JC Master Legal News Issue 843

Key Takeaways for This Issue

The China Securities Regulatory Commission is piloting the use of targeted convertible bonds to support M&A activities and foster the development of listed companies.

In recent years, the China Securities Regulatory Commission has steadily advanced market‑oriented reforms of mergers and acquisitions (M&A) and restructuring, actively supporting state‑controlled, privately‑controlled, and other types of enterprises in leveraging the capital markets to grow and strengthen through M&A and restructuring. In March 2014, the State Council issued the “Opinions on Further Optimizing the Market Environment for Corporate Mergers and Restructurings” (Document No. [2014]14), which explicitly stipulated that “qualified enterprises may issue preferred shares or conduct private placements of convertible bonds as payment instruments for M&A and restructuring.” To implement the State Council’s directives, in June 2014, the CSRC revised and promulgated the “Administrative Measures for Major Asset Restructuring of Listed Companies,” providing that listed companies may issue convertible bonds to specific investors for the purpose of acquiring assets or merging with other companies.

Many regions are raising funds to mitigate the risks associated with share pledges by listed companies.

In recent months, risks stemming from equity‑pledge financing in the A‑share market have come sharply into focus, with the risks associated with major shareholders’ stock pledges proving particularly acute. Some well‑performing private‑sector listed companies have found themselves mired in liquidity crises, threatening the stable and healthy development of both financial markets and the real economy. To swiftly defuse these equity‑pledge risks, a tough battle is now underway. At present, many local governments are taking action on both the equity and debt fronts, establishing special funds to provide emergency support to listed companies.

The Customs Tariff Commission of the State Council has adjusted the tariff rates for import duties on imported goods.

Previously, with the approval of the State Council, the Customs Tariff Commission of the State Council adjusted the tariff rates for imported goods. Accordingly, the General Administration of Customs issued Announcement No. 140 of 2018, specifying that the new tax‑reduction measures would take effect on November 1.

Four draft laws, including the Draft Amendment to the Drug Administration Law, are now open for public comment.

Recently, four draft laws—the revised Drug Administration Law, the second‑reading draft of the amendment to the Rural Land Contracting Law, the second‑reading draft of the Basic Medical and Health Care and Health Promotion Law, and the draft revision of the Civil Service Law—were published on the website of the National People’s Congress of China on the 1st, launching a public consultation open to all sectors of society. The deadline for submitting comments is December 1 this year.

Tianjin Group announced its leadership in entering the global new retail sector of the greater health industry.

Having cultivated the global health and wellness sector for 23 years and officely established itself as a market leader, Tian Shi Group held an opening ceremony and a global media press conference on the morning of October 29 at its newly completed “Tian Shi Product Experience Center” located within the Tian Shi International Health Industry Park.

Table of Contents

Table of Contents

Finance & Capital Markets

The China Securities Regulatory Commission is piloting the use of targeted convertible bonds to support M&A activities and foster the development of listed companies.

The China Securities Regulatory Commission is soliciting public comments on the revision of the “Regulations on Categorized Supervision of Futures Companies.”

The China Securities Regulatory Commission stated that it will “reduce unnecessary interference in the trading process,” and its 228-word statement revealed three key pieces of information.

The Shanghai Stock Exchange has launched a pilot program for credit protection instruments to support bond financing by private enterprises.

Agricultural Development Bank of China’s financial bonds made their debut on the exchange market, with a successful issuance of RMB 10 billion on the Shenzhen Stock Exchange.

Corporate & Commercial

Many regions are raising funds to mitigate the risks associated with share pledges by listed companies.

In October, China’s manufacturing PMI stood at 50.2%, down 0.6 percentage points from the previous month.

New regulations on bank wealth management products have taken effect, allowing public offering wealth management products to invest indirectly in the stock market.

Private Enterprises Usher in a Policy “Golden Autumn,” with Concrete Measures Continuously Alleviating Financing Challenges

China will implement fee reductions and incentive subsidies for financing guarantee services provided to small and micro enterprises.

Taxation

The Customs Tariff Commission of the State Council has adjusted the tariff rates for import duties on imported goods.

Public Consultation on the Stamp Duty Law: Four Key Issues Under Scrutiny; Stamp Duty to Be Waived for Home Purchases

Litigation & Arbitration

Four draft laws, including the Draft Amendment to the Drug Administration Law, are now open for public comment.

Breaking news! The “Interpretation (II) of the Construction Project Contract” has been approved by the Supreme People’s Court.

Beijing: The first civil public-interest lawsuit on food safety has been pronounced.

Other

Tianjin Group announced its leadership in entering the global new retail sector of the greater health industry.

The first-ever re‑listing has been conofficeed: Changhang Oil Transport will return to the A‑share market.

Finance & Capital Markets

The China Securities Regulatory Commission is piloting the use of targeted convertible bonds to support M&A activities and foster the development of listed companies.

In recent years, the China Securities Regulatory Commission has steadily advanced market‑oriented reforms of mergers and acquisitions (M&A) and restructuring, actively supporting state‑controlled, privately‑controlled, and other types of enterprises in leveraging the capital markets to grow and strengthen through M&A and restructuring. In March 2014, the State Council issued the “Opinions on Further Optimizing the Market Environment for Corporate Mergers and Restructurings” (Document No. [2014]14), which explicitly stipulated that “qualified enterprises may issue preferred shares or conduct private placements of convertible bonds as payment instruments for M&A and restructuring.” To implement the State Council’s directives, in June 2014, the CSRC revised and promulgated the “Administrative Measures for Major Asset Restructuring of Listed Companies,” providing that listed companies may issue convertible bonds to specific investors for the purpose of acquiring assets or merging with other companies.

When listed companies use targeted issuance of convertible bonds as a payment instrument in mergers and acquisitions (M&A) and restructuring transactions, it enhances negotiation flexibility, provides a more agile mechanism for balancing interests, effectively alleviates cash‑flow pressures and mitigates the risk of equity dilution for major shareholders, and diversifies financing channels for M&A and restructuring. Recently, in light of market conditions, numerous listed companies have actively explored incorporating targeted convertible bonds into their M&A and restructuring strategies, with some already putting forward concrete, feasible proposals. In response, our Commission, taking into account the specific circumstances of each enterprise, is proactively advancing pilot programs that permit the use of targeted convertible bonds as a payment tool in M&A and restructuring deals, thereby supporting all types of enterprises—including those controlled by private investors—in strengthening and improving their operations through such transactions.

Going forward, the China Securities Regulatory Commission will continue to leverage market mechanisms, closely monitor and respond to the needs of market participants, and create favorable conditions to support enterprises of all types in optimizing resource allocation through mergers and acquisitions and restructuring, thereby achieving high-quality development.

The China Securities Regulatory Commission is soliciting public comments on the revision of the “Regulations on Categorized Supervision of Futures Companies.”

Recently, the China Securities Regulatory Commission (CSRC) has publicly solicited comments from the public on the revision of the “Regulations on Categorical Supervision of Futures Companies” (hereinafter referred to as the “Regulations”).

In August 2009, the China Securities Regulatory Commission issued the “Provisions on Categorized Supervision of Futures Companies (Trial),” which was subsequently revised in April 2011 and has remained in effect ever since. To date, a total of ten rounds of categorized evaluations of futures companies have been conducted. Over the course of sustained regulatory practice, these evaluations have become a key supervisory tool and guiding mechanism for the futures industry, playing an important role in promoting compliant operations and sound development among futures offices.

To implement the requirement of comprehensive, stringent, and law-based regulation, adapt to the evolving dynamics of the futures market, and guide futures companies to focus on their core business, operate in compliance, pursue sound development, and enhance their strength and competitiveness, the China Securities Regulatory Commission has recently revised the Regulations, based on industry feedback. The key provisions are as follows:

First, the scoring criteria have been optimized, including the introduction of a new category of indicators assessing the ability to serve the real economy, the consolidation of indicators with overlapping assessments, the inclusion of the asset management business performance of futures companies in the evaluation, fine-tuning of the evaluation standards for certain indicators, and a moderate increase in the authority delegated to the review committee.

Second, the point‑deduction criteria have been refined to include indicators for restructuring risk management capabilities, adjustments to point‑deduction items in specific circumstances, detailed measures and penalties for point deductions, and an expansion of the categories of serious violations subject to downgrading.

Third, the evaluation procedures have been optimized, including appropriately expanding self-assessment components, rationally allocating responsibilities for the preliminary review, and clearly defining requirements for regulatory coordination.

The China Securities Regulatory Commission stated that it will “reduce unnecessary interference in the trading process,” and its 228-word statement revealed three key pieces of information.

During trading hours, the China Securities Regulatory Commission (CSRC) addressed market concerns through a public statement—a move that has been relatively rare in the past. Recently, the CSRC stated that, in line with the unified deployment of the Financial Stability Committee of the State Council and with capital market reform as its central focus, it is accelerating efforts in the following three areas:

First, we will enhance the quality of listed companies by strengthening corporate governance, standardizing information disclosure and improving transparency, and creating favorable conditions to encourage listed offices to engage in share buybacks and mergers and acquisitions.

Second, optimize trading supervision by reducing transaction frictions and enhancing market liquidity. Minimize unnecessary interventions in the trading process, ensure that the market has clear expectations regarding regulatory policies, and provide investors with fair trading opportunities.

Third, we will encourage value investing. We will leverage the role of institutional investors—including insurance companies, social security funds, various mutual funds, and asset management products—to channel more incremental medium- and long-term capital into the market.

In just 228 words, the statement laid out three key threads underlying the CSRC’s recent push for reform. The shorter the news, the more significant the implications; these reforms are part of a coherent, ongoing effort and closely tied to recent market trends. Riding on the back of the announcement, A‑shares rallied, with the Shanghai Composite Index closing at 2,560.38 points, up 0.72%, the Shenzhen Component Index at 7,335.58 points, up 0.18%, and the ChiNext Index at 1,252.38 points, up 0.15% as of midday.

Key Point One: Reduce Unnecessary Intervention in the Transaction Process

Among the three key pillars of this reform, the most critical is this: optimize trading supervision, reduce transaction frictions, and enhance market liquidity. By minimizing unnecessary interventions in the trading process, we will ensure that the market has clear expectations regarding regulation and that investors enjoy fair trading opportunities.

