JC Master Legal News Issue 849

Key Takeaways for This Issue

AMAC: A suspension procedure has been introduced for the registration of private fund managers.

Recently, the Asset Management Association of China (hereinafter referred to as the “Association”) has released an updated version of the “Notice on Registration of Private Fund Managers” (hereinafter referred to as the “Notice”).

The private‑enterprise bond financing support tool has been implemented in the exchange‑traded bond market, helping to boost bond financing for private enterprises.

To implement the decisions and arrangements of the CPC Central Committee and the State Council on broadening financing channels for private enterprises and alleviating their financing difficulties, and to carry out the State Council Executive Meeting’s decision to establish a bond‑financing support tool for private enterprises, the People’s Bank of China and the China Securities Regulatory Commission have worked closely together. Following the interbank bond market, the exchange‑traded bond market has now launched a bond‑financing support tool for private enterprises, providing market‑based support for their bond financing.

The State Council has made it clear that the tax burden on individual partners in venture capital offices will only be reduced, not increased.

On December 12, Premier Li Keqiang of the State Council presided over an executive meeting of the State Council, which decided to introduce income tax incentives to promote the development of venture capital and strengthen support for entrepreneurship and innovation; outlined measures to accelerate the mechanization of agriculture and upgrade the agricultural machinery and equipment industry, thereby bolstering rural revitalization and the development of agriculture, rural areas, and farmers; and approved the results of the 2018 National Science and Technology Awards review.

New Judicial Interpretation of the Supreme People’s Court: Refining the System of Conduct Preservation in Intellectual Property Disputes

On December 13, the Supreme People’s Court promulgated the “Provisions on Several Issues Concerning the Application of Law in Reviewing Cases of Behavioral Preservation in Intellectual Property Disputes” (hereinafter referred to as the “Provisions”).

The Ministry of Justice has amended the Measures for the Administration of Law Offices.

On December 13, the Ministry of Justice promulgated the “Decision on Amending the Measures for the Administration of Law Offices,” which shall take effect as of January 15, 2019.

Table of Contents

Table of Contents

Finance & Capital Markets

AMAC: A suspension procedure has been introduced for the registration of private fund managers.

The China Securities Regulatory Commission convened a meeting to coordinate and advance the handling of major cases.

Shanghai and Shenzhen Stock Exchanges: May require issuers to conduct ad hoc special audits of raised funds.

Shanghai and Shenzhen Stock Exchanges: Extension of Bond Repurchase Trading Hours

The China Securities Regulatory Commission and the Securities and Futures Commission of Hong Kong have reached an agreement to further enhance information exchange under the Shanghai–Shenzhen–Hong Kong Stock Connect.

The China Securities Regulatory Commission and the French Autorité des Marchés Financiers have signed a bilateral regulatory cooperation letter.

Vice Chairman Li Chao attended the symposium on China’s capital market and global asset allocation.

Corporate & Commercial

The private‑enterprise bond financing support tool has been implemented in the exchange‑traded bond market, helping to boost bond financing for private enterprises.

NDRC: Supports high-quality enterprises in accessing direct financing and enhances the ability of corporate bonds to serve the real economy.

The National Intellectual Property Administration has introduced a series of measures to promote IP‑related services that support the innovative development of private enterprises.

Ministry of Justice: Leveraging the functions and roles of judicial administration to support the development of private enterprises.

General Administration of Customs: Simplify Registration Procedures for Customs Declaration Entities to Reduce Business Costs

Accelerating the reform of state-owned enterprises through mixed ownership, Zhejiang has launched 40 mixed-ownership projects.

China-Japan-South Korea Free Trade Area Negotiations: Further Enhancing the Level of Trade and Investment Liberalization

Taxation

The State Council has made it clear that the tax burden on individual partners in venture capital offices will only be reduced, not increased.

The State Taxation Administration has issued a document clarifying the administrative matters related to the issuance of the “Tax Payment Certificate.”

Individual income tax deductions are set to be implemented; a big data platform for individual income tax administration is being explored.

General Administration of Customs: Promoting the “self-declaration and self-payment” tax regime for domestic sales of processed‑trade materials.

Litigation & Arbitration

New Judicial Interpretation of the Supreme People’s Court: Refining the System of Conduct Preservation in Intellectual Property Disputes

The second-instance trial in Shanghai’s “wife‑killing and body‑hiding case” has begun, with the question of whether a self‑surrender can serve as grounds for exemption from the death penalty at the center of attention.

Other

The Ministry of Justice has amended the Measures for the Administration of Law Offices.

Changsheng Bio has been penalized; Gao Junfang and others have been banned for life from the securities market.

Three agencies: The pre-issuance of government bonds will implement a performance-guarantee system.

Finance & Capital Markets

AMAC: A suspension procedure has been introduced for the registration of private fund managers.

Recently, the Asset Management Association of China (hereinafter referred to as the “Association”) has released an updated version of the “Notice on Registration of Private Fund Managers” (hereinafter referred to as the “Notice”).

In response to five major compliance issues currently observed in private‑fund registration—namely, false capital contributions, nominee shareholding, unstable equity structures, related parties engaging in conflicting business activities, and a tendency toward group‑based operations—the revised “Notice” has expanded and refined these into twelve specific requirements, further clarifying the standards for shareholder authenticity and stability; delineating the boundaries of private‑fund manager registration and strengthening the accountability of group‑type entities regarding their legal status; implementing internal‑control guidelines and tightening compliance and professional‑qualification requirements for senior management and practitioners; and introducing procedures for suspending processing as well as adding new circumstances under which registration will be denied.

Attachment: “Notice on Registration of Private Fund Managers”

In accordance with the Securities Investment Fund Law of the People’s Republic of China, the Interim Measures for the Supervision and Administration of Private Equity Investment Funds, and other relevant laws and regulations, the Asset Management Association of China (hereinafter referred to as “the Association”), under the guidance of the China Securities Regulatory Commission, has updated the “Guidelines on Registration of Private Fund Managers” (hereinafter referred to as the “New Version of the Guidelines”). The revised guidelines have been unanimously approved by the Board of Directors and shall take effect from the date of their publication.

