JC Master Legal News Issue 844

Key Takeaways for This Issue

The China Securities Regulatory Commission, the Ministry of Finance, and the State-owned Assets Supervision and Administration Commission have jointly issued the “Opinions on Supporting Listed Companies in Repurchasing Shares.”

To further enhance the quality of listed companies, strengthen the capital market’s endogenous stability mechanisms, and promote its long-term healthy development, in accordance with the Decision of the Standing Committee of the National People’s Congress on Amending the Company Law of the People’s Republic of China, the China Securities Regulatory Commission, the Ministry of Finance, and the State-owned Assets Supervision and Administration Commission of the State Council have jointly issued the “Opinions on Supporting Listed Companies in Repurchasing Shares” (hereinafter referred to as the “Opinions”), which shall take effect from the date of their promulgation.

Premier Li Keqiang presided over an executive meeting of the State Council, calling for stronger financial support to alleviate the difficulties and high costs of financing faced by private enterprises, particularly small and micro businesses.

On November 9, Premier Li Keqiang presided over an executive meeting of the State Council, calling for stronger financial support to alleviate the difficulties and high costs of financing faced by private enterprises, particularly small and micro businesses. The meeting also decided to launch a special campaign to address the issue of overdue payments owed to private enterprises and to deploy measures to effectively leverage government-backed financing guarantees in support of small and micro businesses and the development of agriculture, rural areas, and farmers.

State Taxation Administration: Enterprises that participate in liability insurance are permitted to deduct the premiums from their taxable income.

The State Taxation Administration recently issued an announcement clarifying that insurance premiums paid by enterprises for liability insurance, such as employer’s liability insurance and public liability insurance, in accordance with relevant regulations, are deductible before corporate income tax.

Jiangsu has issued the Measures for the Administration of Labor Dispute Mediators.

Recently, the Jiangsu Provincial Department of Human Resources and Social Security issued the Measures for the Administration of Mediators in Labor and Personnel Disputes of Jiangsu Province (hereinafter referred to as the “Measures”). The Measures set forth specific provisions regarding the appointment and training of mediators, the management of mediator certificates, professional requirements, and performance evaluation, rewards, and disciplinary measures, thereby providing a solid foundation for further strengthening the professionalization and standardization of the mediator workforce.

CNIPA: Promote the abolition, at the legal and institutional level, of the concepts of “well-known” and “famous” trademarks across all regions.

On November 9, the China National Intellectual Property Administration released the “2018 Plan for Deepening the Implementation of the National Intellectual Property Strategy and Accelerating the Building of a Strong IP Nation” (hereinafter referred to as the “Plan”), which calls for further advancing the reform of the intellectual property system in the areas of deregulation, regulation, and service.

Table of Contents

Table of Contents

Finance & Capital Markets

The China Securities Regulatory Commission, the Ministry of Finance, and the State-owned Assets Supervision and Administration Commission have jointly issued the “Opinions on Supporting Listed Companies in Repurchasing Shares.”

The China Securities Regulatory Commission has issued the “Guiding Opinions on Improving the System for the Suspension and Resumption of Trading of Listed Company Shares.”

The China Securities Regulatory Commission has revised and issued the “Issuance Supervision Q&A—Regulatory Requirements for Guiding and Standardizing Financing Activities of Listed Companies.”

CSRC: Actively and swiftly implementing the requirements for establishing the STAR Market and piloting the registration-based IPO system.

The Shanghai Stock Exchange successfully hosted the 8th International Investors Visit to the SSE event.

A spokesperson for the China Securities Regulatory Commission answered questions from reporters regarding the establishment of the STAR Market at the Shanghai Stock Exchange and the pilot registration-based system.

Corporate & Commercial

Premier Li Keqiang presided over an executive meeting of the State Council, calling for stronger financial support to alleviate the difficulties and high costs of financing faced by private enterprises, particularly small and micro businesses.

ICBC has launched the first batch of bond financing support tools for private enterprises.

The General Office of the State Council has issued the “Notice on Focusing on Enterprises’ Concerns and Further Promoting the Implementation of Policies to Optimize the Business Environment.”

Central Bank: A Clear Bubble in the Blockchain Investment and Financing Sector

Taxation

State Taxation Administration: Enterprises that participate in liability insurance are permitted to deduct the premiums from their taxable income.

State Taxation Administration: Refine and implement transitional policies to ensure that the benefits of the individual income tax reform are fully and promptly realized.

Jiangsu Tax Authorities: Efficiently Implementing Tax Reduction Policies

Litigation & Arbitration

Jiangsu has issued the Measures for the Administration of Labor Dispute Mediators.

The Supreme People’s Court has issued guidelines to provide judicial services and safeguards for rural revitalization.

Jinhua “Police Dog Theft” Case: Police Drop the Case After Obtaining the Victim’s Forgiveness

Other

CNIPA: Promote the abolition, at the legal and institutional level, of the concepts of “well-known” and “famous” trademarks across all regions.

Ministry of Finance: Public consultation on individual income tax special deductions has concluded; dynamic adjustments will continue.

Finance & Capital Markets

The China Securities Regulatory Commission, the Ministry of Finance, and the State-owned Assets Supervision and Administration Commission have jointly issued the “Opinions on Supporting Listed Companies in Repurchasing Shares.”

To further enhance the quality of listed companies, strengthen the capital market’s endogenous stability mechanisms, and promote its long-term healthy development, in accordance with the Decision of the Standing Committee of the National People’s Congress on Amending the Company Law of the People’s Republic of China, the China Securities Regulatory Commission, the Ministry of Finance, and the State-owned Assets Supervision and Administration Commission of the State Council have jointly issued the “Opinions on Supporting Listed Companies in Repurchasing Shares” (hereinafter referred to as the “Opinions”), which shall take effect from the date of their promulgation. The Opinions broaden the sources of funds for share repurchases, appropriately streamline implementation procedures, and guide the improvement of corporate governance arrangements; they also encourage all types of listed companies to implement equity incentive plans or employee stock ownership schemes, thereby strengthening incentive‑based constraints, helping companies solidify their valuation foundations, enhancing their risk‑management capabilities, and elevating the overall quality of listed companies.

The main contents of the “Opinions” include: First, in accordance with the law, support all types of listed companies in repurchasing shares for the purpose of implementing equity incentive plans and employee stock ownership schemes. Listed financial institutions may, on the basis of reasonably determining the repurchase price and effectively preventing the transfer of benefits, legally repurchase shares to implement equity incentive or employee stock ownership plans, and manage such repurchases in compliance with relevant regulations. In particular, listed securities offices may carry out employee stock ownership plans through asset management schemes, trust schemes, and other forms. Second, encourage the use of other market instruments to provide financing and other forms of support for share repurchases. Continue to support listed companies in raising funds for repurchasing their own shares through various means, such as issuing preferred shares and convertible bonds. Support listed companies undertaking share repurchases to conduct refinancing in a simple and efficient manner in accordance with the law. For listed companies applying for refinancing after completing a share repurchase, within a certain scale, the interval requirement for refinancing shall be waived, and priority shall be given during the review process. When a listed company uses cash as consideration and repurchases shares via tender offers or centralized bidding, such repurchases shall be treated as cash dividends and included in the calculation of the relevant cash dividend ratio. Third, streamline the procedures for implementing share repurchases. If a listed company’s stock price falls below its net asset value per share, or if the cumulative decline in stock price reaches 30% over 20 trading days, the company may undertake share repurchases to safeguard corporate value and shareholder rights. Where a listed company carries out a share repurchase under these circumstances and reduces its registered capital, the one-year holding period requirement for listed shares and the current repurchase window restrictions (i.e., the 10-day period prior to the announcement of periodic reports or preliminary earnings releases, and the period during which major matters are being deliberated) shall not apply. Where the shareholders’ meeting authorizes the board of directors to implement share repurchases, it may concurrently authorize the board to undertake refinancing. Fourth, guide the improvement of corporate governance arrangements. Encourage listed companies to refine their share repurchase mechanisms in their articles of association, and urge boards of directors to proactively engage in communication and dialogue with shareholders, thereby fully leveraging the positive role of corporate governance.