At present, against the backdrop of comprehensive, law-based, and stringent regulatory oversight, supervision on the trading side of the capital market has also become increasingly rigorous. From on‑site inquiries into abnormal trading activities to the strict crackdown on market manipulation and other illegal and non‑compliant practices, regulators are leveraging rules, oversight, and enforcement to prevent illicit funds from entering the stock market, thereby curbing unlawful investors and capital that disrupt market order.

Judging from today’s statements, the aim is to “reduce transaction frictions and enhance market liquidity,” while also “minimizing unnecessary interference in trading processes, ensuring that the market has clear regulatory expectations, and providing investors with fair trading opportunities.” Many market participants believe this signals a possible shift from the previous stringent regulatory stance: on the one hand, it seeks to allow some legitimate, compliant capital to enter the market, boosting liquidity and reducing administrative guidance and intervention, thereby bolstering market sentiment and risk appetite; on the other hand, it will continue to rigorously curb the entry of illicit funds, fostering a fair and transparent market environment, while simultaneously clarifying trading rules to ensure investors have a clearer understanding of both the rules and regulatory expectations.

Key Point Two: Encourage companies to engage in share buybacks and mergers and acquisitions.

The three major reform measures also stipulate that the quality of listed companies should be enhanced, corporate governance strengthened, information disclosure standardized and transparency improved, and conditions created to encourage listed companies to engage in share buybacks and mergers and acquisitions.

It mentions two regulatory areas—share buybacks and mergers and reorganizations—and the CSRC has recently undertaken substantial efforts in both.

First, there has been a wave of share buybacks. Since October 26, when the Sixth Session of the Standing Committee of the 13th National People’s Congress adopted a decision to amend the Company Law of the People’s Republic of China—specifically revising Article 142 on share repurchases—more than 50 A‑share listed companies have issued numerous buyback announcements. Chairpersons of companies such as Jingong Steel Structure, Renfu Pharmaceutical, and Zhejiang Guangsha have proposed share repurchase plans, while Ping An Insurance has unveiled a buyback program with a maximum scale of up to RMB 100 billion.

The China Securities Regulatory Commission stated that it will systematically review and streamline the regulatory framework governing share repurchases by listed companies. It will ensure strict compliance with provisions that remain applicable, while promptly refining supporting rules to address the new requirements introduced by the amendment to the Company Law. These efforts 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, along with their controlling shareholders, actual controllers, directors, supervisors, and senior management, are required to strictly abide by the Amendment Decision and related regulatory provisions, amend their articles of association accordingly, and improve 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 sustain its ongoing 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, “benefit transfers,” and “deceptive repurchases”—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.

The Shanghai Stock Exchange also stated that, under the guidance of the China Securities Regulatory Commission, it has begun drafting and revising relevant supporting business rules and announcement‑format guidelines for share repurchases. By contrast, the Shenzhen Stock Exchange acted even earlier, announcing on October 12 that it is promptly reviewing and summarizing issues identified in its day‑to‑day regulatory oversight and has issued the “Format for Share‑Increase Announcements” and the “Format for Repurchase Announcements” to further standardize information‑disclosure requirements.

According to estimates by Industrial Securities Research, following the relaxation of policy restrictions, companies with substantial cash reserves are encouraged to initiate share buybacks, creating a viable pathway for sustained repurchases. This is expected to unlock approximately RMB 3.49 trillion in buyback capital, delivering a significant boost to A‑shares.

Another key policy is mergers and acquisitions (M&A) and corporate restructuring. Recently, several regulations governing M&A and restructuring have been relaxed: the waiting period for companies whose IPO applications were previously rejected to re‑file for a listing has been shortened from three years to six months, thereby accelerating the time it takes for such offices to relist; no additional hurdles have been imposed, encouraging Chinese concept stocks to participate in A‑share M&A and restructuring; ten new industries have been granted access to an expedited review channel; restrictions on the use of proceeds from M&A and restructuring financing have been eased; and private equity funds are being encouraged to engage in M&A and restructuring activities involving listed companies.

These measures collectively help alleviate the funding pressures faced by listed companies in a weak market, particularly the risks associated with stocks that have high‑ratio share pledges. Under stricter regulatory oversight, many IPO applicants whose applications were previously rejected have since addressed the relevant issues; among them are companies with sound corporate governance and strong profitability. Encouraging these offices to go public as soon as possible would not only attract more capital into the market but also strengthen the capital market’s ability to serve the real economy and support a greater number of high‑quality private enterprises.

Key Point Three: Guiding Incremental Medium- and Long-Term Funds into the Market

The reform measures propose encouraging value investing, leveraging the role of institutional investors—including insurance companies, social security funds, various mutual funds, and asset management products—and guiding more incremental medium- to long-term capital into the market.

To promote the stable and healthy development of the stock market, it is essential to attract more institutional investors and channel greater amounts of medium- and long-term capital into the market. Fang Xinghai, Vice Chairman of the China Securities Regulatory Commission, stated that China has a high savings rate and is not short of funds; the Chinese stock market likewise does not lack liquidity. What is lacking, however, are long-term investors—capital that is not subject to annual year-end profit-and-loss calculations.

Only when long-term capital—such as insurance funds, social security funds, and various securities investment funds and asset management products—enters the stock market in a well‑structured, allocation‑driven manner can we improve the market’s ecosystem, optimize the investor base, strengthen the asset foundation underpinning valuations, enhance the capital market’s endogenous stabilization mechanisms, and promote the overall stable functioning of the capital market.

Pan Xiangdong, Chief Economist at New Era Securities, stated that the entry of long-term capital into the market helps maintain stable stock market performance and fosters sound development. Long-term investors tend to pursue value investing, which can improve the pricing mechanism of A-shares and, through price discovery, optimize the allocation of financial resources.

Wang Guangxue, a member of the Executive Committee and Secretary of the Board at CITIC Securities, believes that long-term investing helps steer the market back to its fundamental role as a conduit for capital flows, supports the operational activities of listed companies, strengthens financial capital’s support for real‑economy enterprises, and lays the groundwork for the sustained health of A‑shares.

The Shanghai Stock Exchange has launched a pilot program for credit protection instruments to support bond financing by private enterprises.

On November 2, 2018, the Shanghai Stock Exchange launched a pilot program for market-based credit protection instruments and successfully executed its first batch of credit protection contracts. This initiative represents a key step in implementing the CPC Central Committee and the State Council’s directives to support the development of private enterprises, as well as the China Securities Regulatory Commission’s plans to explore the use of mature credit enhancement tools to help private offices overcome difficulties in issuing bonds. It also marks an active effort by the exchange to refine its suite of credit risk management tools. By leveraging market‑driven credit protection instruments, the Shanghai Stock Exchange aims to restore investor confidence in private‑sector bonds, improve the financing environment for private enterprises, and foster their sound and sustainable growth.

On that day, Guotai Junan Securities and CITIC Securities became among the first credit protection sellers, completing two credit protection contract transactions. The reference entities included private enterprises with varying credit ratings: Hongshi Holding Group (a private enterprise rated AAA) and Jinchengxin (a privately held listed company rated AA). Both Guotai Junan Securities and CITIC Securities served as lead underwriters for the recent corporate bond issuances of these private offices. By providing credit protection to their respective clients—private enterprises—they helped send a positive signal to the market, bolster investor confidence, and facilitate the smooth issuance of bonds by private companies.

Taking the credit protection agreement between Guotai Junan and a certain product of Zhejiang Merchants Fund, which is based on Hongshi Holding Group, as an example: the reference entity, Hongshi Holding Group, recently issued—through a public offering on the Shanghai Stock Exchange—the “Hongshi Holding Group Co., Ltd. 2018 Poverty-Alleviation Special Corporate Bonds.” All proceeds from this issuance are earmarked for a targeted poverty‑alleviation project: the Huichang Hongshi Cement Project. Located in Xijiang Town, Huichang County, Ganzhou City, Jiangxi Province, this county is designated as a key area for national poverty‑alleviation and development efforts, and the project has effectively created employment opportunities for local impoverished residents. Guotai Junan served as the lead underwriter for this special corporate bond issue, and a specific product managed by Zhejiang Merchants Fund successfully subscribed to the bonds. In turn, Guotai Junan provided credit protection to that Zhejiang Merchants Fund product, covering the corporate bonds issued by Hongshi Holding Group in the exchange market. Reportedly, investors’ expectations that the lead underwriter would offer partial credit protection contributed to strong demand, with overall subscription reaching 3.03 times the offering size. The bonds were priced at a coupon rate of 5.5%, at the lower end of the book‑building range of 5.5%–7.0%, below the prevailing industry benchmark for comparable issues. The introduction of credit‑protection instruments helps alleviate investor concerns about private‑sector credit risk, broadens the pool of bond investors, enhances the success rate of bond issuances, and reduces corporate financing costs.

The Shanghai Stock Exchange has taken the lead in piloting credit protection instruments, pioneering a new model for securities offices to serve corporate clients. Under this framework, securities offices can offer issuers an integrated financing solution that combines corporate bond issuance with credit protection tools, thereby significantly enhancing their ability to support corporate clients—particularly private enterprises—in accessing bond financing. During the pilot phase, these credit protection instruments will prioritize supporting high-quality private enterprises and “double‑innovation” companies facing temporary liquidity challenges, while pricing will be determined independently by financial institutions through market‑based mechanisms.

Going forward, the SSE will promptly formulate business rules governing credit protection instruments, enabling a broader range of qualified market participants to offer relevant credit protection services and products to their clients, thereby further improving the financing environment for private enterprises and enhancing the exchange‑listed bond market’s ability to serve the real economy.

Agricultural Development Bank of China’s financial bonds made their debut on the exchange market, with a successful issuance of RMB 10 billion on the Shenzhen Stock Exchange.

On November 1, the Agricultural Development Bank of China (hereinafter referred to as “ADBC”) successfully issued financial bonds on the Shenzhen Stock Exchange, with a total issuance size of RMB 10 billion. This marks the first time ADBC’s financial bonds have been listed on the exchange market, further diversifying the Shenzhen Stock Exchange’s yield‑curve‑linked bond offerings and underscoring the importance of enhancing the exchange’s bond market in supporting national strategies and the real economy.