To further guide the private fund industry toward standardized development and strengthen the registration requirements for private fund managers, the revised “Registration Guidelines” have been expanded and refined into twelve provisions, which more clearly define the requirements for the authenticity and stability of shareholders; clarify the boundaries of private fund manager registration and reinforce the principal‑entity responsibilities of group‑based institutions; implement internal control guidelines and tighten compliance and professional standards for senior management and practitioners; and introduce a suspension‑of‑processing procedure while adding new circumstances under which registration will be denied.

I. Common Potential Risks and Issues in the Administrator Registration Process

Over a period of time, the most common non‑compliance issues in private fund manager registration have centered on the following areas: First, false capital contributions or capital withdrawal. Some institutions, in order to inflate their perceived financial strength, overstate the capital commitments of their investors during business registration, make false contributions, or withdraw capital after establishment, thereby disrupting competitive order within the private fund industry. Second, nominee shareholding. By exercising shareholder rights and obligations under another party’s name, these practices prevent tracing the entity’s actual controller and ultimate responsible parties, circumvent disclosure requirements for material related-party transactions, and create opportunities for conflicts of interest and illicit transfers of benefits. Third, an unstable equity structure. Certain institutions maintain complex equity arrangements, including cross‑shareholdings and multi‑layered nesting, which undermine stability, increase layers of capital circulation, and raise financing costs. Some applicants even establish private fund managers using capital from asset management products; due to the inherent characteristics of such products, this gives rise to further problems, including an unstable equity structure, unclear responsibilities for exercising shareholder rights among actual contributors, and difficulty in identifying the ultimate controller. Fourth, potential risks associated with related parties engaging in conflicting businesses. When related parties operate P2P platforms or other activities that conflict with private fund management, and lack approval from the relevant regulatory authorities, effective oversight of related-party transactions becomes impossible, allowing risks to spill over into the private fund sector. Fifth, a tendency toward group‑based operations. The same de facto controller registers multiple similar private fund managers, effectively “externalizing” internal management and incentive issues. Within these groups, homogeneous competition and cross‑industry conflicts arise, leading to irrational expansion and a situation where resources are stretched thin. In some cases, entities even establish new funds solely to hoard existing licenses.

II. The revised “Registration Guidelines” have refined the requirements for prospective registrants, covering all aspects from equity structure and basic operations to personnel qualifications.

First, in response to the concentrated issues arising in private fund manager registration—such as nominee shareholding, cross‑ownership, non‑compete obligations, intra‑industry competition, professional competence, and a tendency toward group‑based operations—the regulatory framework has been further refined across several dimensions, including operational requirements, personnel qualifications, investors, and related parties. On the operational and institutional fronts, new requirements have been introduced, such as independent office space, transparent financial reporting, and detailed disclosures of past business activities. Notably, special purpose vehicles that lack management personnel, do not maintain a physical office, or fail to fulfill the full duties of a fund manager are exempt from applying for private fund manager registration. With respect to personnel, the non‑compete obligation has been strengthened, the issue of concurrent positions held by senior executives has been clarified, and the competency and staffing requirements for investment professionals have been tightened. Regarding investors, nominee shareholding is strictly prohibited, clear ownership is emphasized, a requirement for equity stability has been added, and the definition of “actual controller” has been further specified. In the areas of subsidiaries, branches, and related parties, new rules on intra‑industry competition have been introduced; it is forbidden to circumvent related‑party disclosure through complex equity structures, and joint liability among multiple managers under the same actual controller, along with enhanced equity‑stability requirements, has been reinforced. Finally, concerning material changes, specific deadlines for reporting significant alterations and limits on the number of remediation attempts have been established. It has also been reiterated that any substantial change in the registration entity will be treated as the establishment of a new institution and subject to re‑examination, while the responsibilities of a private fund manager following mandatory resignation have been underscored.

Second, we will enhance the effectiveness of self-regulatory oversight by introducing a suspension‑of‑processing procedure. To standardize industry development, for applicant institutions that exhibit significant internal control deficiencies—such as unstable office premises, high liability risks, no genuine business‑development needs, or deviations from their core investment activities—and meet two or more of these criteria, the Association will grant a six‑month rectification period. Such institutions must submit their private‑fund registration applications only after completing the required remediation.

Third, to prevent the spillover of risks from business activities that conflict with the nature of private equity funds, new circumstances under which registration will be denied have been added. Previously, the Association had issued “Answers to Relevant Questions on Private Equity Fund Registration and Filing (No. 14),” which set out six grounds for refusing registration. This time, in response to situations where an applying institution or its major investors have previously engaged in P2P lending, informal lending, or other activities that are incompatible with the characteristics of private equity funds, the Association has introduced these circumstances as additional grounds for refusal in the revised “Registration Guidelines,” with the aim of preventing such risks from spilling over into the private equity sector and safeguarding investor interests.

III. The revised “Registration Guidelines” implement the fiduciary duties of administrators, establish a market integrity framework, and refine the industry’s tiered and categorized regulatory system.

Article 10 of the Interpretation of the Securities Investment Fund Law of the People’s Republic of China, published on the official website of the National People’s Congress, states: “Regulation of the securities investment fund industry primarily employs two approaches: administrative supervision and industry self‑regulation. Whether through administrative oversight or industry self‑regulation, the shared objective is to ensure the effective implementation of national laws and regulations governing securities investment funds, uphold the order of the securities market, safeguard the legitimate rights and interests of investors, and promote the sound and standardized development of the securities investment fund sector.” The interpretation further clarifies that administrative supervision and industry self‑regulation differ in nature: the former constitutes an administrative act, while the latter is a form of self‑governance. Administrative measures are grounded in laws and administrative regulations, whereas self‑regulatory practices, in addition to laws and administrative regulations, also draw upon the statutes, business rules, and industry disciplinary codes of self‑regulatory organizations. Throughout the years, the Association, as the industry’s self‑regulatory body, has continuously refined and improved private‑fund registration requirements and enhanced the transparency of private‑fund manager registration by issuing a series of self‑regulatory normative documents, including the Q&A series on private‑fund registration and filing and the Registration Guidelines.