When a listed company undertakes share repurchases, it shall, in accordance with the relevant requirements of the Company Law and the Opinions, promptly study and refine the corporate governance mechanisms governing share repurchases, timely amend its articles of association, strengthen internal governance arrangements, and faithfully fulfill its obligations to disclose information and adhere to the requisite decision-making procedures. No person may exploit a listed company’s share‑repurchase activities to engage in insider trading, market manipulation, or securities fraud, or other unlawful or non‑compliant conduct.

Going forward, the China Securities Regulatory Commission will, in coordination with relevant departments, continue to implement the decisions and arrangements of the CPC Central Committee and the State Council, further refine the supporting regulatory framework for share repurchases, and advance related work in a prudent and steady manner. At the same time, it will strengthen regulatory oversight and enforcement, rigorously investigate and prosecute violations of laws and regulations in accordance with the law, and foster the long-term, sound development of the capital market.

The China Securities Regulatory Commission has issued the “Guiding Opinions on Improving the System for the Suspension and Resumption of Trading of Listed Company Shares.”

Recently, the China Securities Regulatory Commission issued the “Guiding Opinions on Improving the System for the Suspension and Resumption of Trading of Listed Company Shares” (hereinafter referred to as the “Guiding Opinions”).

The suspension and resumption regime for listed company shares is a foundational system of the capital market, whose primary functions are to ensure the timeliness and fairness of information disclosure, alert investors to material risks, and uphold an equitable trading order. In recent years, the China Securities Regulatory Commission (CSRC) has continuously refined trading supervision, worked with stock exchanges to improve relevant rules, and standardized the practices of listed companies regarding share suspensions and resumptions. As a result, issues such as arbitrary suspensions, prolonged停牌 periods, and inadequate information disclosure have been effectively mitigated. Nevertheless, compared with mature international markets, practical challenges remain, including an excessive number of grounds for suspension and relatively long suspension periods—particularly in cases involving major asset restructurings. To implement the spirit of General Secretary Xi Jinping’s important remarks at the symposium on private enterprises, further leverage the role of market mechanisms, enhance the quality of the capital market, improve its fundamental institutional framework, optimize trading supervision, reduce transactional frictions, boost market liquidity, stabilize market expectations, and stimulate market vitality—thereby promoting the long-term, healthy development of the capital market—the CSRC, after conducting in-depth research and extensively soliciting opinions and suggestions from relevant stakeholders, has formulated the “Guiding Opinions.” The main contents include:

First, establish the fundamental principles governing the suspension and resumption of trading in listed company shares, with the aim of maximizing trading opportunities. Specifically, suspend trading only as an exception to the principle of continuous trading; impose short-term suspensions as the norm and long-term suspensions as the exception; and adopt intermittent suspensions as the standard while reserving continuous suspensions for exceptional circumstances. When a listed company encounters a material event, it shall, in accordance with the principle of timely disclosure, disclose the specific details of the matter in stages. It may not arbitrarily request a suspension of trading on the grounds that the relevant matters remain uncertain, nor may it use such requests as a substitute for the confidentiality obligations of the parties concerned.

Second, the duration of stock trading suspensions will be shortened to enhance market liquidity. Specifically, the maximum suspension period for major asset restructurings will be further reduced; it is clarified that, during a listed company’s bankruptcy reorganization, its shares shall, in principle, not be suspended; and during the review by the M&A and Restructuring Committee, the company’s shares must be suspended on the day the Committee convenes. If a listed company fails to resume trading after the prescribed suspension period has expired, the stock exchange shall mandate the resumption of trading.

Third, we will strengthen the information disclosure requirements for stock trading suspensions and resumptions to clarify market expectations. We will raise the standards for information disclosure at the time of an initial suspension, set forth clear obligations for disclosing material information during key phases of the suspension, and rigorously enforce the information disclosure duties of listed companies in cases of mandatory suspension or resumption.

Fourth, strengthen institutional development and clarify the corresponding supporting arrangements. Specifically, stock exchanges are required to revise and refine their detailed rules on the suspension and resumption of trading in accordance with the Guiding Opinions, and to ensure effective self-regulatory oversight and related services in this area. At the same time, stock exchanges shall establish a mechanism linking the duration of stock suspensions to the exclusion of constituent stocks from relevant indices, as well as a system for publicly disclosing suspension information. They are also to regularly publish to the market rankings of listed companies by frequency and duration of suspensions, thereby urging these companies to adopt measures to reduce the occurrence of such suspensions.

The China Securities Regulatory Commission has revised and issued the “Issuance Supervision Q&A—Regulatory Requirements for Guiding and Standardizing Financing Activities of Listed Companies.”

To further support the development of the real economy, enhance the capital market’s role in allocating resources, encourage technological innovation, and guide listed companies to engage in sound financing practices, the China Securities Regulatory Commission has revised and issued the “Issuance Supervision Q&A—Regulatory Requirements for Guiding and Standardizing the Financing Activities of Listed Companies.”

The revised “Regulatory Q&A” clarifies, first, the regulatory requirements for using raised funds to replenish working capital and repay debt. For issuances of shares through a rights issue, the issuance of preferred shares, or a non‑public offering with a designated investor base as determined by the board of directors, all proceeds may be allocated to replenishing working capital and repaying debt. For other fundraising methods, the portion used to replenish working capital and repay debt shall not exceed 30% of the total funds raised; for companies characterized by light assets and high R&D investment, any amount exceeding this threshold must be duly justified on the basis of sound rationale. Second, adjustments have been made to the restrictions on the time interval between refinancing transactions. Listed companies that have substantially utilized their previous fundraising proceeds, or whose prior‑raised funds remain committed to the originally intended purposes and are being deployed as planned, may apply for additional share offerings, rights issues, or non‑public stock offerings without being subject to the 18‑month financing interval requirement; however, such intervals shall, in principle, be no shorter than six months.

The China Securities Regulatory Commission will, in accordance with the law, comprehensively and rigorously strengthen oversight of listed companies’ financing activities, uphold sound market order, earnestly support supply-side structural reform, effectively safeguard the legitimate rights and interests of small and medium-sized investors, and better underpin the development of the real economy.

CSRC: Actively and swiftly implementing the requirements for establishing the STAR Market and piloting the registration-based IPO system.

On the 8th, Fang Xinghai, Vice Chairman of the China Securities Regulatory Commission, stated at the “Financial Capital and Internet Technology Innovation” forum of the Fifth World Internet Conference that the CSRC is swiftly implementing the requirements to establish the STAR Market on the Shanghai Stock Exchange and pilot a registration-based IPO system, thereby fostering a favorable capital market environment for the growth of innovative enterprises and increasing the number of high‑growth, investment‑attractive listed companies in the market.
Fang Xinghai stated that the longstanding “dammed‑lake” phenomenon in IPOs, which had plagued the market for years, has been resolved. The review cycle for eligible IPO applicants has been significantly shortened from more than three years to under nine months, markedly enhancing the predictability of corporate listings. From 2017 through October 2018, a total of 528 companies raised approximately RMB 355.4 billion through IPOs, while 409 offices completed secondary financings, raising a combined total of about RMB 1.124 trillion.
Fang Xinghai stated that the China Securities Regulatory Commission will continue to maintain a normalized issuance of new shares, reform and improve the stock‑issuance system centered on information disclosure, and further enhance the predictability of corporate IPOs. It will deepen market‑oriented reforms of mergers and acquisitions and restructuring, encouraging and supporting listed companies to leverage such transactions to strengthen and upgrade their operations. Building on the “small‑amount, fast‑track” review mechanism, it will implement a “tiered review” approach by industry, giving priority to the high‑tech sector. Following the successful completion of pilot programs, it will promptly roll out full circulation of H‑shares nationwide; H‑share issuers that meet the requisite conditions may apply to achieve full circulation, thereby facilitating overseas listings for domestic innovative enterprises.