The Agricultural Development Bank of China’s financial bonds, successfully issued through the Shenzhen Stock Exchange’s tender system, were divided into two tranches. The first tranche has a one-year tenor, a size of RMB 5 billion, an interest rate of 2.80%, and a subscription multiple of 4.08—12 basis points below the valuation derived from the CDB yield curve. The second tranche features a two-year tenor, a size of RMB 5 billion, an interest rate of 3.36%, and a subscription multiple of 3.98—9 basis points below the CDB yield curve valuation. A total of 20 underwriting syndicate members participated in the bidding, with securities offices accounting for 63.10% of the awards and banks for 36.90%.

As China’s sole agricultural policy bank, the Agricultural Development Bank of China (ADBC) leverages national credit and market‑driven mechanisms to raise funds for agriculture, rural areas, and farmers, thereby supporting the development of “agriculture, rural areas, and farmers” initiatives and fulfilling its role as a key pillar of national strategy. Proceeds from this bond issuance will be primarily allocated to ADBC‑backed loans in priority areas such as targeted poverty alleviation, autumn grain procurement, and green ecological conservation. The listing of ADBC financial bonds on the exchange will, on the one hand, help further optimize the exchange’s bond‑product mix and expand its range of interest‑rate‑linked securities; on the other hand, it will broaden the channels for issuing ADBC bonds, diversify the investor base, and enhance bond liquidity.

The Party Committee of the Shenzhen Stock Exchange attaches great importance to cooperation and exchanges with the Agricultural Development Bank of China in areas such as financial support for agriculture and bond issuance, continuously enriching the structure and diversity of financial market products. Going forward, under the leadership of the China Securities Regulatory Commission, the Shenzhen Stock Exchange will further leverage the exchange’s market strengths and resource-allocation functions, proactively implement the policies on rural revitalization and poverty alleviation, intensify efforts to provide financial support for agriculture and poverty reduction, continually enhance the quality of bond‑issuance services, and fully support innovation in policy‑bank financial bonds, thereby fostering high‑quality development of the exchange‑traded bond market.

Commercial & Corporate

Many regions are raising funds to mitigate the risks associated with share pledges by listed companies.

In recent months, risks stemming from equity‑pledge financing in the A‑share market have come sharply into focus, with the risks associated with major shareholders’ stock pledges proving particularly acute. Some well‑performing private‑sector listed companies have found themselves mired in liquidity crises, threatening the stable and healthy development of both financial markets and the real economy. To swiftly defuse these equity‑pledge risks, a tough battle is now underway. At present, many local governments are taking action on both the equity and debt fronts, establishing special funds to provide emergency support to listed companies.

Local state-owned assets step in to provide relief.

Recently, the stock market has been volatile for a variety of reasons, one of which is the presence of certain technical factors. For example, during periods when individual stock prices decline, passive position reductions have emerged—primarily driven by share pledges.

Generally speaking, shares held by shareholders of listed companies can be used directly as collateral to obtain loans from banks, securities offices, and other financial institutions. Although equity is typically valued at a 30% discount—sometimes even at half its face value—since the beginning of this year, irrational market declines have pushed many stocks below their margin call thresholds, leading to forced liquidations by institutional investors.

With the company’s stock already on shaky ground, a sudden surge in selling pressure would drive the share price even lower, creating a vicious cycle. When this dynamic ceases to be isolated incidents and spreads across the board, the risks associated with stock‑pledge financing come sharply into focus. Li Xunlei, chief economist at Zhongtai Securities, notes that during irrational market declines, the natural selection mechanism—where stronger offices survive while weaker ones are weeded out—struggles to function. If a large number of high‑quality listed companies were to collapse under the weight of equity‑pledge risks, it would not only harm the real economy but also exacerbate market panic.

On October 19, top financial officials jointly voiced their support, urging and encouraging local governments to deploy funds to bail out listed companies. The Shanghai Stock Exchange, the Shenzhen Stock Exchange, and the Asset Management Association of China also unveiled a series of concrete measures to mitigate risks associated with pledged equity.

The Shenzhen municipal government was among the first to take action. According to reports, Shenzhen has established a dedicated task force and allocated hundreds of billions of yuan in special funds to coordinate and address stock pledge risks among listed companies within its jurisdiction. At present, the city’s “risk‑sharing” fund has already been fully mobilized.

On October 26, the first-ever distress-relief special-purpose bond was successfully book‑built and issued on the Shenzhen Stock Exchange: Shenzhen Investment Holdings Co., Ltd. issued its 2018 distress-relief special-purpose bond with a final issuance size of RMB 1 billion. The dedicated equity investment funds will, in accordance with commercial principles, attract participation from private capital, thereby achieving a certain degree of scale amplification.

Beijing is following closely behind. In Haidian District, adhering to the principle of “market‑oriented approaches as the mainstay, with tailored policies for each enterprise,” the district is providing targeted support to key companies facing difficulties. Measures include helping listed companies in Haidian—particularly those with high stock‑pledge risks—to mitigate these risks, and encouraging banks and other financial institutions to extend more substantive financing assistance during periods of distress for private‑sector listed offices. Reportedly, other districts in Beijing will replicate Haidian’s approach, offering support to address stock‑pledge risks held by controlling shareholders of listed companies. Meanwhile, building on the establishment of a distress‑relief fund in Haidian with an initial scale of RMB 10 billion, the Beijing municipal government plans to allocate an additional one to two times that amount in supporting capital, which could bring the fund’s total size to RMB 30 billion.

Chengdu, Guangzhou, Foshan, Shunde, and Dongguan have also recently stepped up efforts to advance state‑owned capital support measures aimed at alleviating financial distress. As policies actively encourage the participation of multiple stakeholders in addressing stock pledge risks, this will to some extent mitigate the risks associated with listed companies’ pledged shares and help stabilize market expectations.

Support listed companies with principles.

State‑owned capital support has yielded tangible results. The first batch of Shenzhen‑based companies that received this “backing” have begun to take shape, and the capital markets have responded with rising prices.

Liu Feng, Chief Economist at Galaxy Securities, stated that local governments’ “risk‑sharing” development funds directly repair corporate balance sheets in the primary market, inject cash flow into enterprises, and effectively address their financial challenges, helping them emerge from adversity.

Of course, the market is also keenly interested: when it comes to local governments’ “risk‑sharing” development funds, whom do they rescue and whom do they not? How is that decision made? Shenzhen has put forward three guiding principles. According to these principles, the specific entities eligible for such support will be selected by management institutions like Shenzhen High‑Tech Investment Co., Ltd., based on market mechanisms and professional judgment; however, they must meet three categories of criteria:

First, the company must be a high-quality A-share listed company in the real economy sector, registered with the Shenzhen Administration for Market Regulation, including high-tech enterprises as well as listed companies operating in strategic emerging industries, traditional industries with competitive advantages, and modern supply chains. Second, the listed company must demonstrate sound operational and financial performance and possess promising growth prospects. Third, the ultimate controlling shareholder must have no record of material violations of laws or regulations, nor any significant breaches of trust.

According to insiders, Beijing’s bailout policy adheres to the principle of “rescuing liquidity crises, not chronic distress.” A key tenet and prerequisite is to support high-quality listed companies whose fundamentals remain sound but are temporarily facing liquidity strains. While these offices may have fallen into liquidity difficulties partly because they were too focused on their core operations and failed to keep a broader market perspective, such challenges also stem from broader market conditions—sharp stock-market volatility and market failures. In such circumstances, the government must act decisively without hesitation. Of course, once market conditions stabilize, a market‑based exit strategy will be required. Therefore, the current support measures are temporary rather than long-term. To address the financing constraints faced by private enterprises, sustained solutions will depend on establishing robust, long‑term institutional mechanisms.

Improving direct financing is key.

China’s high corporate debt levels are closely linked to a financial system that has long been dominated by indirect financing. Accordingly, vigorously developing direct financing is a crucial step in reducing the leverage ratio of the real economy and alleviating its financing constraints.

On October 22, the State Council Executive Meeting decided to establish a bond financing support tool for private enterprises, aiming to alleviate their financing difficulties through market-oriented measures.

It is reported that the bond financing support tool for private enterprises is funded in part by the People’s Bank of China through relending, with operations managed on a market‑based basis by specialized institutions. By means of selling credit risk mitigation instruments, providing guarantees to enhance creditworthiness, and other measures, the tool focuses on supporting bond financing for private enterprises that are temporarily facing difficulties but remain market‑oriented, promising, and technologically competitive.

Meanwhile, the People’s Bank of China has actively supported commercial banks, insurance companies, and bond credit enhancement institutions in leveraging a variety of tools, including credit risk mitigation instruments, to facilitate bond financing for private enterprises—while strengthening risk identification and control—and has fully harnessed the role of local governments in improving the business environment and overseeing the sound operations of private offices.

Experts note that the bond market, as a direct financing channel and an alternative to bank credit, is a crucial component of optimizing the financing structure. Efforts should be intensified to expand the bond market, develop and refine tiered bond markets, and fully leverage the bond market’s role in supporting corporate financing.

Whether it is the local governments’ risk‑sharing development funds or bond‑financing support instruments, both constitute market‑based mechanisms for mitigating risks. They help real‑economy enterprises secure effective financing at more appropriate costs over a given period, thereby easing their balance‑sheet pressures. However, to address financing challenges at their root, it remains essential to advance supply‑side structural reforms centered on the market‑oriented reform of factor‑allocation mechanisms, boost total factor productivity, and build a modern, multi‑tiered capital market—thus fostering mutual reinforcement and harmonious coexistence between the financial system and the real economy.

In October, China’s manufacturing PMI stood at 50.2%, down 0.6 percentage points from the previous month.

Recently, the National Bureau of Statistics released the October 2018 China Purchasing Managers’ Index (PMI) data: in October, the manufacturing PMI stood at 50.2%, down 0.6 percentage points from the previous month. Overall, the manufacturing sector remained in expansion territory, though the pace of expansion has moderated.

From the perspective of enterprise size, the PMI for large enterprises stood at 51.6%, down 0.5 percentage points from the previous month, yet still remaining in expansionary territory; the PMIs for medium- and small-sized enterprises were 47.7% and 49.8%, respectively, down 1.0 and 0.6 percentage points from the previous month, both below the threshold.

Looking at the sub‑indices, among the five components of the manufacturing PMI, the production index and the new orders index are above the threshold, while the raw materials inventory index, the employment index, and the supplier delivery time index are below it.