First, we will proactively fulfill the association’s duties and refine the self-regulatory framework for enforcing fiduciary obligations. The behavioral standards governing fiduciary duties are stricter than the minimum requirements set by laws and regulations and exceed the norms of ordinary commercial practice; accordingly, industry self‑regulation plays a crucial role in upholding these obligations. Ensuring compliance with fiduciary duties in accordance with the law is the core mission of industry self‑regulation, while safeguarding investors’ legitimate rights and interests constitutes the association’s mandate and responsibility. This new edition of the “Registration Guidelines,” as one of the association’s measures to further strengthen self‑regulatory oversight, will help guide the broader public toward a proper understanding of the original intent of the registration and filing system. By means of transparent regulatory standards, clear codes of conduct, and effective monitoring, supervision, and self‑disciplinary sanctions, it will ensure orderly competition and a fair competitive environment among market participants.

Second, it seeks to foster a compliant industry ecosystem and establish a market‑wide integrity framework. The revised “Registration Guidelines” enhance review transparency by publicly disclosing evaluation criteria, providing institutions with clear standards for conducting business in a sound and lawful manner. This helps the industry build its reputation on trust, uphold ethical standards, and proactively mitigate risks that could harm investors’ rights and interests. By doing so, it contributes to the development of a robust market‑integrity mechanism and safeguards investors’ legitimate rights and interests.

Third, we will promote survival of the fittest and refine tiered and categorized industry management. At present, some institutions engage in duplicate or fraudulent registration, thereby increasing their own administrative costs and consuming limited review resources. The revised “Registration Guidelines,” by strengthening the principal‑entity accountability of group‑type institutions and clarifying compliance and professional‑competence requirements for senior executives and practitioners, provides greater operational flexibility to high‑quality institutions that maintain sound internal governance, assemble dedicated professional teams, and have genuine business‑development needs. This will help improve the industry’s structure and prevent the phenomenon of inferior offices driving out superior ones.

The revised “Registration Guidelines,” as one of the Association’s key self-regulatory measures, both strengthens registration requirements for private fund managers and enhances the effectiveness of self‑regulation in response to emerging issues and circumstances, while also providing clear standards to support orderly market operations, thereby yielding significant positive outcomes for the long-term, standardized functioning of the market. The Association is committed to further reinforcing self‑regulatory oversight, improving supporting institutional frameworks, safeguarding the order of the private fund industry, protecting the legitimate rights and interests of investors, and fostering the healthy development of the private fund sector.

The China Securities Regulatory Commission convened a meeting to coordinate and advance the handling of major cases.

Recently, the CSRC’s inspection department convened a work‑progress meeting in Shenzhen to oversee the handling of major cases, focusing on 10 representative cases. The meeting conducted a comprehensive assessment of each case, coordinated the deployment of resources across the regulatory system, and accelerated progress in case resolution, with a office commitment to rigorously enforcing the law against serious and high‑impact securities and futures violations. Officials responsible from the CSRC Inspection Corps, the Shanghai and Shenzhen Commissioner Offices, as well as 11 investigative units in Tianjin, Hubei, Hunan, Guangdong, and other localities attended the meeting.

Since the beginning of this year, the CSRC’s inspection and enforcement system, in accordance with the 2018 priorities and work plan for inspection and law enforcement, has adhered to the principles of “precise case initiation, precise investigation and prosecution, and precise crackdown,” focusing on key areas and market concerns, strengthening the identification of leads, and leveraging targeted enforcement campaigns as a driving force while relying on routine case handling. It has prioritized the investigation and prosecution of cases that seriously harm the interests of listed companies and the legitimate rights and interests of small and medium shareholders, undermine the stable functioning of the market, violate the principle of fair trading, and disrupt the order of information dissemination, achieving positive results. In response to market conditions and emerging issues, the Inspection Bureau has identified and placed under special supervision ten ongoing cases characterized by egregious circumstances, significant impact, and strong public concern, ensuring their timely and effective resolution.

The ten cases primarily involve the following: First, the actual controller, in the name of a listed company, provided guarantees for others and, by leveraging affiliated entities, allowed those entities to occupy the listed company’s funds over an extended period, thereby allegedly breaching fiduciary duties and harming the interests of the listed company. Second, certain listed companies artificially inflated their revenues and profits through methods such as fabricating customers, concocting fictitious transactions, and engaging in circular fund transfers, perpetrating financial fraud over several consecutive years and thus allegedly violating securities‑information disclosure laws. Third, after being subject to administrative penalties for illegal or non‑compliant conduct, some individuals failed to desist; instead, they repeatedly violated the law, continuing to exploit other people’s accounts to manipulate the prices of multiple stocks through continuous trading and self‑dealing, reaping substantial illicit gains. Fourth, the actual controller manipulated the timing of the listed company’s information disclosures and used other people’s accounts to engage in repeated buying and selling of the company’s shares, thereby allegedly committing insider trading, market manipulation, and other violations.

The meeting called on all investigative units to adopt a proactive stance, prioritizing the prevention of financial risks and the rectification of market irregularities. They are to concentrate their core personnel, innovate case-handling approaches, and enhance operational efficiency. Specifically: First, optimize the organizational model by emphasizing unified command over inspection resources, strengthening overall coordination and resource allocation, and fostering a law‑enforcement framework characterized by team‑based operations and close interagency collaboration. Second, bolster enforcement cooperation: promptly convene joint consultations when encountering novel, complex, or challenging issues during investigations, reinforce collaboration with other regulatory and law‑enforcement agencies, and fully leverage synergies in enforcement efforts. Third, elevate compliance standards: ensure that all investigative units strictly adhere to established procedures and the law in handling cases, thereby safeguarding procedural integrity and mitigating risks of misconduct. Fourth, mitigate market risks: while conducting investigations, develop comprehensive contingency plans, conduct proactive risk assessments, and respond in a measured and prudent manner to potential risk events that may arise during the course of case resolution.