He stated that the China Securities Regulatory Commission will continue to uphold its fundamental mission of serving the real economy, deepen reform, expand opening-up, and improve institutional frameworks, thereby continuously enhancing the capital market’s ability to support innovative enterprises and fostering the sound and sustainable development of the capital market as it contributes to the country’s innovation-driven economic growth.

The Shanghai Stock Exchange successfully hosted the 8th International Investors Visit to the SSE event.

On November 8, 2018, the Shanghai Stock Exchange successfully hosted the eighth edition of its “International Investors Visit the SSE” event. As China’s capital markets continue to open up in a steady and orderly manner, international investors—particularly long-term institutional investors—have shown growing interest in the A-share market and increasing demand for allocation. To better showcase the latest achievements in the internationalization of China’s capital markets, deepen international investors’ understanding of these markets, and further enhance cross-border investment communication channels, the SSE has been organizing the “International Investors Visit the SSE” event on an irregular basis since 2014, drawing active participation from a large number of international institutional investors. To date, this initiative has been held eight times, establishing itself as a flagship program for the SSE’s international outreach and serving as a successful example of the Exchange’s efforts to advance its global development.

Jiang Feng, General Manager of the Shanghai Stock Exchange, attended the event and delivered a speech. Shen Bing, Director of the International Department of the China Securities Regulatory Commission, and Wu Jianli, Director of the Pension Management Department of the National Council for Social Security Fund, gave keynote addresses. Sha Yan, Director of the Institutional Department of the CSRC, also attended. Nearly 200 heads of investment and trading operations from close to 70 major domestic and international institutions—including BlackRock, Vanguard, Fidelity International, the Central Bank of Norway, AllianceBernstein, Schroders, Morgan Stanley, UBS, HSBC (China), CICC, CITIC Securities, Haitong Securities, and BOC International—participated in the event.

In his address, Jiang Feng stated that the entry of international investors into A‑shares is of paramount importance for the maturation of China’s capital market and for the Shanghai Stock Exchange’s journey toward becoming a world‑class exchange. The SSE has consistently prioritized serving international investors, and in recent years has employed a variety of formats and channels to help an increasing number of global investors deepen their understanding of the SSE and of China’s capital market as a whole. Amid China’s new landscape of comprehensive opening-up, the SSE will continue to follow the unified deployment of the China Securities Regulatory Commission, adhering to the principle of “acting sooner rather than later, and faster rather than slower,” to comprehensively accelerate its opening‑up, steadily advance the internationalization of the exchange, continuously broaden and deepen its external engagement, and further promote mechanisms for cross‑border capital market connectivity. The SSE will also engage in pragmatic cooperation with capital markets along the Belt and Road, and persistently explore ways to deepen exchanges and collaboration with overseas stock exchanges.

This conference featured three keynote speeches. Through a live video link, Shen Bing delivered a speech titled “Expanding Two-Way Opening of the Capital Market to Support High-Quality Economic Development.” He stated that the two-way opening of the capital market can be reflected in four key areas: first, in the refinement of the capital market’s foundational institutional framework and the expansion and optimization of cross-border investment channels; second, in the continuous enrichment of internationally traded futures contracts; third, in the ongoing relaxation of market access and the orderly advancement of two-way financial sector opening; and fourth, in enhanced cooperation between domestic and overseas exchanges. Moving forward, the China Securities Regulatory Commission will safeguard the healthy and sustainable development of the capital market by focusing on three pillars: policy implementation, institutional improvement, and regulatory cooperation.

Wu Jianli delivered a keynote address titled “Practices in Pension Investment and Management,” providing international investors in attendance with a detailed overview of the fundamentals of China’s pension investment and management framework, while outlining the investment strategies employed in practice and their broader strategic significance. He emphasized that the principles of long-term investing, collaborative two-tiered professional division of labor, and diversified investment are pivotal to effective pension fund management.

In addition, Zhu Haiyang, Assistant General Manager of Tianhong Fund, delivered a keynote address in which he outlined the conceptual underpinnings and market practices of pension investment safety in China, thereby enriching international investors’ understanding of the country’s pension system from an alternative perspective.

This roundtable discussion centered on three key themes: first, the future evolution of the QFII/RQFII regime and the implementation of look-through supervision under the Shanghai–Shenzhen–Hong Kong Stock Connect; second, the opportunities and challenges facing WFOEs and QDLPs; and third, the inclusion of Chinese securities in international indices and the ongoing development of market interconnectivity. Representatives from the Shanghai and Shenzhen stock exchanges, the Lujiazui Financial City Development Bureau, domestic and overseas brokerage offices, foreign fund management companies, globally renowned index providers, global custodians, and leading law offices drew on their respective experiences and corporate‑level business practices to provide attendees with an overview of the latest policies and developments shaping China’s capital markets.

This year’s International Investors Visit to the Shanghai Stock Exchange received unanimous praise from participants both within and outside China. Craig Verdon, Head of Equities, Asia at Morgan Stanley, stated: “This event was a great success, helping international investors uncover investment opportunities in China’s capital markets. The high‑level presentations enabled investors to gain a deeper understanding of the ongoing opening-up of China’s capital markets and to develop a more nuanced appreciation of the current state and progress of China’s pension system.” James Chatfield, Head of Asia‑Pacific Equity Trading and Senior Fund Manager at Vanguard, remarked: “The SSE’s flagship initiative provides global asset managers—including Vanguard—with an opportunity to leverage their accumulated international expertise to invest in the A‑share market. Vanguard anticipates that, as market liberalization continues to advance, the weighting of Chinese A‑shares in global indices will rise. We are grateful for the SSE’s efforts to broaden channels for investing in A‑shares and to refine market infrastructure, enabling market participants to execute trades more effectively on behalf of investors.” Li Shaojie, Managing Director of Fidelity International for China, added: “Fidelity International has been deeply rooted in China for 14 years, witnessing the gradual opening and maturation of the Chinese financial market. The SSE stands at the forefront of implementing a series of reform measures, and we remain highly confident in the prospects of the Chinese market.” Brian Schweiger, Global Head of Equities, Funds, and Fixed Income at London Stock Exchange Group, said: “It is a great honor to take part in this event and to discuss the Shanghai–London Stock Connect with all of you. The Shanghai–London Stock Connect represents another significant step forward, guided by China’s long‑term vision of further opening its capital markets and integrating them into the global economy.”

A spokesperson for the China Securities Regulatory Commission answered questions from reporters regarding the establishment of the STAR Market at the Shanghai Stock Exchange and the pilot registration-based system.

Q: At the opening ceremony of the first China International Import Expo, General Secretary Xi Jinping announced the establishment of the STAR Market on the Shanghai Stock Exchange and the launch of a pilot registration-based system. What are the specific considerations of the China Securities Regulatory Commission?