The production index stood at 52.0%, down 1.0 percentage point from the previous month, remaining in expansion territory and indicating a slower pace of output growth in the manufacturing sector.

The new orders index stood at 50.8%, down 1.2 percentage points from the previous month, but still above the threshold, indicating a moderation in the pace of growth in manufacturing market demand.

The raw materials inventory index stood at 47.2%, down 0.6 percentage points from the previous month and below the threshold, indicating that inventories of key raw materials in the manufacturing sector continued to decline.

The employment index stood at 48.1%, down slightly by 0.2 percentage points from the previous month and remaining below the threshold, indicating a decline in workforce levels among manufacturing offices.

The supplier delivery time index stood at 49.5%, down slightly by 0.2 percentage points from the previous month and remaining below the threshold, indicating a slight slowdown in delivery times from raw-material suppliers to manufacturers.

In October, China’s non-manufacturing business activity index stood at 53.9%, down 1.0 percentage point from the previous month, indicating that the non-manufacturing sector continued to expand, albeit at a slower pace.

By sector, the services sector’s business activity index stood at 52.1%, down 1.3 percentage points from the previous month, reflecting a slight deceleration in growth. Among major industries, railway transport, air transport, postal services, telecommunications, radio, television, and satellite transmission services, internet software and information technology services, insurance, and leasing and business services all posted business activity indices above 55.0%, indicating robust business operations. By contrast, capital market services, real estate, and household services and repair sectors remained below the threshold, with a corresponding decline in overall business volume. Meanwhile, the construction sector’s business activity index reached 63.9%, up 0.5 percentage points from the previous month, signaling a continued acceleration in construction output.

The new orders index stood at 50.1%, down 0.9 percentage points from the previous month but slightly above the threshold, indicating a slowdown in the pace of expansion in non‑manufacturing market demand. By sector, the services sector’s new orders index was 49.1%, a decrease of 1.0 percentage point from the previous month, falling below the threshold. The construction sector’s new orders index was 56.2%, up 0.5 percentage points from the previous month.

The input price index stood at 54.9%, down 0.7 percentage points from the previous month but still above the threshold, indicating that overall input prices used in non‑manufacturing offices’ operations continued to rise, albeit at a slower pace. By sector, the services sector’s input price index was 53.4%, a decrease of 0.9 percentage points from the previous month, while the construction sector’s input price index was 63.0%, up 0.2 percentage points from the prior month.

The sales price index stood at 51.2%, down 0.3 percentage points from the previous month, remaining above the threshold and indicating a moderation in the overall increase of non‑manufacturing sales prices. By sector, the services sector’s sales price index was 50.7%, down 0.3 percentage points from the previous month, while the construction sector’s sales price index was 54.0%, down 0.4 percentage points from the previous month.

The employment index stood at 48.9%, down 0.4 percentage points from the previous month and below the threshold, indicating a contraction in workforce levels among non‑manufacturing offices. By sector, the services sector’s employment index was 48.0%, a decrease of 0.5 percentage points from the prior month, while the construction sector’s employment index was 54.1%, up 0.2 percentage points from the previous month.

The business activity expectations index stood at 60.6%, up 0.5 percentage points from the previous month, remaining in a robust expansionary range and signaling that non‑manufacturing offices are optimistic about market prospects. By sector, the services sector’s business activity expectations index was 59.7%, up 0.4 percentage points from the previous month, while the construction sector’s index was 66.0%, an increase of 0.9 percentage points from the prior month.

In October, the composite PMI output index stood at 53.1%, down 1.0 percentage point from the previous month, indicating that Chinese enterprises’ production and business activities continued to expand, albeit at a slower pace.

New regulations on bank wealth management products have taken effect, allowing public offering wealth management products to invest indirectly in the stock market.

Recently, the China Banking and Insurance Regulatory Commission officially issued the “Administrative Measures for the Supervision and Administration of Commercial Bank Wealth Management Business,” which serves as a set of implementing rules to complement the new asset‑management regulations. Notably, the investment threshold for public‑offering wealth management products has been significantly lowered from no less than RMB 50,000 to no less than RMB 10,000, drawing considerable attention. In addition, the new measures introduce provisions governing the entry of wealth‑management funds into the stock market: where wealth‑management business is conducted by internal departments of banks, public‑offering wealth‑management products are permitted to gain indirect access to the stock market by investing in various publicly offered mutual funds.

In fact, bank wealth-management funds are at the heart of the “large asset management” business model, serving as the upstream source for non‑bank asset‑management businesses such as securities‑office asset management, fund‑based asset management, and trust‑based asset management. Industry insiders believe that the implementation of these new regulations will directly impact the operation of asset‑management activities across securities offices, trust companies, public mutual funds, private equity funds, and other institutions. Looking ahead, as the new wealth‑management rules are formally put into effect, what changes can we expect in the bank wealth‑management market?

The threshold for wealth management has been lowered, bolstering banks’ competitiveness against Yu’e Bao.

According to a relevant official from the China Banking and Insurance Regulatory Commission, the new regulations on wealth management, as implementing rules accompanying the “New Regulations on Asset Management,” are aligned with those regulations and are designed to standardize banks’ non‑principal‑guaranteed wealth management products.

Since 2002, commercial banks in China have progressively launched wealth-management services. While these businesses have expanded rapidly, several issues have emerged, including inadequate operational standardization, insufficient investor‑suitability assessments, and the failure to fully implement a “buyer beware” framework underpinned by sellers’ accountability. Today, nearly half a year after the new asset‑management regulations were officially implemented, principal‑guaranteed wealth products—once enjoying robust growth—have gradually been phased out. In contrast, the outstanding balance of non‑principal‑guaranteed wealth products has been rising steadily.

Data released by the China Banking and Insurance Regulatory Commission show that, since 2018, the outstanding balance of banks’ non‑principal‑guaranteed wealth management products has risen steadily. As of the end of June, the balance stood at RMB 21 trillion; by the end of July, it had increased to RMB 21.97 trillion; and by the end of August, it reached RMB 22.32 trillion. Wealth management funds are primarily allocated to standardized assets such as bonds, deposits, and money‑market instruments, accounting for roughly 70% of the total; investments in non‑standardized credit‑type assets account for about 15%, with the overall allocation remaining broadly stable.

Under the new regulations on wealth management, public and private wealth-management products will henceforth be strictly segregated. At the same time, fund‑pooling practices will be standardized to mitigate “shadow banking” risks, liquidity risk management will be strengthened, and leverage levels will be kept in check.

Previously, money market funds such as “Yu’ebao” entered the wealth-management market with a minimum investment threshold of just RMB 1, significantly siphoning deposits from households and prompting publicly offered funds—traditionally requiring a minimum of RMB 1,000—to lower their own entry barriers. Now, bank wealth-management products with a minimum purchase of RMB 10,000 are proliferating, and the draft Measures for the Administration of Commercial Bank Wealth‑Management Subsidiaries has even eliminated any minimum sales threshold for public‑offering wealth‑management products, posing substantial challenges to “baby‑type” money‑market fund products.

An investor who is an office worker noted that recently, money market funds targeting retail investors have been offering low yields, and there are limits on both deposits and withdrawals. Originally, he planned to accumulate 100,000 yuan before purchasing wealth-management products. Now, with the entry barriers for such products lowered, he intends to use the small surplus in Yu’ebao to buy similar bank‑issued wealth-management products.

Following the official implementation of the new regulations on wealth management, several banks have successively announced reductions in the minimum investment thresholds for certain wealth-management products. On September 30, China Construction Bank took the lead in the industry by lowering the threshold for its “Qianyuan Huixiang” (Ji Ji Fu) open-ended net-value RMB wealth-management product from RMB 50,000 to RMB 10,000. On the same day, the Agricultural Bank of China and the Bank of China also announced cuts to the minimum investment requirements for select wealth-management products. Subsequently, China Merchants Bank, Bank of Communications, and Shanghai Pudong Development Bank followed suit, each reducing the minimum investment thresholds for some of their wealth-management offerings.

On October 19, the China Banking and Insurance Regulatory Commission released the “Administrative Measures for Wealth Management Subsidiaries of Commercial Banks (Draft for Public Comment).” The draft indicates that face-to-face signing will no longer be mandatory for individuals purchasing wealth management products for the first time, nor will there be a minimum investment threshold or a cap on the proportion of equity investments in publicly offered wealth management products.

The new regulations on asset management issued in April this year set a clear timetable for phasing out principal-guaranteed wealth management products, stipulating that by the end of the transition period in 2020, all bank wealth management products must be converted to net-value‑based offerings.

The latest regulations on wealth management once again stipulate that banks may not advertise “expected yields” for wealth management products or make guarantees of principal and returns when selling such products.

Public offering wealth management products are permitted to invest indirectly in the stock market.

At the investment level, the new regulations on wealth management have drawn particular attention for their provisions regarding the investment channels of wealth-management products.

Article 35 of the New Regulations on Wealth Management stipulates that commercial banks’ wealth management products may invest in government bonds, local government bonds, large-denomination certificates of deposit, interbank certificates of deposit, asset-backed securities issued in the interbank market and the stock exchange market, equity assets, as well as other assets approved by the banking regulatory authority under the State Council.

In addition, the new regulations set forth specific requirements regarding the concentration of public‑offering wealth management products’ investments in securities assets. For instance, the market value of any single security or single public‑offering mutual fund held by each such product may not exceed 10% of the product’s net asset value; the aggregate market value of all public‑offering wealth management products held by a commercial bank in any single security or public‑offering mutual fund may not exceed 30% of the market value of that security or mutual fund; and the total holdings of all wealth management products issued by a commercial bank in shares of a single listed company may not exceed 30% of that company’s tradable shares.

What has drawn significant market attention is that the new regulations have, in principle, lifted restrictions on public offering wealth management products’ investment in equities.

Under the previous regulatory framework, private‑placement wealth management products were permitted to invest directly in equities, while public‑offering wealth management products were restricted to investing only in money‑market and bond funds. Today, public‑offering wealth management funds are no longer allowed to purchase equities directly; however, when wealth management activities are conducted by an internal bank division, such products may gain indirect access to the stock market by investing in various publicly offered mutual funds. Going forward, once banks conduct wealth management business through subsidiaries, the subsidiaries’ publicly offered wealth management products will be permitted to invest directly in equities or to gain indirect exposure through other channels.

