepen efforts to address the challenges of enforcement.

Liu Guixiang stated that the people’s courts will leverage information technologies such as cloud computing and big data to analyze the consumption patterns and fund flows of persons subject to enforcement, thereby implementing appropriate punitive measures to curb attempts to evade enforcement. At present, a nationwide unified judicial appraisal platform is about to enter trial operation, integrating judicial appraisal with judicial auctions to achieve end-to-end asset disposal.

What should you do when enforcement is impossible? — Bankruptcy settlement, judicial assistance, and insurance mechanisms.

“Nowadays, in rural areas, some traffic accident cases or criminal cases with accompanying civil claims leave both the perpetrator and the victim in dire straits, lacking the capacity to cope with sudden emergencies. Even when the court orders compensation, the parties are indeed obligated to pay—but they simply cannot afford it.” Xian Tieke, a member of the Standing Committee of the National People’s Congress, asked: With regard to such cases—where enforcement is sought but cannot be carried out—does the Supreme People’s Court have any effective solutions?

“In general, cases of ‘enforcement impossibility’ fall into two main categories,” explained Liu Guixiang. “When the party subject to enforcement is a corporate legal person, if it is on the brink of bankruptcy, saddled with overwhelming debt, and effectively in a ‘zombie’ state, it should, in accordance with the law, enter bankruptcy proceedings. If, however, it does possess assets but is merely experiencing a temporary cash-flow crunch, bankruptcy reorganization or bankruptcy conciliation procedures should be applied—both of which serve the interests of creditors and the enterprise.”

Liu Guixiang stated that, in cases where natural persons encounter debt crises due to extraordinary events, the people’s courts provide relief through judicial assistance. Special-purpose funds for judicial assistance have played a crucial role in addressing certain difficulties in enforcement proceedings. In some localities, pilot programs have explored judicial assistance insurance, mobilizing resources from various sectors of society and strengthening relief efforts, thereby benefiting a broader segment of the population.

“Under the strong leadership of the Party Central Committee with Comrade Xi Jinping at its core, and with the vigorous support of all sectors of society, the issue of difficulties in enforcement will surely be effectively resolved!” Zhou Qiang stated.

Other

China is accelerating pharmaceutical and healthcare legislation to prescribe a remedy for longstanding challenges in accessing medical care.

The alarming cases of substandard vaccines, counterfeit drugs, and exorbitantly priced medications have left patients despairing at the very prospect of accessing care, while the frequent incidents of medical‑related disturbances have inflicted harm on both doctors and patients. To address these persistent challenges in healthcare, a draft Basic Medical and Health Promotion Law—currently before the Standing Committee of the National People’s Congress for its second deliberation—proposes that the personal safety and dignity of medical and health professionals be inviolable; establishes a comprehensive drug traceability system; implements a scheduled immunization program; and employs legally binding measures to safeguard the rights and interests of both medical providers and patients.

Crackdown on “medical disturbances”: Medical and health institutions’ premises are designated as public spaces.

On September 22, three obstetricians and gynecologists, including He Yingdong from Peking University First Hospital, were assaulted by a patient’s family members while on duty, once again thrusting the issue of “medical disturbances” into the spotlight. According to the “White Paper on Chinese Physicians’ Professional Status,” released by the Chinese Medical Association in early 2018, only 34% of physicians have never personally experienced violence against medical staff. From criminalizing “medical disturbances” to implementing joint punitive measures across multiple departments, the state has repeatedly taken strong steps in recent years to curb such incidents; yet violent attacks on healthcare workers remain difficult to eradicate.

The second draft for deliberation of the Basic Medical and Health Care and Health Promotion Law stipulates that the personal safety and human dignity of medical and health personnel shall be inviolable, and their legitimate rights and interests are protected by law. The premises where medical and health institutions carry out their operations constitute public spaces for the provision of medical and health services, and no organization or individual may disrupt the order thereof.

“To safeguard the normal order of medical care and the professional rights of healthcare workers, ensure that patients enjoy a favorable environment and their right to access medical services, and clarify the legal status of medical and health institutions is both necessary and urgent,” says Deng Yong, an associate professor in the Department of Law at Beijing University of Chinese Medicine. He argues that defining the premises where medical and health institutions operate as public spaces will facilitate better coordination between this law and the Law on Administrative Penalties for Public Order, providing law enforcement agencies with a stronger legal basis to crack down on “medical disturbances” in accordance with the law.

To reduce violence against healthcare workers, in addition to safeguarding the rights and interests of medical personnel, it is essential to adopt a multi‑pronged approach that addresses the root causes of doctor–patient conflicts and prevents such incidents before they occur.