Going forward, in line with the principle of comprehensive, stringent, and law-based regulation, I will refine the organizational framework for case investigations, strengthen coordinated oversight and deployment of major cases, and rigorously crack down on securities and futures violations that undermine the foundations of market operations, accumulate systemic risks, or severely disrupt market order. This will ensure robust protection of investors’ legitimate rights and interests and effectively safeguard the healthy and stable development of the capital market.

Shanghai and Shenzhen Stock Exchanges: May require issuers to conduct ad hoc special audits of raised funds.

Recently, the Shanghai and Shenzhen Stock Exchanges have revised and issued the “Rules for the Listing of Corporate Bonds” (Shanghai) (Shenzhen) and the “Rules for the Public Offering and Trading of Non‑Publicly Issued Corporate Bonds” (Shanghai) (Shenzhen).

The main contents of this rule revision encompass the following aspects: First, strengthening the exchange’s frontline regulatory functions and expanding the scope of self-regulatory oversight to bring securities offices, investors, and relevant personnel within the purview of regulation. Second, implementing the principle that any filing is subject to regulatory scrutiny, thereby reinforcing oversight at the issuance‑entry stage. A dedicated chapter sets out specific requirements for the pre‑review of corporate bond listings and for the conofficeation of transfer conditions for privately placed corporate bonds. Third, refining information‑disclosure supervision by stipulating that the issuer’s directors and senior management must serve as the persons responsible for information disclosure, emphasizing the obligation to disclose periodic reports for privately placed corporate bonds, tightening deadlines for such reports, and removing provisions allowing for delayed disclosure. Fourth, improving investor protection mechanisms by introducing a new provision authorizing the Shenzhen Stock Exchange to require issuers to engage accountants to conduct unscheduled special audits of raised funds.

Shanghai and Shenzhen Stock Exchanges: Extension of Bond Repurchase Trading Hours

The Shanghai Stock Exchange recently issued the “Notice on Preparing for the Adjustment to Extend Trading Hours for Bond Pledge Repurchase Transactions” (Shanghai Stock Exchange Letter [2018] No. 1374), while the Shenzhen Stock Exchange also released the “Notice on Preparing for the Extension of Bond Pledge Repurchase Trading Hours” (Shenzhen Stock Exchange Committee [2018] No. 526). Both exchanges will extend bond pledge repurchase trading hours to 3:30 p.m.

Specifically, following the extension of bond‑pledge repurchase trading hours, the opening call auction for bond‑pledge repos will take place from 9:15 to 9:25 each trading day; continuous bidding will run from 9:30 to 11:30 and from 13:00 to 15:27; and the closing call auction will be held from 15:27 to 15:30.

Attachment: (1) “Notice on Preparing for the Adjustment to Extend the Trading Hours of Bond Repurchase Transactions with Pledge” (SSE Letter [2018] No. 1374)

To all member institutions, information service providers, and relevant market participants:

To promote the healthy and orderly development of the bond market and enhance trading convenience, the Shanghai Stock Exchange (hereinafter referred to as “the Exchange”) plans to extend the trading hours for bond repurchase transactions with collateral to 15:30 at market close. All member institutions, information service providers, and relevant market participants are requested to make timely preparations for the necessary business and technical implementations. The relevant matters are hereby notified as follows:

I. Regarding the Extension of Trading Hours for Bond Repurchase Agreements with Pledge

Our exchange will extend the trading hours for bond‑pledge repurchase transactions, while maintaining the existing trading mechanisms and modes. Trading hours for other securities, including stocks, funds, and cash bonds, will remain unchanged. Following this adjustment, the opening call auction for bond‑pledge repurchases will take place from 9:15 to 9:25 each trading day, with continuous bidding from 9:30 to 11:30 and from 13:00 to 15:30. The code range for bond‑pledge repurchases is 204***.

II. Regarding Technical System Adjustments and Supporting Measures

All member institutions are requested to promptly complete the necessary technical and operational preparations, making adjustments to their order‑submission systems and associated risk‑control mechanisms. In accordance with the revised rules, please thoroughly verify the submission deadlines for all types of product trading orders and refrain from submitting to the exchange any investor orders for products that fall outside the trading hours.

All information service providers are requested to ensure proper display of the extended trading hours for bond‑pledge repurchase transactions, so that, upon system launch, they can present complete market data for this product.

All member institutions, information service providers, and relevant market participants are requested to complete system upgrades by the end of January 2019 and to make appropriate preparations on both business and technical fronts. In addition, please participate in the market testing organized by this exchange and, by the end of December 2018, submit your status regarding business and technical system‑upgrade readiness through the “Online Survey and Feedback” section in the exchange’s Member Zone.

III. On Investor Education

All member institutions, information service providers, and relevant market participants shall, in accordance with the Exchange’s rules, notices, and other pertinent documents issued by the Exchange, conduct investor education activities, engage in thorough communication with bond market investors, and ensure that investors fully understand and comply with the revised trading rules.

The specific dates for market testing, the official launch of operations, and the activation of technical interfaces will be communicated separately by this office.

(II) Notice on Preparing for the Extension of Trading Hours for Bond Repurchase Transactions with Collateral (SZSE [2018] No. 526)

To all member institutions, information service providers, and relevant market participants:

To promote the healthy and orderly development of the bond market and better serve market participants, with the approval of the China Securities Regulatory Commission, the Shenzhen Stock Exchange (hereinafter referred to as “the Exchange”) will extend the trading hours for bond repurchase transactions with collateral to 15:30. All member offices, information service providers, and relevant market participants are requested to make timely preparations for business and technical implementation. The relevant matters are hereby notified as follows:

I. Arrangements for Extending the Trading Hours of Bond Pledge Repurchase Transactions

Following the extension of bond repurchase‑by‑pledge trading hours, the opening call auction for bond repurchase‑by‑pledge transactions will take place from 9:15 to 9:25 each trading day; continuous trading will run from 9:30 to 11:30 and from 13:00 to 15:27; and the closing call auction will be held from 15:27 to 15:30. In addition, the time period during which the Exchange accepts applications for pledging or releasing pledges of bonds will be adjusted to 9:15 to 11:30 and 13:00 to 15:30 on each trading day.