So, once investment restrictions are lifted, will substantial capital flood into the stock market? Analysts generally agree that, in the short term, it is unlikely that publicly offered wealth-management funds will rush into the market.

Zeng Gang, deputy director of the National Financial and Development Laboratory, believes that the short-term impact of the new wealth-management regulations on the stock market should not be overestimated. There are three reasons: First, banks’ demand for allocating funds to equity funds is limited; allowing bank wealth management products to invest in public‑offering equity funds merely provides a new channel for indirect exposure to the stock market, but whether they actually enter the market still depends on banks’ willingness and ability to invest in such funds. In practice, bank wealth‑management clients generally exhibit a low risk appetite. Second, public‑offering wealth‑management products investing in equity funds remain subject to concentration‑risk limits. The new rules impose caps on the market value of any single security or public‑offering mutual fund held by each product, as well as on the aggregate market value of shares of a single listed company held across all of a commercial bank’s wealth‑management products—constraints that will cap the scale of these investments. Third, banks’ allocation to equities (or equity funds) also hinges on the risk preferences of investors; under the current market conditions, such demand remains subdued.

Wang Wei, Director of Financial Markets at Ping An Bank, stated that the bank’s wealth management business remains committed to offering clients low‑volatility, stable‑return products. With respect to equity investments, the bank primarily relies on partnerships with well‑established public mutual funds and does not itself make large-scale allocations to such equity‑based products.

Bu Yanhong, General Manager of the Asset Management Department at Postal Savings Bank, stated that for genuine equity investments—particularly direct equity holdings—related products should still be offered exclusively to qualified investors. “Each bank may need to redesign its product offerings and implement differentiated client management. In the long run, this is positive; however, in the short term, aligning substantial wealth-management funds with direct entry into the stock market will require time.”

In fact, among the 22 trillion yuan in bank wealth-management funds, the portion invested in the stock market is relatively small. According to Wang Jian, chief banking analyst at Guosen Securities, as of the end of 2017, the total size of bank wealth management stood at 29.54 trillion yuan—of which non‑principal‑guaranteed products accounted for 22.17 trillion yuan—with roughly 9.47% allocated to equity assets, or about 2.80 trillion yuan. Among this, direct investments in secondary‑market equities represent only a minority; the remainder includes margin financing for clients’ equity investments and primary‑market equity stakes. As of now, no authoritative data are available, but industry estimates put the figure at no more than 500 billion yuan.

Accelerate the transition of wealth management products to net-value pricing.

In addition, Article 43 of the new regulations on wealth management stipulates that the term of closed-end wealth management products issued by commercial banks shall not be less than 90 days; the liquidity of the assets invested in open-ended wealth management products must be aligned with investors’ redemption demands, ensuring that sufficient cash, demand deposits, government bonds, central bank bills, and policy-based financial bonds—assets characterized by high liquidity—are maintained to meet redemption payments. Open-ended public offering wealth management products must hold at least 5% of their net asset value in cash or in government bonds, central bank bills, and policy-based financial bonds with maturities of one year or less.

Data show that the transition of bank wealth-management products to net-value pricing is accelerating. According to monitoring by Puyi Standard, 1,107 new net-value‑based bank wealth-management products were launched in the first half of the year, with state‑controlled banks and joint-stock commercial banks accounting for nearly 80% of the total issuance.

Bu Yanhong, General Manager of the Asset Management Department at Postal Savings Bank, believes that following the implementation of the new asset‑management regulations, many banks have ceased issuing new products with guaranteed returns. Given that yield‑based pooled‑funds products once dominated the market, the transition process has posed significant challenges in investor education. Moreover, how to handle non‑standard assets remains another pressing issue. As for the specific steps involved in converting these assets into standardized ones, banks must address these matters prudently, taking into account their own circumstances.

In the view of Liu Xinghua, General Manager of the Asset Management Department at China Construction Bank, the new regulations on wealth management will create two major opportunities. On the one hand, banks’ asset‑management investment capabilities remain relatively limited compared with the scale of funds they manage, prompting them to seek external partnerships. On the other hand, the new rules permit wealth‑management funds to invest indirectly in equities, and once wealth‑management subsidiaries are established, they will be able to invest directly in stocks, which could bring additional capital into the equity market. “At present, commercial banks’ asset‑management divisions are actively implementing the requirements of the new asset‑management regulations, facing three key challenges. First is breaking implicit guarantees: a central tenet of the new rules is to end such guarantees, and managing client relationships under this framework poses a significant test. Second is transitioning to net‑value pricing: historically, products have been based on expected returns; achieving net‑value accounting during the transitional period is another major challenge. Third is standardizing assets: while non‑standardized assets remain indispensable in the real economy, asset managers must strike a balance between these and standardized instruments—ensuring safety while driving transformation—a task that presents considerable difficulty.”

Private Enterprises Usher in a Policy “Golden Autumn,” with Concrete Measures Continuously Alleviating Financing Challenges

Ministries and commissions: Deploy a “policy toolkit”

On October 22, the People’s Bank of China announced that it would establish a bond‑financing support tool for private enterprises to stabilize and boost their access to bond financing. The tool will be initially funded in part by the central bank through relending, with operations managed on a market‑based basis by specialized institutions. By means such as the issuance of credit‑risk mitigation instruments and the provision of guarantees to enhance creditworthiness, the initiative will prioritize supporting private enterprises that are temporarily facing difficulties but remain market‑oriented, promising, and technologically competitive.

Following the release on October 25 of the “Notice on Matters Relating to the Establishment of Special Products by Insurance Asset Management Companies,” which permitted insurance funds to help alleviate liquidity risks stemming from stock pledges by listed companies, the China Banking and Insurance Regulatory Commission unveiled another major measure on October 26—encouraging insurance capital to provide financial support to non-listed enterprises and actively bolster the real economy.

On October 26, China Securities Regulatory Commission (CSRC) spokesperson Chang Depeng stated that, in order to implement the CPC Central Committee and the State Council’s decisions and arrangements for winning the tough battle of preventing and defusing risks and addressing the financing difficulties faced by private enterprises, the CSRC supports eligible institutions in raising funds through the issuance of special-purpose corporate bonds, with proceeds earmarked to alleviate the financing constraints of private offices and mitigate stock pledge risks among listed companies. The CSRC will also work with the stock exchanges to establish a green‑channel review process for such special‑purpose corporate bonds, adopting an “immediate filing, immediate review” approach to enhance issuance efficiency and actively leverage the exchanges’ role in supporting private enterprises.

On October 7, Finance Minister Liu Kun stated in a media interview that, while fully implementing the tax and fee reduction policies already introduced, the government is expediting the formulation of larger‑scale tax cuts and more substantial fee reductions, so as to enable enterprises to operate with lighter burdens and pursue development without restraint.

Local governments: Provide liquidity support

On November 1, the People’s Bank of China’s Operations Management Department, the Preparatory Group of the Beijing Banking and Insurance Regulatory Bureau, the Beijing Municipal Financial Work Bureau, and several other departments jointly issued the “Implementation Opinions on Further Deepening Financial Services for Private and Small and Micro Enterprises in Beijing.” The PBOC’s Operations Management Department will establish a special rediscount quota of RMB 7 billion to provide targeted support to small and micro enterprises and private offices, and will set up an additional PBOC rediscount window within the Zhongguancun Demonstration Zone to help financial institutions offer low-cost, convenient bill‑financing services to technology‑focused small and micro enterprises and private companies.

According to the Opinions, relevant departments will actively facilitate the implementation in Beijing of the “Private Enterprise Bond Financing Support Tool,” thereby helping private enterprises that are temporarily facing liquidity challenges but remain market‑driven, promising, and technologically competitive to improve their financing conditions.

The “Opinions” propose that Beijing will establish a municipal financing guarantee fund, build a policy-based financing guarantee system, and encourage guarantee and reinsurance institutions to actively engage in financing guarantee services for small and micro enterprises. Meanwhile, the People’s Bank of China’s Business Management Department is conducting a pilot program on foreign exchange policies within the Zhongguancun Demonstration Zone, further enhancing trade and investment facilitation for private and small and micro enterprises. All relevant departments will continue to optimize the business environment, work to reduce ancillary financing costs for small and micro enterprises, shorten the approval time for corporate account opening applications at the People’s Bank of China to one working day, improve mechanisms for sharing enterprise credit information, and explore the development of a Beijing‑based financial service platform for small and micro enterprises, thereby fostering a favorable financing climate for the private sector and small and micro businesses.

On November 1, in response to the challenges facing private-sector enterprises, Xicheng District of Beijing plans to establish the Beijing New Power High-Quality Enterprise Development Fund, with a target size of RMB 10 billion and an initial phase of RMB 4 billion. The fund will actively engage partner financial institutions and other social capital, directing investments toward high-quality privately owned listed companies that are operationally sound, demonstrate strong performance, and are experiencing temporary liquidity pressures. At the same time, it will provide financial support to these listed companies through equity investments, convertible bonds, and other instruments, helping to alleviate their liquidity risks.

Relevant officials from the Haidian District Government of Beijing recently stated that, in accordance with the principle of “market‑oriented approaches as the mainstay, while adhering to a case‑by‑case policy,” the district government is providing targeted support and assistance to key enterprises facing difficulties. This includes helping listed companies in Haidian District with relatively high stock‑pledge risks to mitigate those risks; guiding banks and other financial institutions to extend more substantive financing support during periods of distress for private‑sector listed offices; and facilitating the establishment, by district‑owned state‑owned assets and Dongxing Securities, of a fund to support the development of high‑quality technology enterprises, with a total size of RMB 10 billion—of which RMB 2 billion has already been raised in the first phase. The fund will acquire equity stakes not exceeding 10% of a listed company’s total share capital, thereby helping private‑sector technology‑listed offices address stock‑pledge risks.

Zhejiang Provincial State-owned Capital Operation Co., Ltd. recently announced that, together with Agricultural Bank Financial Asset Investment Co., Ltd. and the Zhejiang Branch of the Agricultural Bank of China, it has established the “Zhejiang Emerging Dynamics Fund.” The fund will primarily invest in listed companies within Zhejiang Province, with a particular focus on privately owned listed offices, aiming to alleviate corporate debt burdens and mitigate recent financial market risks. The fund’s targeted total investment size is RMB 10 billion, with an initial phase of RMB 2 billion.