Answer: Since the 18th National Congress of the Communist Party of China, General Secretary Xi Jinping has issued a series of important instructions and directives on the reform, opening-up, development, and stability of China’s capital market, providing a clear and scientifically grounded roadmap for its future direction. At the Central Politburo meeting on economic conditions held on October 31 and at the symposium on private enterprises on November 1, General Secretary Xi emphasized the need to focus on capital market reform, strengthen institutional frameworks, invigorate market vitality, and promote the long-term, sound development of the capital market. In his keynote address this morning at the opening ceremony of the first China International Import Expo, General Secretary Xi announced that a Science and Technology Innovation Board will be established on the Shanghai Stock Exchange, with a pilot registration-based system, to support the development of Shanghai as an international financial center and a hub for scientific and technological innovation, and to continuously improve the fundamental systems of the capital market. The CPC Leadership Group of the China Securities Regulatory Commission will work closely with the CPC Leadership Group of the Shanghai Stock Exchange to resolutely implement these decisions. The CPC Leadership Group of the CSRC deeply recognizes that establishing the STAR Market on the Shanghai Stock Exchange is a major reform initiative to advance the strategies of innovation-driven development and building a science-and‑technology‑strong nation, to promote high-quality development, and to support Shanghai’s efforts to become an international financial center and a center for scientific and technological innovation. It also represents an important step in refining the capital market’s foundational institutions, boosting market dynamism, and safeguarding the legitimate rights and interests of investors. The STAR Market is designed to address the shortcomings in the capital market’s ability to serve technological innovation; it constitutes an incremental reform of the capital market, featuring more tailored and differentiated arrangements regarding profitability, equity structure, and other factors, thereby enhancing the market’s inclusiveness and adaptability to innovative enterprises.

In December 2015, the Standing Committee of the National People’s Congress granted authorization for the implementation of a registration-based system for stock issuance, providing a solid legal basis for piloting this system on the STAR Market. Over the past several years, comprehensive and stringent regulatory oversight of the capital market, coupled with corresponding institutional reforms, has created the necessary conditions for the registration‑based pilot program. At the same time, the pilot adheres to rigorous standards and procedures, placing greater emphasis—throughout the entire process, from acceptance and review to registration, issuance, and trading—on the authenticity and comprehensiveness of information disclosure, on the quality of listed companies, on fostering market vitality, and on safeguarding investors’ rights and interests.

The China Securities Regulatory Commission will instruct the Shanghai Stock Exchange to strengthen suitability management for STAR Market investors, taking into account the unique characteristics of innovative enterprises in areas such as asset requirements, investment experience, and risk tolerance, thereby guiding investors to participate in a rational and informed manner. Small and medium-sized investors are encouraged to engage in STAR Market investments through public mutual funds and other channels, enabling them to share in the fruits of innovation-driven enterprise development.

The China Securities Regulatory Commission and the Shanghai Stock Exchange will, in accordance with relevant national laws, regulations, and policies, promptly refine the institutional frameworks and regulatory arrangements for the STAR Market. In particular, they will draw on international best practices to enhance corporate information disclosure, while carefully calibrating the scope and pace of the pilot program. At the same time, they will continue to encourage the entry of long-term incremental capital into the market, rigorously crack down on illegal and non-compliant activities such as fraudulent issuances, strengthen the accountability of intermediary institutions, and promote the stable and sound development of the capital market.

Commercial & Corporate

Premier Li Keqiang presided over an executive meeting of the State Council, calling for stronger financial support to alleviate the difficulties and high costs of financing faced by private enterprises, particularly small and micro businesses.

On November 9, Premier Li Keqiang presided over an executive meeting of the State Council, calling for stronger financial support to alleviate the difficulties and high costs of financing faced by private enterprises, particularly small and micro businesses. The meeting also decided to launch a special campaign to address the issue of overdue payments owed to private enterprises and to deploy measures to effectively leverage government-backed financing guarantees in support of small and micro businesses and the development of agriculture, rural areas, and farmers.

The meeting noted that alleviating the difficulties faced by private enterprises and small and micro‑enterprises is a crucial step to further invigorate market vitality and create more jobs. In accordance with the arrangements of the CPC Central Committee and the State Council, all regions and departments have adopted multiple measures to ease the financing challenges of small and micro‑enterprises, achieving some progress. However, the problems of difficult and expensive access to finance for private enterprises—particularly small and micro‑enterprises—remain acute. Going forward, we must strengthen support for private enterprises and small and micro‑enterprises, ensuring equal treatment across all forms of ownership, including state‑owned and private offices. First, we will broaden financing channels: expand the scope of eligible collateral under the Medium‑Term Lending Facility from loans to small and micro‑enterprises with credit lines of RMB 5 million or less per borrower to those with credit lines of up to RMB 10 million; reallocate a portion of the credit‑granting capacity of large enterprises to increase lending to small and micro‑enterprises; innovate financing instruments; deepen reforms of the multi‑tiered capital market; and encourage more small and micro‑enterprises to raise funds through equity and bond issuance. Second, we will stimulate the intrinsic motivation of financial institutions to address their reluctance and hesitancy to extend credit. We will clarify the criteria for determining due diligence exemptions in credit granting, guide financial institutions to appropriately delegate credit‑approval authority, and link small‑and‑micro‑enterprise lending to internal performance assessments and compensation schemes. For financial institutions with a large base and high share of small‑and‑micro‑enterprise loans, we will provide positive regulatory incentives. Third, we will strive to reduce the average interest rate on newly issued small‑and‑micro‑enterprise loans by commercial banks in the fourth quarter by one percentage point compared with the first quarter. We will rectify unreasonable loan withdrawal and suspension practices, streamline unnecessary procedures and eliminate excessive ancillary fees, and rigorously investigate and punish practices such as tying deposit accounts to loan disbursements. At the same time, we will implement measures to effectively manage and mitigate credit risks.

To address the issue of outstanding payments owed by government departments and large state-owned enterprises to private offices, the meeting decided to promptly launch a special campaign to settle these arrears. The General Office of the State Council will take the lead in overseeing implementation, with relevant departments assuming their respective responsibilities and the auditing authorities stepping in. All cases involving such debts must be systematically recorded, with a strict deadline for full repayment. Persistent defaulters will be placed on a “blacklist” of untrustworthy entities and subjected to severe disciplinary measures and accountability. For local governments and departments that fail to repay their debts, the central government will adopt measures such as offsetting their deposits in the state treasury or reducing corresponding transfer payments to recover outstanding amounts. Furthermore, efforts will be intensified to streamline and standardize security deposits in the construction sector, significantly raise the cost of commercial debt defaults, and strictly prohibit the emergence of new arrears. A report on the progress of debt clearance will be submitted to the State Council before next year’s Spring Festival.

To further leverage the role of government-backed financing guarantees and enhance financial support for small and micro enterprises and agriculture, rural areas, and farmers, the meeting decided on the following measures: First, government-backed financing guarantee and re‑guarantee institutions at all levels shall prioritize agricultural and small‑business financing guarantees, with a particular focus on supporting small and micro enterprises and agricultural, rural, and farmer entities whose individual guarantee amounts do not exceed RMB 5 million. Second, financing costs shall be reduced: the guarantee fee rate charged by the National Financing Guarantee Fund shall not exceed the fee rate level of provincial‑level institutions. The central government will provide performance‑based awards and subsidies to localities that demonstrate significant results in expanding the scale of financing guarantees for small and micro enterprises and in lowering guarantee fees. Third, risk sharing shall be implemented: in principle, both the National Financing Guarantee Fund and financial institutions shall assume no less than 20% of the risk; banks may not reduce their actual loan disbursements as a result. Localities are encouraged to offer risk compensation to institutions with a high proportion of agricultural and small‑business guarantee business that is growing rapidly, and to explore the establishment of diversified funding‑supplementation mechanisms primarily financed by fiscal contributions, thereby ensuring the sustainable operation of government‑backed financing guarantees.

ICBC has launched the first batch of bond financing support tools for private enterprises.

On November 6, three bond‑financing support instruments for private enterprises—underwritten by the Industrial and Commercial Bank of China as the lead underwriter and issuer of credit risk mitigation warrants (CRMWs)—were officially announced, marking the first batch of projects implemented by major state‑controlled banks since the People’s Bank of China launched the “Private Enterprise Bond Financing Support Instrument.”