II. Technical System Adjustments and Supporting Measures

All member institutions are requested to promptly complete the necessary technical and operational preparations, make adjustments to their order‑entry systems and associated risk‑control mechanisms, and thoroughly verify the submission deadlines for all types of product trading orders to ensure compliance with current regulatory requirements. No investor orders for products may be accepted outside of trading hours.

All information service providers are requested to ensure proper display of the extended trading hours for bond‑pledged repurchase transactions, so that market data can be fully presented upon go-live.

All member institutions, information service providers, and relevant market participants are requested to promptly complete system upgrades, make the necessary business and technical preparations, and actively participate in the market testing organized by this exchange.

III. Investor Education Efforts

All member institutions, information service providers, and relevant market participants are requested to conduct investor education in accordance with the Exchange’s rules, notices, and other relevant documents, engage in thorough communication with bond market investors, and ensure that investors fully understand and comply with the revised regulations.

The specific dates for market testing, the official launch date of the service, and the date on which the technical interface will be activated will be announced separately by this exchange.

The China Securities Regulatory Commission and the Securities and Futures Commission of Hong Kong have reached an agreement to further enhance information exchange under the Shanghai–Shenzhen–Hong Kong Stock Connect.

The China Securities Regulatory Commission (CSRC) and the Securities and Futures Commission of Hong Kong (SFC) have reached an agreement to further enhance information exchange under the mutual market access arrangements between the two markets. Both sides will refine the look-through mechanism for investors in the Shanghai–Shenzhen–Hong Kong Stock Connect programs and strengthen information sharing under the mutual market access framework. With the strong support of the SFC, the look‑through regulatory mechanism for the Shanghai Stock Connect and Shenzhen Stock Connect was implemented on September 26, 2018. In accordance with the relevant regulations and arrangements governing the mutual market access between the two markets, the CSRC will provide the necessary assistance to establish an identity‑identification code system for Hong Kong‑listed stocks under the Stock Connect program.

The China Securities Regulatory Commission and the French Autorité des Marchés Financiers have signed a bilateral regulatory cooperation letter.

Recently, during the Sixth China–France High-Level Economic and Financial Dialogue held in Paris, the China Securities Regulatory Commission and the French Autorité des Marchés Financiers signed a bilateral regulatory cooperation letter, aimed at strengthening practical cooperation between the two securities and futures regulators and their respective capital markets, thereby making a positive contribution to building a close and enduring China–France comprehensive economic strategic partnership.

The cooperation letter specifies that the China Securities Regulatory Commission and the French Autorité des Marchés Financiers will, in light of the current international economic and financial landscape, strengthen their pragmatic cooperation in areas such as market risk prevention, financing for the real economy, asset management, green and sustainable finance, and financial innovation, while also outlining their collaborative plans for the next two years. This cooperation letter serves to refine and supplement the Memorandum of Understanding on Cooperation in Securities and Futures Regulation, which was signed by the regulatory authorities of China and France in 1998.

Vice Chairman Li Chao attended the symposium on China’s capital market and global asset allocation.

On December 13, the Asset Management Association of China convened a symposium in Beijing on China’s capital markets and global asset allocation. In his address at the event, Li Chao, Vice Chairman of the China Securities Regulatory Commission, noted that in recent years, the CSRC has resolutely implemented the decisions and arrangements of the CPC Central Committee and the State Council, adopting a series of policy measures to steadily expand two-way opening-up of the capital market: optimizing and expanding stock‑connect mechanisms; revising and improving the Qualified Foreign Institutional Investor (QFII) and Renminbi Qualified Foreign Institutional Investor (RQFII) regimes; steadily advancing the opening of the futures market; further broadening access for the securities and futures industries; strengthening cross‑border regulatory cooperation; and effectively safeguarding the legitimate rights and interests of investors. At the same time, China’s economy has entered a stage of high‑quality development, with accelerated transformation of growth drivers and continuous optimization of the economic structure, leading to sustained improvements in development quality. The capital market now enjoys stronger momentum, its ability to serve the real economy has been enhanced, measures to prevent and defuse major financial risks are being effectively implemented, and a series of major initiatives to deepen reform and opening-up are being rolled out. The CSRC welcomes more long-term overseas capital to invest in China’s capital markets.

Representatives from numerous QFII and RQFII entities, domestic custodian banks, and securities and fund management institutions attended the meeting. The participating representatives shared their analyses and perspectives on global capital market trends and asset allocation, fully commended the achievements China has made through reform and opening-up and in the development of its capital markets, expressed broad optimism about the prospects for China’s economy and capital markets, and put forward specific recommendations for further improving the QFII and RQFII frameworks.

Relevant officials from the China Securities Regulatory Commission, the Shanghai Stock Exchange, the Shenzhen Stock Exchange, the China Financial Futures Exchange, and China Securities Depository & Clearing Corporation Limited attended the meeting.

Commercial & Corporate

The private‑enterprise bond financing support tool has been implemented in the exchange‑traded bond market, helping to boost bond financing for private enterprises.

To implement the decisions and arrangements of the CPC Central Committee and the State Council on broadening financing channels for private enterprises and alleviating their financing difficulties, and to carry out the State Council Executive Meeting’s decision to establish a bond‑financing support tool for private enterprises, the People’s Bank of China and the China Securities Regulatory Commission have worked closely together. Following the interbank bond market, the exchange‑traded bond market has now launched a bond‑financing support tool for private enterprises, providing market‑based support for their bond financing.

Recently, the first batch of bond financing support tools for private enterprises was launched, covering Jiangsu Hengtong Optic‑Electrical Co., Ltd. and Guangzhou Zhiguang Electric Co., Ltd., both of which utilized credit protection contracts. Both companies are publicly listed private enterprises.