Protecting patients’ rights and interests. The second draft of the bill stipulates that, when receiving medical and health services, citizens are entitled by law to the right of informed consent regarding their condition, treatment plans, medical risks, medical costs, and other relevant matters. Citizens also have the right, in accordance with the law, to voluntarily participate in clinical trials of drugs and medical devices, as well as other experimental medical research, and to exercise their right to informed consent.

Strengthen the management of medical institutions. The second draft proposes that the State establish a mechanism for the prevention and resolution of medical disputes, ensure their proper handling, and safeguard medical order. Organizations in the healthcare sector and medical institutions shall intensify education on professional ethics and conduct for healthcare personnel. Healthcare professionals shall not, by virtue of their positions, solicit or illegally accept property, nor seek other improper benefits.

“To truly eliminate profit-driven factors such as using drug sales to sustain hospitals, overtreatment, excessive testing, and setting revenue‑generation targets for medical institutions, we must restore public healthcare to its public‑service mission,” said Deng Yong. He added that fundamentally addressing the issue of “medical disturbances” requires continuously deepening reform of the medical and health system, effectively tackling the challenges of difficult and expensive access to care, and improving both the compensation and working conditions of healthcare professionals and patients’ overall experience when seeking medical services.

Ensuring the public has access to safe and reliable medicines: Establishing a comprehensive drug traceability system.

They sold more than 30 types of counterfeit anti-cancer drugs across 30 provinces nationwide, with profits reaching as high as RMB 10,000 per box, and the total amount involved exceeding RMB 10 million… This massive case of manufacturing and selling counterfeit drugs in Shenzhen has exposed significant shortcomings in China’s regulatory framework for pharmaceutical quality and safety.

To ensure that the public has access to safe and reliable medicines, the second draft of the Basic Medical and Health Care and Health Promotion Law dedicates a separate chapter to providing detailed provisions on issues related to “guaranteeing the supply of pharmaceuticals.”

The second draft explicitly stipulates that the State shall enhance the supply capacity of essential medicines, strengthen quality and safety oversight of such medicines, and ensure their equitable access and rational use. The State will also improve the pharmaceutical supply‑guarantee system, establish a coordination mechanism for pharmaceutical security, and comprehensively coordinate efforts related to drug research and development, production, distribution, use, evaluation, and regulation, thereby safeguarding the safety, efficacy, and accessibility of medicines for citizens.

Only when enterprises produce “conscientious medicines” and pharmacies refrain from selling “unscrupulous drugs” can the public have access to “reassuring medicines.” Risks to pharmaceutical quality and safety permeate the entire lifecycle of a drug, from research and development through manufacturing, distribution, marketing, and use. To this end, the second draft proposes that the state strengthen its oversight of pharmaceuticals and establish a comprehensive traceability system to ensure the quality and safety of medicines.

“End-to-end traceability ensures that the origin of pharmaceuticals is verifiable, their distribution trackable, and accountability enforceable,” said Yan Jianzhou, a project researcher at the National Center for Drug Policy and Pharmaceutical Industry Economics at China Pharmaceutical University. He added that, in the event of drug quality or safety issues, such a traceability system can promptly contain the scope of the impact, recall affected products, and investigate the root causes, thereby safeguarding the public’s right to safe and effective medication.

The practice of awarding contracts to bidders submitting excessively low prices in essential‑medicine tenders poses significant risks to drug quality. Experts generally agree that such behavior severely disrupts the normal supply of medications used in clinical settings, inflicts substantial harm on society, and warrants stricter penalties to raise the cost of non‑compliance.

To this end, the second‑reading draft explicitly stipulates that the state shall strengthen oversight and management of centralized drug procurement, and prohibits bidders participating in drug procurement tenders from submitting bids at prices below cost. The second‑reading draft also reinforces the legal liabilities of bidders who, in violation of statutory provisions, submit bids at prices below cost.

In recent years, localized and structural shortages of clinically essential drugs such as protamine sulfate and mitomycin C have become increasingly frequent. How can the suffering caused by “waiting for medication to save one’s life” be alleviated?

The second draft proposes that the State shall publish a National Essential Medicines List and, based on clinical practice, changes in drug standards, and the introduction of new drugs, shall dynamically adjust the list.

“Dynamic adjustments enable newly approved, therapeutically superior, and reasonably priced drugs to be promptly added to the formulary, thereby ensuring patients’ access to essential medications,” said Yan Jianzhou. He added that drugs whose clinical efficacy no longer offers a comparative advantage or that have raised concerns regarding quality or safety can also be swiftly removed from the list through this dynamic process, thus safeguarding patient medication safety.