According to the briefing, the three private‑enterprise bond financing support instruments comprise: a credit risk mitigation certificate—18 Zhengtai SCP001—jointly issued by China Credit Enhancement Investment Co., Ltd. and ICBC, with an issuance amount not exceeding RMB 150 million and a bond issuance size of RMB 300 million, the proceeds of which will be used to repay existing financing; and two separate credit risk mitigation certificates—18 Yingfeng CP001 and 18 Zhujiang Investment Management SCP003—issued solely by ICBC, with issuance amounts of up to RMB 350 million and RMB 250 million, respectively, and bond issuance sizes of RMB 700 million and RMB 500 million, respectively, both of which will be used to repay outstanding debt and replenish working capital.

Industry insiders noted that, by jointly and independently issuing credit risk mitigation warrants (CRMWs) to provide credit protection for private‑enterprise bonds, ICBC has proactively leveraged policy tools in line with market‑oriented principles, thereby playing a positive role in further stabilizing market expectations and improving the credit environment in the private‑enterprise bond market.

Data show that, in recent years, ICBC has effectively leveraged its role as a leading bank to support the development of private enterprises. As of the end of September, the number of private enterprises with outstanding financing at ICBC reached 79,000, up 11% from the beginning of the year and accounting for 77% of all corporate borrowers; the total outstanding financing stood at approximately RMB 2 trillion, with an average loan rate of 5.2%. Recently, ICBC also held a bank‑to‑enterprise cooperation signing ceremony with 100 key private enterprises and has initiated market‑based, rule‑of‑law‑compliant debt‑to‑equity swaps with some of them.

The General Office of the State Council has issued the “Notice on Focusing on Enterprises’ Concerns and Further Promoting the Implementation of Policies to Optimize the Business Environment.”

To address the bottlenecks and pain points hindering enterprises’ investment, production, and operations, accelerate the development of a market‑oriented, law‑based, and internationally competitive business environment, and bolster offices’ confidence and competitiveness, on November 8 the General Office of the State Council officially issued the “Notice on Focusing on Enterprises’ Concerns to Further Promote the Implementation of Policies for Optimizing the Business Environment.”

China has been taking concrete steps to optimize the business environment. According to the World Bank’s latest “Doing Business 2019” report, China ranked 46th among 190 economies in the overall business‑environment assessment, a jump of 32 places from the previous year, underscoring significant progress in improving the country’s business climate. How were these achievements attained, and what measures can further elevate the business environment? On November 9, the State Council Information Office held a regular policy briefing, during which Zhou Xiaofei, Deputy Secretary-General of the National Development and Reform Commission; Tang Wenhong, Director-General of the Department of Foreign Investment of the Ministry of Commerce; and Xiong Maoping, Director-General of the Registration Bureau of the State Administration for Market Regulation, addressed related questions.

Comprehensively deepen reform on the basis of optimizing the business environment.

Creating a favorable business environment is a crucial foundation for building a modernized economic system and promoting high-quality development. Since the 18th National Congress of the Communist Party of China, China has focused on improving the business climate and steadily advanced the “delegation, regulation, and service” reform.

Zhou Xiaofei stated that, in recent years, guided by the goal of optimizing the business environment, China has comprehensively deepened reform, achieving significant progress across all areas, with particular emphasis on four key aspects.

First, market access continues to be liberalized, making investment and trade more open and convenient. Space for private investment has been expanded, with continued efforts to deepen opening-up in key sectors such as civil aviation and railways; in certain monopolized industries, mixed‑ownership reforms have actively attracted private capital. The negative list for foreign investment has been substantially streamlined, and market access across the primary, secondary, and tertiary sectors has been comprehensively relaxed. A clear timetable and roadmap for opening up the automotive and financial sectors have been laid out, enhancing the predictability of China’s further opening-up.

Second, we have strengthened regulatory oversight and law enforcement, fostering a fairer and more orderly market environment. We have reinforced property rights protection and reviewed and rectified a number of wrongful cases involving property rights. We have continued to advance the development of a social credit system, having signed 40 joint reward-and-punishment memoranda with over 60 departments. We launched a special campaign to address breaches of trust in government administration, successfully clearing outstanding payments totaling RMB 3.31 billion. We also streamlined and standardized fees levied on enterprises, introducing and implementing 10 measures to reduce prices, which helped lower average electricity tariffs for general industrial and commercial users by 10%.

Third, we deepened the “Internet Plus Government Services” initiative, making administrative procedures and business start-ups more convenient and efficient. We vigorously advanced the integration and sharing of government information systems, essentially establishing a nationwide, integrated data-sharing and exchange platform. Over 1,000 data-sharing service interfaces have been made available to government departments at all levels across the country, with a total of 36 billion data‑sharing transactions. We also launched the “Action to Resolve 100 Bottlenecks in Public Services,” encouraging localities to leverage information technology and data‑sharing mechanisms to address 2,425 bottlenecks, thereby substantially enhancing the sense of gain among businesses and the public.

Fourth, we have established and improved the evaluation mechanism, making business‑environment assessments more incentive‑driven and effective. In collaboration with relevant departments and local authorities, we have engaged third‑party professional institutions, drawn on international best practices, and preliminarily developed a business‑environment evaluation indicator system that is uniquely Chinese in character yet internationally comparable.

“Going forward, the National Development and Reform Commission will work with relevant departments to continue advancing reforms in key areas of the business environment, encourage localities to foster a competitive climate for improving the business climate, and accelerate the development of a world-class business environment that is market‑oriented, rule‑of‑law based, and internationally aligned,” Zhou Xiaofei emphasized.

Optimizing the foreign investment environment and raising the level of opening-up.

From January to September this year, 45,922 new foreign-invested enterprises were established nationwide, a year-on-year increase of 95.1%. Actual utilized foreign investment reached US$97.96 billion, up 6.4% from the same period last year, reflecting a steady and improving trend in foreign capital inflows. These achievements are attributable to China’s increasingly attractive investment environment.

“Since 2017, we have introduced a series of policy documents aimed at boosting foreign investment and improving the business environment, putting forward 65 measures across such areas as investment liberalization, facilitation, promotion, and protection, thereby fostering a more equitable, transparent, and convenient investment climate that is increasingly attractive,” said Tang Wenhong. “We have continued to ease restrictions on foreign market access, revising the Negative List for Foreign Investment for two consecutive years, reducing the number of restrictive measures from 93 to 48 and significantly raising the level of investment liberalization. In June this year, we released the 2018 version of the Negative List, introducing opening-up measures in 22 sectors, including finance, automobiles, shipbuilding, and aircraft. Meanwhile, the pilot free trade zones have further expanded openness in fields such as culture, natural resources, and telecommunications.”

According to reports, the 2018 version of the Negative List for Foreign Investment Access explicitly sets out special administrative measures, such as equity‑ownership and senior‑management requirements. In sectors not covered by the Negative List, management is implemented in accordance with the principle of national treatment, and no restrictions may be imposed specifically on foreign investment access, thereby significantly enhancing regulatory clarity and transparency.

“In terms of enhancing investment facilitation, since October 2016, the establishment and amendment of foreign-invested enterprises that do not fall under special administrative measures for market access have been shifted from an approval-based to a filing‑based regime, thereby replacing the ‘case-by-case approval system’ that had been in place for more than three decades. Over 97 percent of foreign investment matters can now be completed through the filing process. On June 30 this year, a one‑stop service was rolled out nationwide, integrating business filing and industrial and commercial registration for foreign‑invested enterprises, further elevating the level of investment facilitation,” said Tang Wenhong.

Tang Wenhong stated that, in order to foster a favorable environment for foreign investment, China has launched a special campaign to protect the intellectual property rights of foreign-invested enterprises, established an inter‑ministerial joint conference mechanism for handling complaints from such enterprises, and promptly and appropriately addressed the most pressing issues raised in these complaints. At the same time, China has made solid progress in building pilot free trade zones, fully demonstrating their role as experimental platforms for comprehensively deepening reform and further opening up.

Significantly lower market access barriers to foster a fair competitive environment.