Meanwhile, to foster complementarity between policy guidance and market mechanisms and mobilize additional resources to support private‑enterprise financing, the China Securities Regulatory Commission has encouraged and supported relevant financial institutions in providing credit protection instruments for private‑enterprise bond issuances. On the same day, market participants also launched a credit protection contract for bonds issued by Hailiang Group Co., Ltd.

Going forward, the China Securities Regulatory Commission will continue to thoroughly study and implement the spirit of General Secretary Xi Jinping’s important speech at the symposium on private enterprises, further leveraging the capital market’s positive role in supporting the development of private offices. It will strengthen communication and coordination with relevant financial institutions and private corporate bond issuers, and, while upholding market‑based principles, support private enterprises in making better use of bond‑financing instruments to raise funds in the exchange‑traded bond market.

NDRC: Supports high-quality enterprises in accessing direct financing and enhances the ability of corporate bonds to serve the real economy.

On December 12, the National Development and Reform Commission issued the “Notice on Supporting High-Quality Enterprises in Direct Financing to Further Enhance the Ability of Corporate Bonds to Serve the Real Economy” (hereinafter referred to as the “Notice”), which explicitly supports high-quality enterprises in issuing corporate bonds.

The Notice clarifies that, at this stage, priority support will be given to high-quality enterprises that meet the following criteria:

1. The issuer’s credit rating must be AAA.

2. Key financial performance indicators should be at the forefront of the industry or region.

3. Production and operations comply with national industrial policies and macroeconomic regulation policies.

4. Over the past three years, no defaults have occurred on corporate credit bonds or other debt instruments, and there are no outstanding instances of delayed principal or interest payments that remain ongoing.

5. No material violations of laws or regulations in the past three years, and not listed on any blacklist of untrustworthy entities.

6. During the reporting period, the financial statements were not subject to an adverse opinion or a disclaimer of opinion by the certified public accountant. If a qualified opinion was issued, the material impact of the matters covered by the qualification has been eliminated.

7. Other issuance conditions formulated by the National Development and Reform Commission to optimize financing supervision.

Attachment: “Notice on Supporting High-Quality Enterprises in Direct Financing and Further Enhancing the Ability of Corporate Bonds to Serve the Real Economy”

To the Development and Reform Commissions of all provinces, autonomous regions, municipalities directly under the central government, cities separately listed for planning purposes, and the Xinjiang Production and Construction Corps:

In order to thoroughly implement the decisions and arrangements of the CPC Central Committee and the State Council on strengthening the capacity of financial services to support the real economy, further enhance the ability of corporate bonds to serve the real economy, win the tough battle of preventing and defusing major risks, increase the share of direct financing, optimize bond‑financing services, and promote high‑quality economic development, the following matters concerning the issuance of corporate bonds by high‑quality enterprises are hereby notified.

I. Support high-quality enterprises with sound credit standing, stable operations, and a leading role in industrial structural transformation and upgrading or regional economic development to issue corporate bonds. At this stage, priority will be given to high-quality enterprises that meet the following criteria:

(1) The issuer’s credit rating must be AAA.

(2) Key operating and financial indicators shall be at the forefront of the industry or region (Attachment 1).

(3) Production and operations comply with national industrial policies and macroeconomic regulation policies.

(4) Over the past three years, there have been no defaults on corporate credit bonds or other debt instruments, and there are no outstanding instances of delayed payment of principal or interest that remain ongoing.

(5) No material violations of laws or regulations in the past three years, and not listed on any blacklist of untrustworthy entities.

(6) During the reporting period, the financial statements were not subject to an adverse opinion or a disclaimer of opinion by the certified public accountant. If a qualified opinion was issued, the material impact of the matters covered by the qualification has been eliminated.

(7) Other issuance conditions formulated by our Commission to optimize financing supervision.

Our commission actively supports eligible high-quality private enterprises in issuing corporate bonds and will, based on market developments, adjust the scope of support for such enterprises as appropriate.

II. Eligible enterprises applying to issue high-quality corporate bonds shall be subject to an issuance management regime characterized by “one-time approval of the quota, with phased, self‑directed issuances.”

(1) During the bond filing stage, issuers may submit a consolidated application for quota across all bond categories under our commission; the validity period of the approval document shall not exceed two years.

(2) Upon approval by our Commission, the issuer may, in light of market conditions and its own needs, independently and flexibly determine the specific issuance plan for each tranche of bonds, including, but not limited to, the size, tenor, embedded options, and principal‑and‑interest repayment arrangements of each tranche.

(3) During the filing stage, the issuer may establish only a lead underwriting syndicate, and at the time of each bond issuance, designate the lead underwriter and the members of the underwriting syndicate.

III. Enterprises seeking to issue corporate bonds must comply with the relevant requirements of the Company Law, the Securities Law, and the Regulations on the Administration of Corporate Bonds. High-quality corporate bonds shall be subject to an “immediate filing and review” process, with dedicated personnel assigned for liaison and specialized review. The review procedures shall be aligned with our Commission’s “accelerated and simplified review” category for bonds, and the review policy requirements shall be appropriately adjusted.

(1) On the basis of sound debt‑repayment safeguards, up to 50% of the proceeds from bond issuance may be used to replenish working capital.

(2) When determining the approved scale of public bond issuance, the calculation shall be based on the criterion that the outstanding balance of publicly issued corporate bonds and debentures does not exceed 40% of net assets.

(3) Encourage qualified high-quality listed companies and their subsidiaries to issue corporate bonds.

(4) High-quality enterprises shall be permitted, in accordance with applicable laws and regulations, to issue corporate bonds privately to institutional investors.

(5) Commercial banks are encouraged to adopt a “debt‑loan combination” approach to enhance creditworthiness and implement integrated management of bonds and loans.

IV. During the application stage for high-quality corporate bonds, the use of bond proceeds shall be governed by a positive‑negative list system.