The Shenzhen Municipal Government has recently allocated hundreds of billions of yuan in special funds to establish a risk-sharing mechanism, addressing both debt and equity dimensions, with the aim of mitigating stock pledge risks among Shenzhen‑listed A‑share companies and enhancing their liquidity.

Institution: Actively participate in bond financing support tools.

Following the introduction of the policy on bond financing support tools for private enterprises, many financial institutions have indicated that they have begun to digest the policy and initiate customer assessments.

On October 26, the Shanghai Stock Exchange and the Shenzhen Stock Exchange each issued a special-purpose bond to help listed companies mitigate risks associated with pledged equity. In addition, the China Securities Association has recently advanced the establishment of a collective asset management program—initiated by 11 securities offices—to support the development of private enterprises, which has now made substantial progress and entered the implementation phase.

On October 16, at the headquarters of the Industrial and Commercial Bank of China (ICBC), the bank held a symposium with numerous leading private enterprises and, following the event, signed a “Headquarters-to-Headquarters Cooperation Agreement.” According to reports, ICBC has established headquarters‑to‑headquarters partnerships with 100 such key private offices. Through dedicated service teams, ICBC will provide these companies with comprehensive financial services that combine financing with advisory support. In addition, ICBC plans to engage in market‑based, rule‑of‑law‑compliant debt‑to‑equity swaps with some of these enterprises, helping them optimize their capital structures, enhance their market value, and strengthen their long-term growth momentum.

The Agricultural Bank of China has prioritized organizing its branches in key regions such as Guangdong, Jiangsu, and Zhejiang to conduct enterprise customer selection in accordance with established standards. Following an initial screening, a number of target enterprises have been identified.

China Construction Bank is also implementing this in two phases. First, it is coordinating and collaborating with China Credit Enhancement Investment Co., Ltd., aligning on project pipelines and establishing issuance standards, and proactively communicating and preparing the relevant contractual documents. Second, it is mobilizing pilot branches to identify and screen private enterprises that meet the “three‑principle” criteria. Third, it is maintaining close communication with the National Association of Financial Market Institutional Investors to prepare for the issuance of certificates for targeted projects. In addition, during the second phase, as the lead underwriter, the bank will seek to obtain the necessary issuance qualifications as soon as possible. At the same time, it will work to remove policy barriers related to risk appetite and approval procedures, thereby increasing its willingness to extend credit to private enterprises.

Industrial Bank has already identified 12 projects with a total value of approximately RMB 15.5 billion. It is currently in discussions with the Traders Association and has established a RMB 3 billion funding pool to invest in credit risk mitigation warrant (CRMW) products.

China will implement fee reductions and incentive subsidies for financing guarantee services provided to small and micro enterprises.

To encourage the reallocation of more financial resources to small and micro enterprises, further expand the scale of their financing guarantee services, and reduce financing guarantee fees, China will implement fee reductions and incentive subsidies for such services.

According to the “Notice on Implementing Fee Reduction and Subsidy Policies for Financing Guarantee Services for Small and Micro Enterprises,” jointly issued recently by the Ministry of Finance and the Ministry of Industry and Information Technology, the central government allocated RMB 3 billion annually from 2018 to 2020, adopting a combined approach of awards and subsidies to incentivize localities that have taken strong policy‑driven measures to expand the scale of financing guarantee services for small and micro enterprises and reduce their guarantee fees. In 2018, award and subsidy funds were provided to all 37 regions nationwide, including provinces, autonomous regions, municipalities directly under the central government, cities separately listed in state planning, and the Xinjiang Production and Construction Corps. In 2019 and 2020, awards and subsidies were granted only to provinces meeting specified criteria.

The notice clarifies that the central government will provide awards and subsidies to local governments through a special fund for the development of small and medium-sized enterprises. These funds will be allocated in designated tranches to provincial-level fiscal departments, which, in coordination with their respective SME authorities, will prioritize support for guarantee institutions that demonstrate strong policy guidance and proven effectiveness—particularly those that directly serve micro and small enterprises and charge low fees—by increasing the level of awards and subsidies.

The notice requires that, through direct subsidies, performance-based incentives, and indemnity compensation, policy‑guided guarantee institutions be encouraged to expand their financing guarantee services for micro and small enterprises—particularly guarantees for individual loans of RMB 10 million or less, first‑time loan guarantees, and medium- and long‑term loan guarantees—and to reduce the guarantee fees charged to these enterprises.

The fiscal departments of each province, in coordination with their respective SME authorities, shall conduct annual performance evaluations of the use and implementation outcomes of central government grant‑in‑aid funds; meanwhile, the Ministry of Industry and Information Technology will carry out ongoing monitoring and provide operational guidance, and, depending on progress, organize follow-up performance assessments.

Small and micro enterprises refer to small and micro enterprises that meet the criteria set forth in the “Standards for Classifying Small and Medium-sized Enterprises,” jointly issued by the Ministry of Industry and Information Technology, the National Bureau of Statistics, and other relevant authorities. Such enterprises do not include those operating in the real estate sector, the financial services sector, or entities engaged in investment (asset) management, local government investment and financing platforms, or capital operation platforms of local state-owned enterprises.

Taxation TAXATATION

The Customs Tariff Commission of the State Council has adjusted the tariff rates for import duties on imported goods.

Previously, with the approval of the State Council, the Customs Tariff Commission of the State Council adjusted the tariff rates for imported goods. Accordingly, the General Administration of Customs issued Announcement No. 140 of 2018, specifying that the new tax‑reduction measures would take effect on November 1.

This tax rate adjustment generally reduces the import duty rates on imported goods from three brackets—15%, 30%, and 60%—to 15%, 25%, and 50%. The tariff lines subject to this reduction account for 69.7% of the total number of tariff lines.

The reduction in postal tax benefits tobacco, alcohol, luggage, and cosmetics.

In this round of adjustments to the postal tax rates, 259 commonly consumed everyday goods—ranging from alcohol and tobacco to textiles, luggage, footwear, watches, cosmetics, home appliances, photographic equipment, and audiovisual devices—have all seen their tax rates reduced. The applicable rates for these items have been lowered from 30% and 60% to 25% and 50%, respectively. Notably, the tax reductions for tobacco, alcohol, jade, high-end watches, and cosmetics amount to 10 percentage points. In addition, previously, “shoulder bags, backpacks, and handbags” were taxed at a flat rate based on a unit price of RMB 200; under this adjustment, the taxation method has been revised to “to be determined separately.” Optical media such as CDs, VCDs, and DVDs have been consolidated under a newly added tariff line, “Optical Media,” with a tax rate set at 15%. Skincare products priced at RMB 10 per milliliter (or gram) or RMB 15 per tablet (or sheet) and above have been reclassified into the “High-End Skincare Products” category, with the tax rate raised to 50%; meanwhile, the tax rate for other non‑high‑end skincare products has been reduced to 25%.

Shoppers who buy overseas online say the tax rate cut has offset some of the losses from exchange-rate fluctuations. In response, a frequent buyer who sources goods abroad through purchasing agents noted that the tax reduction has indeed lowered the cost of cross-border shopping, though for most products the savings are relatively modest. He illustrated this with an example: under the new tax rates, if you purchase a high-end watch worth 20,000 yuan overseas, the previous 60% tax rate would have resulted in a duty of 12,000 yuan. After the adjustment, applying the 50% rate reduces the tax by 2,000 yuan, bringing the total to 10,000 yuan.

Tariff lines for items such as bird’s nest and cordyceps have been abolished.

It is also worth noting that, although aquatic products—previously popular among many consumers for overseas purchase—as well as premium food and nutritional items such as bird’s nest, cordyceps, deer antler velvet, and donkey‑hide gelatin had already been listed in the Ministry of Agriculture and the General Administration of Quality Supervision, Inspection and Quarantine’s catalog of animals, plants, their products, and other quarantine‑controlled items prohibited from being carried or mailed into the country, they nevertheless remained classified under certain import tariff lines, creating a contradiction. In response, this round of adjustments has removed the tariff codes previously assigned to these prohibited items—namely “aquatic products,” “bird’s nest,” “cordyceps,” “deer antler velvet,” and “donkey‑hide gelatin.” This means that these goods will continue to be subject to the existing restrictions on being carried or mailed into China—information that overseas shoppers should pay particular attention to.

When is the postal tax payable? According to available information, the postal tax differs from the customs duties applied to ordinary imported goods. It is an import tax levied on baggage and personal postal items carried by inbound travelers that exceed the quantities stipulated by customs but are still deemed for personal use. Under relevant regulations, the General Administration of Customs has specified that personal-use imported items below a certain threshold are exempt from import tax. For example, for personally mailed items, if the applicable import tax does not exceed RMB 50 (inclusive), the customs authorities will waive the tax. It is reported that customs applies two criteria: “reasonable for personal use” and “limited value.” For instance, for items mailed from Hong Kong, Macao, or Taiwan, the per‑shipment limit is RMB 800; for items sent from other countries and regions, the limit is RMB 1,000. If these limits are exceeded, the items must either be returned by the postal service or declared and subject to import tax according to their classification. However, if a parcel contains only a single item that cannot be divided, even if it exceeds the limit, it may be taxed as a personal item upon customs review and conofficeation of its intended personal use. With regard to items carried by travelers, resident travelers bringing personal-use imports acquired abroad—provided their total value does not exceed RMB 5,000 (inclusive)—and non-resident travelers carrying personal-use imports intended to remain in China—provided their total value does not exceed RMB 2,000 (inclusive)—are granted duty-free clearance, subject to the condition that each item is for personal use and in reasonable quantity. Exceptions apply to tobacco products, alcoholic beverages, and the 20 categories of goods designated by the state as taxable under relevant regulations. Furthermore, resident travelers carrying personal-use imports exceeding RMB 5,000, which are conofficeed by customs as being for personal use, and non-resident travelers carrying personal-use imports intended to remain in China that exceed RMB 2,000, will have only the portion above the respective thresholds taxed. As for indivisible single items, the full postal tax rate will apply.

This means that, whether carried by inbound resident travelers or sent by mail, any personal‑use imported items exceeding the aforementioned limits but still within a reasonable quantity are subject to the postal tax.

Public Consultation on the Stamp Duty Law: Four Key Issues Under Scrutiny; Stamp Duty to Be Waived for Home Purchases

The Provisional Regulations on Stamp Tax will be elevated to the status of law.