This year marks the fifth anniversary of the comprehensive implementation of commercial system reform. Over the past five years, in response to the key pain points and bottlenecks faced by businesses and entrepreneurs, China has introduced a series of market‑access reforms, including the reform of the registered capital registration system, the “one‑license‑for‑multiple‑permits” initiative, and the separation of licenses and permits. The results of these reforms are evident: according to a World Bank report, while China’s overall business environment score has improved markedly, its ranking for the “starting a business” indicator has surged by 65 places from the previous year, reaching 28th place. The number of procedures required to start a business has been reduced from seven to four, and the average processing time has fallen from 22.9 days to 8.6 days.

Xiong Maoping stated that, in terms of product market access, China has significantly streamlined the administration of industrial product production licenses, reducing the number of license categories from 60 to 24. The country has also fully implemented the “one license per enterprise” reform for industrial product production permits and accelerated reforms of the registration and approval systems for food, pharmaceuticals, and medical devices. At the same time, efforts have been deepened to facilitate intellectual property registration. These measures have substantially lowered the institutional transaction costs for new enterprises and new products entering the market, thereby boosting market vitality. As of the end of September this year, the total number of market entities nationwide reached 106 million, with newly established entities accounting for 73% since the launch of commercial system reforms. The average daily number of newly registered enterprises has risen from 6,900 before the reforms to 18,400 today.

While easing market access, regulatory approaches and philosophies have also been continuously innovated. “Market regulators have adopted new regulatory principles, replacing annual inspections with annual reporting, promoted ‘double-random, one-public’ supervision, conducted comprehensive reviews of fair competition, and actively investigated cases of administrative monopolies as well as practices that exclude or restrict competition,” Xiong Maoping explained.

“To further enhance enterprises’ sense of gain, market regulatory authorities will focus on ‘reducing certificates and licenses while streamlining permits,’ thereby fostering a more convenient and transparent business‑entry environment,” revealed Xiong Maoping. Starting November 10 this year, China will implement reforms nationwide for the first batch of 106 administrative approval items involving enterprises, advancing the “post‑licensing reduction of certificates” initiative. By year’s end, the time required to establish a business in municipalities directly under the central government, cities separately listed in state planning, prefecture‑level cities, and provincial capitals will be shortened to no more than 8.5 days.

Xiong Maoping stated that market regulatory authorities will also fully implement fair‑competition reviews, extend the “double random” inspection approach to cover all routine checks, strengthen antitrust enforcement, and rigorously crack down on illegal acts infringing intellectual property rights, thereby fostering a fair‑competition market environment. In addition, they will streamline government services, conduct thorough rectification of unlawful pricing and fee‑charging practices, verify the implementation of fee‑reduction policies for small and micro enterprises, and, in coordination with relevant departments, address “red‑top intermediaries” in accordance with the law, thus creating a healthy and harmonious development environment.

Central Bank: A Clear Bubble in the Blockchain Investment and Financing Sector

The People’s Bank of China stated in a working paper published on its official website that blockchain’s capabilities and limitations should be assessed rationally and objectively, without exaggerating or placing undue faith in its functions. The paper also notes that the blockchain investment and financing sector is currently characterized by significant bubbles, with widespread speculative trading, market manipulation, and even illegal activities—particularly in projects involving tokens issued through public offerings. Relevant government authorities should strengthen oversight to mitigate financial risks.

The “People’s Bank of China Working Papers” publishes academic articles authored by staff members of the People’s Bank system, covering topics in economics, finance, and related issues of reform and development; most of these papers represent the preliminary findings of research projects undertaken by PBC personnel.

A working paper published by the central bank, titled “What Can and Cannot Blockchain Do?,” notes that, overall, there are currently very few blockchain projects that have been successfully implemented and delivered tangible social benefits. In addition to the technology’s limited physical performance, a key contributing factor is the shortcomings of blockchain’s economic functionality.

The paper argues against exaggerating or placing undue faith in the capabilities of blockchain technology. Industry experience over recent years has demonstrated that certain blockchain‑based applications are not viable. In particular, the modern financial system has continually incorporated technological innovations as they emerge; any innovation that enhances the efficiency of financial resource allocation and improves the security and convenience of financial transactions will be integrated into the financial system. To date, no technological innovation has had a disruptive impact on the financial system, and blockchain is unlikely to be an exception. Cryptocurrencies lack flexibility, intrinsic value, and sovereign credit backing, rendering them unable to effectively perform monetary functions and thus incapable of disrupting or replacing fiat currencies. Nevertheless, it is worth noting that certain national conditions in China present opportunities for blockchain experimentation—for example, digital bill‑trading platforms can help address the fragmentation of the country’s bill market.

The article also argues that blockchain applications should be grounded in real-world conditions and avoid clinging to overly idealistic principles. For instance, relying on technology to replace institutions and trust is extremely challenging and, in many contexts, nothing more than a utopian vision. Similarly, decentralization and centralization each have their own appropriate use cases; neither is inherently superior to the other. In practice, scenarios that are entirely decentralized or entirely centralized are rare. Many blockchain projects begin with a commitment to decentralization but, over time, inevitably incorporate some degree of centralization—otherwise, they would be impossible to implement. For example, when external data is written onto a blockchain, a trusted centralized authority is often required; complete decentralization is simply unattainable.

Taxation TAXATATION

State Taxation Administration: Enterprises that participate in liability insurance are permitted to deduct the premiums from their taxable income.

The State Taxation Administration recently issued an announcement clarifying that insurance premiums paid by enterprises for liability insurance, such as employer’s liability insurance and public liability insurance, in accordance with applicable regulations, are deductible before corporate income tax.

With the development of the economy and society, liability insurance is being used with increasing frequency in business operations, playing a crucial role in helping enterprises diversify operational liability risks, effectively safeguarding the rights and interests of all parties involved, and promoting social harmony and stability.

According to a responsible official from the State Taxation Administration, recently, relevant departments and enterprises have raised concerns regarding the pre‑tax deduction of liability insurance premiums—such as employer’s liability insurance and public liability insurance—in corporate income tax. To standardize the policy on pre‑tax deductions for liability insurance premiums, facilitate taxpayers’ compliance, and better help enterprises mitigate operational liability risks and enhance their risk‑resilience, the State Taxation Administration has issued an announcement clarifying the relevant policies.

Liability insurance, such as employer’s liability insurance and public liability insurance, is a type of insurance under which, when an insured enterprise incurs an accident specified in the policy and becomes liable to third parties for damages, the insurer assumes responsibility for indemnifying such losses on behalf of the insured. Since the premiums paid by enterprises for employer’s liability insurance, public liability insurance, and other liability coverages constitute actual expenses incurred by the enterprise, and given that the Insurance Law stipulates that property insurance includes liability insurance, the relevant provisions of the Enterprise Income Tax Law and its implementing regulations expressly provide that these premiums may be deducted before tax.

State Taxation Administration: Refine and implement transitional policies to ensure that the benefits of the individual income tax reform are fully and promptly realized.