(1) The application materials shall clearly specify the intended investment areas for the proceeds raised through the bonds, thereby establishing a “positive list.” This “positive list” must be aligned with national industrial policies and focus on the issuer’s core business. High-quality issuers are encouraged to allocate and utilize the bond proceeds in accordance with applicable laws and regulations within the scope defined by the “positive list,” thereby enhancing the efficiency and flexibility of bond‑fund utilization.

　(2) The application materials shall clearly specify the sectors in which bond proceeds are prohibited, thereby establishing a “negative list.” Such negative list shall include, but not be limited to: lending the raised funds to third parties; investing in real estate or overcapacity industries; engaging in risky investments such as stock trading and futures transactions unrelated to the enterprise’s production and operations; and using the funds to cover losses or for non‑productive expenditures. The scope of the negative list may be supplemented and adjusted in accordance with the enterprise’s specific business activities.

(3) High-quality enterprises are encouraged to allocate proceeds from bond issuances to national major strategies, key sectors, and priority projects; to strengthen efforts to address infrastructure bottlenecks; to accelerate the cultivation and development of strategic emerging industries; and to promote economic transformation, upgrading, and high-quality development.

V. Prior to the issuance of each tranche of bonds, the issuer shall publicly disclose a list of projects to which the proceeds are intended to be allocated, as well as the measures in place to ensure debt repayment.

VI. Issuers of high-quality corporate bonds and intermediary service institutions shall faithfully fulfill their information disclosure obligations and fully disclose bond investment risks to investors in a truthful, accurate, and complete manner.

(1) On the basis of fully disclosing material financial changes and bond‑related risks during the reporting period, the issuer shall prepare the offering circular in accordance with the requirements set forth in the “Guidelines for Information Disclosure on the Issuance of High‑Quality Corporate Bonds” (Attachment 2).

(2) The issuer shall, in accordance with the regulations of the regulatory authorities and the trading venue, periodically disclose, throughout the term of the bond, relevant information including financial status, operational performance, use of proceeds, and project progress. If, during the term, the intended use of proceeds is changed or any other matter arises that has a material impact on the rights and interests of bondholders, such changes or matters shall comply with applicable laws, regulations, and policies, follow the procedures prescribed by relevant rules or agreements, and be promptly announced.

VII. Any statements in this notice regarding high-quality enterprises, as well as any decisions made by our commission concerning their issuance of corporate bonds, do not constitute an assessment or guarantee of the issuer’s operational risks, debt‑repayment risks, litigation risks, or the investment risks and returns associated with such corporate bonds. Investors intending to subscribe for bonds issued by high-quality enterprises are advised to carefully read the offering prospectus and all relevant disclosure documents, make independent investment judgments, and assume full responsibility for the associated risks.

VIII. Provincial development and reform authorities may, in light of local development conditions, proactively provide services and actively guide high-quality enterprises within their jurisdictions to engage in direct financing through corporate bonds, channeling the proceeds from such bond issuances into real‑economy sectors that align with national industrial policies.

IX. Strengthen ongoing and post‑issuance supervision of high‑quality corporate bonds to effectively guard against debt‑repayment risks.

(1) By April 30 each year, the issuer and the lead underwriter shall submit to our Commission a report on the use of proceeds and the progress of projects financed by high-quality corporate bonds for the preceding year, as well as details on the arrangements for principal and interest repayments for the current year and an assessment of repayment‑related risks. The law office shall provide a legal opinion on the compliance of the relevant projects. Local enterprises shall simultaneously forward the aforementioned materials to the provincial development and reform authorities.

(2) The lead underwriter shall earnestly fulfill its obligation to oversee debt repayment, conduct thorough risk assessments for the annual principal and interest payments of the bonds, and, in cases where significant operational difficulties arise that may jeopardize bond repayment, promptly propose a risk‑mitigation plan and report it without delay to the provincial development and reform authorities and to our Commission.

(3) Our commission will further refine the credit profiles of corporate bonds and implement “dual-random” inspections for the ongoing management of high-quality corporate bonds. Provincial-level development and reform authorities should fully leverage their local‑level management advantages, employing tools such as the construction of a social credit system and big‑data‑driven early warning, monitoring, and analytical systems, to strengthen oversight and inspection of the allocation of proceeds from high-quality corporate bonds within their jurisdictions and of project construction progress. This will ensure that bond proceeds are used in compliance with laws and regulations, enable dynamic monitoring of debt‑repayment capacity and risk early warning, and urge issuers to make adequate preparations for principal and interest repayment, thereby effectively and prudently mitigating risks in the bond market.

The National Intellectual Property Administration has introduced a series of measures to promote IP‑related services that support the innovative development of private enterprises.

On December 11, the National Intellectual Property Administration issued the “Notice on Several Measures for Intellectual Property Services to Support the Innovative Development of Private Enterprises” (hereinafter referred to as the “Notice”), which mandates the strict protection of private enterprises’ intellectual property rights in accordance with the law.

The Notice calls for strengthening intellectual property protection for private enterprises through a variety of measures, coordinating with relevant parties to launch targeted campaigns, and concentrating on investigating and prosecuting a number of cases involving infringement of private enterprises’ intellectual property rights, thereby establishing a robust enforcement stance. Leveraging tools such as the internet and big data, and employing methods like source tracing, real-time monitoring, and online identification, efforts will be intensified to enhance both the effectiveness and precision of combating IP infringement and counterfeiting. In-depth research will be conducted to identify the challenges and issues faced by private enterprises in the enforcement and protection of intellectual property rights. Furthermore, the establishment of a joint credit‑based punitive mechanism in the IP field will be accelerated.