Alleviating Vaccine Anxiety: The State Implements a Planned Immunization Program

The case involving Changchun Changsheng Bio‑Technology Co., Ltd., which illegally and non‑compliantly manufactured rabies vaccines and other problematic vaccines, has exposed regulatory loopholes and latent risks in vaccine production, distribution, and use, drawing sustained public attention.

To address public concerns and anxieties, the second draft of the Basic Medical and Health Care and Health Promotion Law stipulates that the state shall implement a planned immunization system, and that citizens have both the right and the obligation to receive vaccines included in the national immunization program in accordance with the law. Vaccines used for immunization must be manufactured in strict compliance with Good Manufacturing Practices, meet national pharmaceutical standards, and ensure safety and efficacy.

The second draft also stipulates that the State shall implement a vaccination certificate system for children. When children enter childcare facilities or schools, such institutions shall verify their vaccination certificates; if a child has not received vaccinations in accordance with the National Immunization Program, they shall report this in accordance with the law and cooperate with the relevant authorities to ensure that the child’s guardian arranges for the child to receive the missing vaccinations promptly after enrollment.

Deng Yong believes that elevating certain provisions of administrative regulations and rules related to vaccines to the level of law would ensure the legislation’s scientific rigor, comprehensiveness, and rationality; moreover, clearly defining the responsibilities of all parties involved in vaccine administration within the legal framework would help prevent such issues as vaccine falsification and adverse reactions following immunization.

It is reported that the draft amendment to the Drug Administration Law, which was recently submitted for the first time to the Standing Committee of the National People’s Congress for deliberation, also includes separate provisions to strengthen the regulation of vaccines and other special‑purpose drugs. For example, information‑technology tools must be employed throughout the research, development, production, distribution, and vaccination processes to collect and retain traceability data. Holders of marketing authorizations for vaccines are required to obtain insurance in accordance with relevant state regulations.

The draft amendment to the Drug Administration Law contains numerous provisions pertaining to vaccines. For example, vaccines, blood products, narcotic drugs, psychotropic drugs, and toxic drugs for medical use may not be outsourced for production, except in cases specifically authorized by the State Council’s drug regulatory authority. The drug regulatory authorities are required to conduct targeted inspections and oversight of vaccines and other biological products. Furthermore, the draft amendment significantly strengthens penalties, stipulating that, within the statutory range, offenses involving the production or sale of six categories of illegal products—including counterfeit and substandard vaccines—shall be subject to enhanced punishment.

The central bank will implement three major measures to enhance financial services for private enterprises.

On October 26, the State Council Information Office held a regular policy briefing. Pan Gongsheng, Vice Governor of the People’s Bank of China and Director of the State Administration of Foreign Exchange, stated that going forward, the People’s Bank will continue to implement the directives of the CPC Central Committee and the State Council, uphold the “two unwavering commitments,” and, in accordance with market‑based and rule‑of‑law principles, leverage the financing functions of bonds, credit, equity, and other channels to further enhance financial services for private enterprises and small and micro businesses.

First, leverage the bond market’s leading role. Effectively utilize the bond financing support tool for private enterprises, provide credit enhancement services through market‑based mechanisms, stabilize and boost private corporate bond issuance, and thereby help improve the overall financing environment for private offices.

Second, ensure stable credit support from banks. Urge banks to fully implement the policies on relending and rediscounting, and strengthen monitoring, performance assessment, and oversight of bank loan disbursements. For enterprises that are financially sound but temporarily facing liquidity challenges, require banks not to arbitrarily curtail or terminate lending.

Third, we will continue to support and coordinate with relevant departments to jointly promote the development of private and small and micro enterprises. We will encourage local governments to proactively innovate their support mechanisms, thereby fostering the sound growth of private and small and micro businesses. At the same time, we urge these enterprises to operate prudently, in compliance with regulations, and in accordance with the law; to establish well‑structured financial management and reporting systems; to enhance their professional capabilities and standards; and to strengthen their ability to effectively mobilize and utilize operational resources.

Overall, financial support for private enterprises and small and micro businesses has made significant progress. As of the end of September, inclusive‑scope small and micro loans grew 18.1% year on year, about 5 percentage points faster than the average growth rate of all loans. In the first three quarters of this year, such loans increased by roughly RMB 960 billion, a rise equivalent to 1.6 times last year’s full‑year increase.

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