In August 1988, the State Council promulgated the Provisional Regulations of the People’s Republic of China on Stamp Tax, stipulating that, effective October 1, 1988, stamp tax would be levied on entities and individuals who execute or receive taxable instruments such as contracts and documents evidencing the transfer of property rights.

Data show that from 1988 to 2017, the nationwide cumulative collection of stamp tax totaled RMB 2.145 trillion, with an average annual growth rate of 19.1%; in 2017 alone, stamp tax revenue reached RMB 220.6 billion.

“From a practical standpoint, the key elements of the stamp tax system are broadly reasonable and have operated relatively smoothly. Therefore, it is feasible to maintain the existing tax framework and overall tax burden unchanged while elevating the Provisional Regulations to the status of law,” the Ministry of Finance and the State Taxation Administration stated in their accompanying explanation. They further noted that enacting a Stamp Tax Law would help refine the legal framework for the stamp tax, enhancing its scientific basis, stability, and authority.

The securities transaction stamp tax is proposed to remain at the current rate of 1‰.

With respect to taxpayers, the Draft for Public Comments is consistent with the Provisional Regulations and relevant provisions: any entity or individual that enters into or receives taxable instruments having legal effect within the territory of the People’s Republic of China, or engages in securities transactions within the territory of the People’s Republic of China, shall be deemed a taxpayer of the stamp tax.

With regard to tax rates, the Draft for Public Comment, except for minor adjustments to the rates of a small number of tax items, largely maintains the current rate structure. Depending on the nature of the taxable instrument, either proportional rates or specific‑amount rates are applied.

Specifically: For taxable contracts, the tax rates vary according to contract type, at 0.3%, 0.05%, and 0.1% of the contract‑specified price or remuneration, respectively; for taxable instruments evidencing transfer of property rights, the rate is 0.5% of the consideration paid; for taxable certificates of rights and licenses, the rate is RMB 5 per item; for taxable business account books, the rate is 0.25% of the combined total of paid‑in capital (share capital) and capital reserves; and for securities transactions, the rate is 0.1% of the transaction amount.

It is worth noting that, amid the current volatile stock market, some have proposed reducing or exempting the securities transaction stamp tax to bolster equity markets. However, according to the draft for public comment, the securities transaction stamp tax will remain unchanged at a rate of 1‰.

The authority to adjust the securities transaction stamp tax is proposed to be vested in the State Council.

The Draft for Soliciting Opinions stipulates that any adjustments to the taxpayers or tax rates of the securities transaction stamp tax shall be decided by the State Council and submitted to the Standing Committee of the National People’s Congress for record.

Zhao Xijun, Vice Dean of the School of Finance and Economics at Renmin University of China, believes that this amounts to an act of delegation, meaning that the National People’s Congress has authorized the State Council to decide on adjustments to the securities transaction stamp tax.

In their accompanying explanatory notes, the Ministry of Finance and the State Taxation Administration also stated that this measure is intended to better align with practical needs, facilitate flexible and timely policy adjustments, and uphold the principle of tax legality.

Six scenarios are proposed for tax exemption; home purchases may be exempt from taxation.

The Draft for Public Comment stipulates six categories of tax exemptions: First, to avoid double taxation, copies or transcripts of taxable instruments are exempted; second, to support agricultural development, contracts for the purchase of agricultural inputs or the sale of self‑produced agricultural products, as well as agricultural insurance contracts, entered into by farmers, specialized farmer cooperatives, rural collective economic organizations, and village committees, are exempted; third, to facilitate financing for specific entities, interest‑free or subsidized loan agreements, loan contracts concluded between international financial institutions and China for concessional loans, and loan agreements between financial institutions and small and micro enterprises are exempted; fourth, to promote public‑interest projects, deeds of transfer of property rights executed when property owners donate their assets to the government, schools, or social welfare institutions are exempted; fifth, to support national defense, taxable instruments executed by or received by the armed forces and the People’s Armed Police are exempted; and sixth, to alleviate the housing burden on individuals, taxable instruments relating to the transfer or lease of residential housing are exempt from the stamp duty that would otherwise be payable by individuals. In other words, the exemption of stamp duty on home purchases may soon be further enshrined in law.

Yan Yuejin, Research Director at the E-House Institute Think Tank, noted that, in practice, stamp duty is not a major tax in real estate transactions. Buyers typically focus more on taxes such as deed tax, value-added tax, and individual income tax. Nevertheless, reducing costs associated with stamp duty can also lower expenses in both buying/selling and leasing activities, making it a positive development.

Litigation & Arbitration

Four draft laws, including the Draft Amendment to the Drug Administration Law, are now open for public comment.

Recently, four draft laws—the revised Drug Administration Law, the second‑reading draft of the amendment to the Rural Land Contracting Law, the second‑reading draft of the Basic Medical and Health Care and Health Promotion Law, and the draft revision of the Civil Service Law—were published on the website of the National People’s Congress of China on the 1st, launching a public consultation open to all sectors of society. The deadline for submitting comments is December 1 this year.

The Sixth Session of the Standing Committee of the 13th National People’s Congress, which concluded recently, reviewed these four draft laws. The draft amendment to the Drug Administration Law introduces revisions centered on implementing the Marketing Authorization Holder system and advancing reforms to the approval process, upholding a stringent regulatory approach to address disorder, strengthening oversight across the entire lifecycle of drugs, and simultaneously reforming and improving the drug review and approval system to encourage pharmaceutical innovation.

The second draft of the amendment to the Rural Land Contracting Law implements the requirements of the “separation of three rights” reform and stipulates systems for the registration of land operation rights and for financing guarantees, among other provisions.

The second draft of the Basic Medical and Health Care and Health Promotion Law places particular emphasis on basic medical and health services, strengthens primary-level healthcare, and reinforces the grassroots healthcare network. It fully embodies the “three‑medicine coordination” mechanism, enriches provisions related to medical insurance and pharmaceuticals, and adds and refines regulations governing the management of vaccines and drugs.

The draft amendment to the Civil Service Law reflects new experiences and achievements in the reform of the cadre and personnel system, further clarifies the relationship between the Civil Service Law and other laws and Party regulations, and ensures the organic coordination among these systems.

It is understood that the public may submit their comments directly by logging onto the website of the National People’s Congress of China (www.npc.gov.cn), or by mailing their views to the Legislative Affairs Commission of the Standing Committee of the National People’s Congress.

Breaking news! The “Interpretation (II) of the Construction Project Contract” has been approved by the Supreme People’s Court.

On October 29, Chief Justice and President of the Supreme People’s Court Zhou Qiang presided over a plenary session of the Supreme People’s Court Adjudication Committee, at which the “Interpretation (II) of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Disputes over Construction Project Contracting” (hereinafter referred to as “Interpretation (II)”) was deliberated and approved in principle.

The construction industry is a pillar of the national economy, playing a vital role in absorbing rural migrant labor, stimulating related industries, promoting economic and social development, and advancing urban–rural development and improvements in people’s livelihoods. Safeguarding the sound development of the construction sector and enhancing the quality and safety of construction projects are key responsibilities of the people’s courts in supporting and ensuring socio‑economic progress. On January 1, 2005, the Supreme People’s Court’s Interpretation on Several Legal Issues Concerning the Adjudication of Disputes over Construction Contract Cases officially came into effect, playing an important role in standardizing the application of law, ensuring engineering quality, regulating the construction market, and protecting the legitimate rights and interests of various stakeholders, particularly vulnerable groups such as rural migrant workers. At present, China’s construction industry is undergoing changes in investment and operational models as well as regulatory policies. In judicial practice, both the number of disputes arising from construction contracts and the value of the subject matter involved have risen sharply, while new types of cases and emerging issues continue to surface. There is an urgent need to further formulate and refine judicial interpretations in the field of construction contract disputes to guide the adjudicatory work of courts nationwide. To this end, in 2012, the Supreme People’s Court initiated the drafting of the Second Interpretation on Several Legal Issues Concerning the Adjudication of Disputes over Construction Contract Cases. Following thorough research and deliberation, extensive consultations with relevant parties and experts, and multiple rounds of revision, the draft of the Second Interpretation was prepared and submitted for consideration at this session.

The second draft of the Interpretation primarily sets forth provisions on issues such as the validity of construction project contracts, the settlement of construction project payments, expert appraisal in construction projects, the exercise of the priority right to payment for construction project costs, and the protection of the rights of actual constructors.

Following deliberation, the meeting approved in principle the said Interpretation. It was decided that, based on the comments raised during the discussion, the document would be revised, submitted for approval in accordance with established procedures, and promulgated at an appropriate time.

Beijing: The first civil public-interest lawsuit on food safety has been pronounced.

On the morning of November 2, the Beijing Municipal People’s Procuratorate’s Fourth Branch delivered its first-ever citywide civil public-interest lawsuit concerning food safety. The case was heard in open court at the Beijing No. 4 Intermediate People’s Court, which ruled in favor of all the claims brought by the Fourth Branch.

According to reports, the case was uncovered by the People’s Procuratorate of Fengtai District, Beijing, in the course of its official duties. Luo Jianping and Lu Chengying were found, at their temporary residence in Fengtai District, Beijing, selling weight-loss health products—including the Bitter Melon Fat-Reducing Series, the Classic Body-Slimming Series, and the Shennong Fenggu Cao product—through four online stores. Testing revealed that certain products contained phenolphthalein or sodium diclofenac, substances whose long-term or excessive use can harm human health.

Following a case filing and review, the Fourth Branch of the Beijing Municipal People’s Procuratorate determined that Luo Jianping and Lu Chengying had committed unlawful acts endangering food and drug safety, thereby infringing upon the personal health and safety of an indefinite number of consumers and harming the public interest. With clear facts and sufficient, conclusive evidence, the procuratorate instituted a civil public-interest lawsuit before the Beijing No. 4 Intermediate People’s Court, seeking to hold Luo Jianping and Lu Chengying liable for ceasing the infringement, eliminating the danger, and issuing a public apology.