On August 31, the new Individual Income Tax Law was adopted by a vote at the Fifth Session of the Standing Committee of the 13th National People’s Congress and will take effect on January 1, 2019. As part of this reform, a transitional policy will be implemented starting October 1, raising the basic deduction from RMB 3,500 per month to RMB 5,000 per month. To ensure the smooth, precise, and timely implementation of these transitional measures, the State Taxation Administration recently issued the “Announcement on Strictly Applying the RMB 5,000 Standard for Deducting Expenses in the Implementation of Tax Policies” (hereinafter referred to as the “Announcement”), addressing concerns raised by taxpayers during the policy’s rollout. This move aims to fully and promptly deliver the benefits of the individual income tax reform, providing taxpayers with greater confidence and reassurance.
To ensure that taxpayers fully benefit from the tax reform, the Notice stipulates that, for salary and wage income actually received by taxpayers after October 1 of this year, the standard deduction of RMB 5,000 per month shall apply. For cases falling under the aforementioned circumstances, all withholding agents are required to strictly withhold and remit taxes in accordance with the RMB 5,000 per month standard deduction.
In response to situations where some withholding agents may have incorrectly selected the tax‑attributable month, resulting in certain taxpayers failing to benefit from the RMB 5,000 per month standard deduction, the Notice further clarifies that, for wages and salaries actually received by taxpayers on or after October 1, 2018, if the withholding agent mistakenly designated the “tax‑attributable month” as “September 2018” when filing the return—thereby causing the taxpayer to miss out on the RMB 5,000 monthly deduction—the withholding agent may file an amended tax return. The tax authorities will then process a refund of any overpaid taxes in accordance with the law, thereby alleviating taxpayers’ concerns.
Luo Tianshu, Director-General of the Income Tax Department of the State Taxation Administration, stated that if withholding agents fail to apply the 5,000-yuan standard deduction when paying wages and salaries after October 1 this year, taxpayers may call the 12366 tax service hotline or file a direct complaint with the tax authorities. The tax authorities will promptly verify the issue, provide appropriate guidance and outreach to the withholding agents, and resolve the matter as soon as possible, thereby effectively safeguarding taxpayers’ legitimate rights and interests.
“The tax authorities will further organize publicity and training on the transitional policies for individual income tax and the new tax system, ensuring that the ‘comprehensive package’ of tax reform measures is delivered precisely to every taxpayer,” said Sun Yushan, Director-General of the Taxpayer Services Department of the State Taxation Administration.

Jiangsu Tax Authorities: Efficiently Implementing Tax Reduction Policies

In the first three quarters of this year, Jiangsu’s economy maintained stable growth while improving in quality. The province’s tax authorities rigorously implemented all tax‑reduction measures introduced by the state and adopted a range of initiatives to ensure that taxpayers are fully informed and fully benefit from these policies, striving to establish a new benchmark for high‑quality tax services and thereby fostering Jiangsu’s high‑quality economic and social development.

Tax reduction policies are effectively implemented, yielding tangible results in fostering entrepreneurship and improving people’s livelihoods.

In the first three quarters, tax authorities at all levels across the province provided targeted support for opening up to the outside world, processing export tax refunds and exemptions totaling RMB 173.68 billion, a year-on-year increase of 7.78%. During the same period, 6,002 enterprises in the province that met the eligibility criteria for the value-added tax credit refund policy received refunds amounting to RMB 13.891 billion.

In the first three quarters, tax authorities at all levels across the province actively implemented tax preferential policies to support employment among key groups, processing tax‑benefit filings for 230,000 individuals, including college graduates starting their own businesses, laid‑off workers seeking reemployment, retired soldiers launching entrepreneurial ventures, and persons with disabilities in employment. Additionally, they vigorously enforced personal income tax incentives for equity‑based incentives and technology‑equity contributions, deferring tax liabilities totaling RMB 110 million.

Serve as a dedicated “service provider” for businesses and promote a high-quality business environment.

Jiangsu Taxation has upgraded its “no‑in‑person‑interaction” service roster and introduced an innovative invoice‑delivery model featuring “online expedited application and centralized logistics distribution,” enabling “no‑in‑person‑interaction” processing with invoices delivered “by appointment in the morning, arriving by evening, and guaranteed by the next day.” On average, 15,000 taxpayer accounts receive invoices via postal delivery each day, with a cumulative total of 320 million invoices successfully delivered. Both the scale of services and the share of related business lead the nation.

Meanwhile, the nation has pioneered a “package‑style” service for newly established enterprises, consolidating 12 business‑registration procedures into a single online “package.” New businesses can now “fill out just one form online and make only one in‑person visit,” with processing time reduced from 10 days to 4.8 hours. In addition, a one‑stop, integrated approach to real estate registration has been implemented: applicants need to obtain only one queue number and submit a single set of documents to complete both tax payment and transfer registration for secondhand properties, cutting the processing time from at least one working day to as little as 10 minutes.

Stay grounded and implement concrete measures; press ahead with renewed vigor to drive development.

During the implementation of these policies, the Jiangsu tax authorities, through meticulous planning and targeted measures, conducted extensive publicity across major platforms, established specialized teams to deliver preferential policy services, and strengthened accurate policy forecasting, thereby ensuring the smooth rollout of tax‑reduction measures in the first three quarters.

Going forward, the Jiangsu tax authorities will further emancipate their minds, foster a favorable environment, effectively implement administrative streamlining and delegation of powers, enhance the taxpayer experience, vigorously innovate tax‑related products, demonstrate the tangible results of reform, and ensure that all policies, measures, and initiatives aimed at simplifying administration, cutting taxes, reducing burdens, and supporting economic and social development are fully implemented.

Litigation & Arbitration

Jiangsu has issued the Measures for the Administration of Labor Dispute Mediators.

Recently, the Jiangsu Provincial Department of Human Resources and Social Security issued the Measures for the Administration of Mediators in Labor and Personnel Disputes of Jiangsu Province (hereinafter referred to as the “Measures”). The Measures set forth specific provisions regarding the appointment and training of mediators, the management of mediator certificates, professional requirements, and performance evaluation, rewards, and disciplinary measures, thereby providing a solid foundation for further strengthening the professionalization and standardization of the mediator workforce.

The Measures stipulate that mediators shall uphold the leadership of the Communist Party, be fair and upright, maintain close ties with the public, and demonstrate a strong commitment to labor and personnel dispute mediation; they must be in good health and of sound moral character; generally, they should hold at least an associate’s degree and possess specialized knowledge or practical experience in labor and personnel disputes; and they are required to complete pre‑appointment training organized by the human resources and social security administrative departments of prefecture-level cities.

The appointment of mediators shall follow the following procedures: individual application or organizational recommendation; review by the mediation organization to be appointed; participation in pre-appointment training organized by the human resources and social security administrative department of the prefecture-level city; and appointment by the mediation organization.

The Measures stipulate that mediator certificates shall be uniformly produced and issued by the human resources and social security administrative departments of prefecture-level cities. The application process for obtaining a mediator certificate shall follow these procedures: the mediation organization shall centrally organize the completion of the application form; the mediation organization shall review and compile the application information and submit it to the human resources and social security administrative department of the county (city, district); the county (city, district) human resources and social security administrative department shall collate and summarize the application information and report it to the prefecture-level city’s human resources and social security administrative department; and the prefecture-level city’s human resources and social security administrative department shall be responsible for issuing the mediator certificates.

The Supreme People’s Court has issued guidelines to provide judicial services and safeguards for rural revitalization.

On the 7th, the Supreme People’s Court held a press conference to release the “Opinions of the Supreme People’s Court on Providing Judicial Services and Guarantees for Implementing the Rural Revitalization Strategy” (hereinafter referred to as the “Opinions”). The Opinions comprise 45 provisions, clearly outlining how the people’s courts are to serve and safeguard the development of modern agriculture, the building of an eco‑civilized countryside, the creation of a civilized, harmonious, and safe rural environment, the advancement of the modernization of the rural governance system and governance capacity, and the protection of farmers’ legitimate rights and interests.

With regard to the people’s courts’ role in serving and safeguarding the development of modern agriculture, the Opinions stipulate that rural land‑contracting disputes shall be adjudicated in accordance with the law; the Party Central Committee’s policy on the “separation of three rights” for contracted land must be thoroughly implemented; and the lawful and orderly transfer of rural land‑contracting operating rights must be protected. Where farmland is polluted or damaged, or where basic farmland is converted to other uses, the responsible parties shall, in accordance with the law, be ordered to take restorative remedial measures such as pollution control and land reclamation, thereby officely upholding the red line for arable land.