The Fourth Intermediate People’s Court of Beijing held that product liability is based on strict liability, meaning that producers and sellers must bear tort liability for product defects regardless of whether they were subjectively at fault. The conduct of Luo Jianping and Lu Chengying was unlawful, and a causal link exists between their wrongful acts and the resulting harm; thus, the elements of product liability are satisfied, and they should be held liable for tort. By selling products containing toxic and harmful substances that may endanger human health throughout the country, Luo Jianping and Lu Chengying have jeopardized public health and infringed upon the public interest. In view of their conduct— which not only violates consumers’ rights but also poses a significant risk to the public interest—prompt measures to cease the infringement and eliminate the danger must be taken, and preventive steps should be implemented to avert future tortious acts, thereby ensuring the fullest possible protection of the public interest. Moreover, while their unlawful acts have caused harm to an indefinite number of consumers, they have inevitably also impaired the public’s intangible interests in enjoying a normal, orderly, and safe consumer environment; accordingly, they should assume civil liability by publicly expressing remorse and offering apologies.

The court ultimately ordered the defendants, Luo Jianping and Lu Chengying, to cease selling toxic and harmful food products, including the Bitter Melon Fat-Reducing Series, the Classic Body-Slimming Series, and the Shennong Fenggu Cao health supplements. They are also required to issue a public apology in a nationally circulated media outlet, with the content specifying the names of the health supplements sold by Luo Jianping and Lu Chengying, the periods during which they were marketed, the names of their online stores, and the toxic or harmful ingredients contained in the products along with their associated risks. The text of the apology, as well as the chosen media outlet, page layout, and font size, must be approved by the court and submitted within thirty days from the date the judgment becomes effective; publication must occur within sixty days of such approval.

Following the pronouncement of the verdict, the defendant stated in court that he accepted the judgment and would not file an appeal.

Other

Tianjin Group announced its leadership in entering the global new retail sector of the greater health industry.

Having cultivated the global health‑and‑wellness sector for 23 years and officely established itself as an industry leader, Tian Shi Group held the opening ceremony and a global media press conference on the morning of October 29 at its newly completed “Tian Shi Product Experience Center” within the Tian Shi International Health Industry Park. Chairman Li Jinyuan formally announced that Tian Shi is integrating its entire health‑and‑wellness value chain under an “One Core, Multiple Wings” strategy and is pioneering a global new‑retail business model. This initiative will accelerate the in-depth development of local market resources by Tian Shi’s subsidiaries—built on 20 years of global presence—while leveraging cutting‑edge blockchain technology and a proprietary digital currency to meet surging demand, fostering mutually beneficial, win‑win partnerships with host countries.

Following the announcement of its “One Core, Multiple Wings” strategy to the global market in January 2018, Tian Shi Group has invested heavily in integrating resources to build a comprehensive ecosystem encompassing health supplements and brick‑and‑mortar retail, healthcare and wellness, education, e‑commerce, tourism, hospitality, and other sectors. On the 29th, the company unveiled, for the first time under the banner of the “Tian Shi Product Experience Center,” concrete results of the strategy’s implementation, and announced the completion of an OMO (online‑plus‑offline) ecosystem that leverages an electronic wallet and loyalty points to drive consumption across all business lines. Tian Shi will now roll out a fully integrated business model—“buying globally, selling globally, interconnected and mutually exchangeable”—on a worldwide scale. This launch marks a new milestone in the global development of the greater health industry, ushering in a new era by transforming the sector into a cutting‑edge, integrated marketing paradigm.

“Our development has always been guided by a global perspective,” said Chairman Li Jinyuan. Tiens has established 110 subsidiaries worldwide, directly serving local markets. Li Jinyuan noted that, in recent years, the Tiens Group has shifted its focus to the greater health sector while expanding into diversified business lines. It has also successfully launched its proprietary digital wallet, the “Yingfen PointsWin” app, which integrates all business operations and builds a global consumer network, enabling the company to respond swiftly to market demands across every corner of the world.

Consumers can make purchases across any of Tian Shi’s business units, enjoying 100% peace of mind with the Yingfen App—while also earning consumption points—and gaining an excellent opportunity to “build wealth through household spending and further grow wealth by managing it.”

After its launch in 2017, the “Tianyan Marine Yeast Hydrating Series,” developed by Li Yueqi’s product center, promptly earned the honor of “2017 Sina Fashion Award—Annual High‑Impact Skincare Product” in November of that year. “Experiential marketing represents the cutting edge of business development; take skincare as an example—this approach is not only essential but also delivers consumers the most immediate, nuanced, and delightful experiences,” Li Yueqi noted. She added that today’s trendiest shared‑space designs integrate multiple business formats, sparking engaging social conversations. The Tianli Product Experience Center, built by the Tianli Group, seamlessly brings together the company’s diverse business lines and core operations, creating a unique operating model of “stores within the network, networks within the stores.” By crossing industry boundaries and interconnecting disparate resources, it fuels innovation and fosters dynamic, mutually reinforcing exchanges.

The Tian Shi Product Experience Center leverages cutting-edge technologies to deliver a seamless customer experience, seamlessly integrating “smart living” into everyday life. Within the facility, online–offline interactions are combined to enable customers to effortlessly browse official‑website information and access virtual exhibit spaces. Visitors can also scan QR codes to shop, learn about products, and engage in self‑directed learning through Bluetooth‑based location services. All user interactions across these platforms are captured in a comprehensive database, providing robust data‑driven insights. Supported by digital terminal systems, consumers can access a wealth of relevant data and workflows, showcasing Tian Shi’s innovative, deeply integrated “Internet Plus” approach. This allows every in‑store visitor to immerse themselves in high‑tech, intelligent scenarios, experiencing the new health‑and‑fashion lifestyle that Tian Shi Group brings to humanity.

The Tian Shi Product Experience Center boasts a unique location and strategic significance. Its diverse layout vividly embodies the company’s “One Core, Multiple Wings” global strategy, enabling visitors to transform their brand‑consumption mindset through immersive, in‑depth experiences. Moreover, the center will serve as a hub for managing and operating global experience centers and for training staff, marking a pivotal step in Tian Shi’s worldwide expansion. Committed to fostering an inclusive social platform and an innovative business‑development space for every consumer segment, the center aims to enhance customers’ quality of life and deliver enriching, enjoyable experiences.

The first-ever re‑listing has been conofficeed: Changhang Oil Transport will return to the A‑share market.

After nearly six months of submitting its application for relisting, on November 2, 2018, the Shanghai Stock Exchange, in accordance with the deliberations of the Listing Committee, decided to approve Changhang Oil Transport’s application to resume trading.

On June 4, 2018, Changhang Oil Transport submitted a re‑listing application to the Shanghai Stock Exchange. According to a reporter from the Securities Daily, this marks the first-ever case of a Shanghai‑listed company seeking to relist after delisting.

According to the heads of the relevant departments at the SSE, the review process for Changhang Oil Transport’s relisting proceeded in three stages: a preliminary review by the business units, a review by the Listing Committee, and a deliberation and decision by the SSE. During the preliminary review, the SSE’s specialized departments assigned legal, accounting, and industry experts to conduct a comprehensive examination of the company’s relisting application documents, issuing four rounds of feedback requiring the company to provide supplementary disclosures and take concrete follow-up actions. In the Listing Committee review stage, a panel of seven external experts—primarily lawyers, accountants, and financial specialists—was convened to engage in an in-depth discussion on whether the company met the relisting criteria, as well as on its going‑concern capability, business prospects, and management team, and to hold a necessary hearing with the company. Following careful deliberation, the Listing Committee unanimously approved the company’s relisting while also identifying several matters that required further implementation by the company. The company has since addressed all such outstanding issues.

Changhang Oil Transport was established in 1993, primarily engaged in petroleum transportation on coastal and international routes, and was listed on the Shanghai Stock Exchange in June 1997. On June 5, 2014, due to four consecutive years of losses, the company’s shares were delisted from the Shanghai Stock Exchange; subsequently, on August 6, 2014, it was transferred to the National Equities Exchange and Quotations system under the stock abbreviation “Changyou 5.”

Following its delisting, the company underwent bankruptcy reorganization that same year, divesting its largest loss‑making asset—the VLCCs (very large crude carriers)—and thereby reducing its substantial debt burden. Thereafter, without altering its core business or its ultimate controlling shareholder, the company, through its own efforts, gradually enhanced and restored its ability to generate sustained profits and maintain ongoing operations.

The aforementioned official stated that the Shanghai Stock Exchange’s “Stock Listing Rules” and “Measures for the Re‑listing of Delisted Companies” set forth clear requirements regarding the conditions for Changhang Oil Transport’s re‑listing. Based on these criteria, the company has already met the requisite conditions for re‑listing.

The official also noted that this relisting of Changhang Oil Transport represents the first case under the newly implemented relisting regime, carrying significant positive implications for the market. It has established a clear pathway for companies to go public, delist, and then relist, helping to foster more predictable regulatory expectations. From the company’s perspective, its core business is robust, and it holds a leading position in the oil transportation sector. Following its delisting, it did not resort to backdoor listing, instead relying on its own efforts to strengthen its ability to sustain operations—conditions that provide a valuable benchmark for other delisted companies seeking to relist. At the same time, constrained by historical burdens and the current downturn in the shipping industry, the company still faces certain issues requiring attention, such as negative retained earnings and a decline in profitability. In response, the company has put in place necessary measures, including share buybacks and revised earnings forecasts.

“We have also requested the company to provide a full public explanation on this matter, urging the market and investors to pay close attention,” said the official.

He also emphasized that the primary purpose of the relisting regime is to enable delisted companies, once they have restored their ability to sustain operations, improved their corporate governance, and fully met the regulatory requirements for listed‑company compliance, to return to the main board market. Accordingly, such companies must focus on their core businesses, strive to enhance operational performance, and genuinely rebuild their capacity to generate cash flow in order to satisfy the prescribed relisting criteria. If a company merely manipulates its controlling shareholder or core business to superficially meet certain relisting requirements—while its core operations remain weak, its ability to sustain ongoing operations remains lacking, and it has yet to establish effective corporate governance—it will still fail to meet the substantive conditions for relisting. The SSE will resolutely prevent regulatory arbitrage; for companies that have become shell corporations or zombies with no clear core business, it will, in accordance with laws and regulations, either refuse to accept their relisting applications or deny approval.

In addition, while diligently carrying out the necessary preparations for relisting, the SSE will continue to rigorously enforce the delisting regime. For companies that meet the delisting criteria, it will ensure that “one company is delisted for every one that qualifies,” striving to foster a market‑driven mechanism of survival of the fittest and to purify the market’s overall ecosystem.

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