The Opinions stipulate that the transfer of rural residential land and the use rights to collectively-owned construction land in rural areas, as well as the development of rural residences, agricultural facilities, and leisure‑tourism facilities that comply with the overall land‑use plan, shall be protected. They also call for robust support for pilot regions undertaking trials of rural land‑system reform. Any acts of illegally buying or selling residential land, violating land‑use zoning regulations, or allowing industrial and commercial enterprises and urban residents to enter rural areas and use rural residential land to construct villas, large compounds, or private clubs shall be deemed invalid in accordance with the law.

With regard to safeguarding the legitimate rights and interests of farmers, the Opinions stipulate that farmers’ personal rights shall be protected in accordance with the law, ensuring their personal freedom, human dignity, and physical health. Efforts will be focused on protecting the lawful rights and interests of elderly persons left behind in rural areas and left-behind children, as well as the right to education of school-age children in rural regions, while strengthening judicial protection of human rights in rural areas.

The Opinions also call for resolute, lawful, strict, and swift punishment of criminal gangs and their “protective umbrellas.” They stipulate that such groups—those who seize control of grassroots rural governance, manipulate and sabotage rural elections, monopolize rural resources, and embezzle collective assets; “village tyrants” who wield family and clan power to run roughshod over local communities, dominate the region, and oppress and harm the populace; as well as those who orchestrate and operate illegal activities such as pornography, gambling, and drugs in rural areas, engage in usury, resort to violent debt collection, meddle in civil disputes, and act as “underground enforcement squads”—must be punished with the utmost severity and speed in accordance with the law. Furthermore, the “protective umbrellas” of these criminal gangs are to be prosecuted strictly and swiftly under the law.

Jinhua “Police Dog Theft” Case: Police Drop the Case After Obtaining the Victim’s Forgiveness

Recently, a couple in Jinhua, Zhejiang, who claimed to have “rescued” a police dog, were accused of stealing state property and placed under residential surveillance, sparking widespread online debate. On November 2, the Political and Legal Affairs Commission of the Jindong District Committee of Jinhua City issued a verification notice stating that the couple’s subjective intent to commit theft was not clear and that there was insufficient evidence of theft. At present, the Jindong Public Security Sub-bureau has dropped the case and lifted the residential surveillance imposed on the couple.

Rescue police dog accused of “theft”

One evening in June this year, Ms. Ying and her husband, residents of Jinhua City in Zhejiang Province, spotted a dog rummaging through trash near a row of garbage bins close to the Duohu Police Station in Jindong District. Motivated by a desire to help, the couple took the dog home. Little did they know that the dog was “Lao San,” a police canine assigned to the Duohu Police Station, valued at 15,000 yuan. Subsequently, officers from the Duohu Police Station brought the couple in for questioning on suspicion of theft, and after several rounds of official statements, they were released on bail pending further investigation.

After returning home, Ms. Ying posted her experience on Weibo, drawing widespread attention from both netizens and the media. The main points of concern centered on whether the couple’s act of bringing a dog home constituted “theft,” and whether the police station’s decision to leave the police dog unattended outside amounted to mismanagement.

The chief of the police station involved has been suspended.

Due to the failure of relevant personnel at Yindu Lake Police Station to fulfill their management duties regarding loose‑leashed police dogs, in violation of pertinent provisions of the “Operational Procedures for the Raising and Management of Police Dogs,” the Jindong Public Security Sub-bureau has decided to suspend the station chief from duty and dismiss the police dog handler. The Jinhua Public Security Bureau stated that, based on leads and evidence provided by Mr. Zhu and Ms. Ying, the case will undergo a comprehensive review of the facts and evidence, with a clear response to all parties involved.

On the evening of November 2, the Jindong Sub-bureau issued a notice of case dismissal to the couple and lifted their bail. The case was closed on the grounds that “criminal liability should not be pursued.”

The couple has been released on bail.

According to the Jinhua Municipal Public Security Bureau, in response to the “theft of police dogs” incident, the Political and Legal Affairs Commission of the Jindong District Committee of Jinhua City convened a joint investigation team to examine the case’s factual evidence, investigative procedures, and legal application. Based on the findings, it was determined that Zhu and Ying lacked clear subjective intent to unlawfully appropriate property, and that the evidence of theft was insufficient. Accordingly, the Jindong Public Security Sub-bureau has now closed the case and released Zhu and Ying from bail pending trial.

A spokesperson for the Jinhua Municipal Public Security Bureau stated that, in response to the management shortcomings exposed by this incident, the Jindong Public Security Sub-bureau has already taken disciplinary action against the individuals held accountable. The Jindong Public Security Sub-bureau will draw lessons from this case, conduct a thorough self‑examination, and implement corrective measures. “We have already communicated with the parties involved and obtained their understanding, and we welcome continued oversight from all sectors of society.”

Other

CNIPA: Promote the abolition, at the legal and institutional level, of the concepts of “well-known” and “famous” trademarks across all regions.

On November 9, the China National Intellectual Property Administration released the “2018 Plan for Deepening the Implementation of the National Intellectual Property Strategy and Accelerating the Building of a Strong IP Nation” (hereinafter referred to as the “Plan”), which calls for further advancing the reform of the intellectual property system in the areas of deregulation, regulation, and service.

The Plan calls for the establishment of a credit‑based regulatory system for trademark agencies, the vigorous crackdown on illegal practices such as unfair competition by these agencies, and concerted efforts to standardize order in the trademark agency sector. It also mandates the continued expansion of trademark application acceptance windows and the integrated development of acceptance points and pledge‑registration centers. Furthermore, it seeks to advance reforms aimed at simplifying trademark registration procedures and to promote the legal removal of the “well‑known” and “famous” trademark designations across all regions. Finally, it emphasizes strengthened oversight of collective management organizations for copyright and of representative offices in China of foreign copyright certification bodies.

Ministry of Finance: Public consultation on individual income tax special deductions has concluded; dynamic adjustments will continue.

The Provisional Measures on Special Additional Deductions for Individual Income Tax (Draft for Public Comment) recently concluded its two-week public consultation period. This round of public consultation aims to solicit broad input from the general public and better address the expectations of the people.

Implementing the policy of special additional deductions is both a major highlight and a significant challenge of this new round of individual income tax reform. Under the newly amended Individual Income Tax Law, when calculating taxable income, in addition to the basic deduction of 5,000 yuan and specific deductions such as the “three insurances and one housing fund,” taxpayers may also claim special additional deductions for children’s education, continuing education, major illness medical expenses, housing loan interest or rent, and support for elderly parents. The law authorizes the State Council to determine the specific scope, standards, and implementation procedures for these special additional deductions, and to file them with the Standing Committee of the National People’s Congress for record.

During the public consultation period, many industry insiders expressed expectations for strengthening the deduction for major‑illness medical expenses, refining the detailed rules governing deductions for housing loan interest, continuing education, and other special additional deductions. Yang Zhiyong, a researcher at the Institute of Financial Strategy of the Chinese Academy of Social Sciences, suggested that, with respect to the major‑illness medical expense deduction, taxpayers should be permitted to claim deductions for their spouse’s major‑illness medical costs.

Yuan Baiwei, an inspector with the Shanghai Municipal Finance Bureau, believes that, judging from the draft for public comment, the wording could be further clarified. For example, in the provision on the special additional deduction for housing loan interest, the concept of a “first-home mortgage” needs to be more precisely defined—specifically, whether it is determined by property ownership or by the mortgage itself, and how first-home mortgages are defined across different cities.

Vice Minister of Finance Cheng Lihua stated that, in response to the specific comments submitted by the public during the consultation process regarding the scope and standards of deductions, as well as tax collection and administration, the relevant measures will be further refined and improved to ensure that the general public can truly benefit from the reforms. Meanwhile, in light of changes in people’s livelihood expenditures—such as education, housing, healthcare, and elderly care—the Provisional Measures for Special Additional Deductions under the Individual Income Tax will undergo dynamic adjustments during their implementation.

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