Attachment: Notice on Several Measures for Intellectual Property Services to Support the Innovative Development of Private Enterprises

To the Intellectual Property Offices of all provinces, autonomous regions, municipalities directly under the central government, and the Xinjiang Production and Construction Corps; to all departments of the National Intellectual Property Administration; to the relevant departments of the Patent Office; and to all units directly affiliated with the Administration:

In order to thoroughly implement General Secretary Xi Jinping’s important instructions on the development of the private sector and the decisions and arrangements of the CPC Central Committee and the State Council, and to leverage the fundamental role of intellectual property in driving innovation‑driven development, while vigorously supporting the private sector in enhancing quality and efficiency and fostering innovative growth, the following matters concerning intellectual property services for the innovative development of private enterprises are hereby notified:

I. Strictly protect the intellectual property rights of private enterprises in accordance with the law. Adopt a variety of measures to strengthen IP protection for private enterprises, and, in coordination with relevant authorities, launch targeted enforcement campaigns to investigate and prosecute a number of cases involving infringement of private enterprises’ IP rights, thereby maintaining a high-pressure stance on IP protection. Leveraging tools such as the Internet and big data, and employing methods like source tracing, real-time monitoring, and online identification, we will intensify efforts to combat IP infringement and counterfeiting with greater precision. Conduct in-depth research into the challenges and issues faced by private enterprises in the enforcement and protection of their IP rights. Accelerate the establishment of a joint credit‑based punitive mechanism in the field of intellectual property.

II. Strengthening Rapid, Coordinated Intellectual Property Protection for Private Enterprises. All intellectual property protection centers should further increase the proportion of private enterprises in their service‑provider roster, refine the one‑stop mechanism for expedited patent grant, rights conofficeation, and enforcement, and substantially enhance the efficiency of IP creation and protection among private offices in key industries. Meanwhile, all intellectual property rights‑protection assistance centers are to take proactive measures, provide on‑site services, and implement a first‑contact responsibility system; they must conduct at least one on‑site outreach activity per month for private enterprises, offering rapid response, swift handling, and timely feedback in IP rights‑protection assistance.

III. Expanding the coverage of intellectual property‑pledge financing for private enterprises. Fully leveraging the role of intellectual property in enhancing creditworthiness and facilitating access to loans, we will orient various support policies—such as risk compensation, subsidies, and interest rate subsidies—toward private enterprises to reduce financing costs. We will also refine a risk‑sharing mechanism for IP‑pledge financing that involves banks, insurers, guarantee institutions, and funds, thereby sharing financing risks. We will thoroughly assess the intellectual property financing needs of private enterprises and establish platforms for bank–enterprise matchmaking through project promotion events and bank–enterprise pairing conferences, thereby ensuring smooth access to financing channels. By the end of 2018, all provinces (autonomous regions, municipalities directly under the central government) and sub-provincial cities shall host at least one IP‑pledge financing matchmaking event. Furthermore, key cities in the construction of intellectual property operation service systems are expected to achieve an annual growth rate of over 20% in IP‑pledge financing in 2018, with projects involving small and medium‑sized private enterprises accounting for more than 50% of the total.

IV. Guiding intellectual property (IP) operation funds to support the innovative development of private enterprises. The IP operation funds for key industries, which are guided and supported by central government finances, should accelerate their investment pace, with new investments exceeding RMB 200 million in 2018. The proportion of investments directed toward private enterprises shall be incorporated into the funds’ performance evaluation metrics, ensuring that such investments account for more than 80% of total allocations. All types of IP operation funds are expected to leverage their professional expertise, strengthen post-investment management and services, and help private enterprises enhance the quality and efficiency of their IP assets.

V. Deeply implement the SME Intellectual Property Strategy Promotion Project. The intellectual property bureaus of pilot cities under this project shall refine the IP trusteeship framework, fostering collaboration among industry associations, IP service providers, and enterprises; intensify government procurement of services; and extend IP trusteeship services to private enterprises. Local intellectual property bureaus shall organize patent‑agency assistance programs, encouraging patent agencies to offer free patent‑filing services to struggling small and micro private enterprises, with a target of increasing the number of assisted enterprises by at least 20% in 2018. Furthermore, efforts will be stepped up to cultivate model enterprises that excel in IP management, thereby raising the share of private enterprises among national IP‑advantage demonstration entities. Support policies—including guidance on IP management system standardization and certification—will be tilted toward private enterprises, encouraging more of them to adopt and implement GB/T 29490‑2013, “Guidelines for the Management of Intellectual Property in Enterprises,” thus optimizing and enhancing their IP management systems. In addition, initiatives such as patent‑driven strategic planning, trademark and brand development, and geographically‑indicated‑product‑based targeted poverty alleviation will be actively advanced to bolster the growth and strengthening of private enterprises.

VI. Supporting the Development of the Intellectual Property Services Sector. Foster a fair and competitive environment to invigorate the private sector within the intellectual property services industry, ensuring equal treatment for both state‑owned and privately‑owned IP service providers in areas such as market access, licensing and approval, and industry oversight. Reduce the processing time for patent agency approvals to 10 days and strengthen ongoing and post‑approval supervision of patent agencies. All intellectual property service clusters should prioritize the cultivation of IP service brands, develop a cohort of large‑scale, internationally oriented, and well‑branded IP service providers, and promote the high‑quality development of the IP services sector.

VII. Promote facilitative services for intellectual property. All patent agency service windows shall organize briefings for private enterprises on patent fee reduction and related application policies. At least two such policy‑briefing events should be held annually, ensuring that measures such as patent fee reductions, the priority examination green channel, and the patent examination fast track benefit a greater number of private enterprises. Relevant local intellectual property offices shall coordinate with patent examination cooperation centers and trademark examination cooperation centers to launch “Face-to-Face with Thousands of Private Enterprises” initiatives, dispatching examiners to visit private offices. Each patent examination cooperation center shall send at least 100 examiner‑visits, while each trademark examination cooperation center shall dispatch no fewer than 20 examiner‑visits, providing in‑person consultations on specialized issues related to obtaining, protecting, and exercising intellectual property rights, soliciting advice and identifying needs from enterprises, thereby helping private businesses enhance the quality and effectiveness of their intellectual property assets. Furthermore, an overseas intellectual property dispute response mechanism should be established, the overseas intellectual property information platform continuously refined, and practical guidelines for safeguarding intellectual property rights abroad compiled and published, so as to support the international expansion of private enterprises.

VIII. Strengthen public services for intellectual property information. Improve the patent data service pilot system, expand the scope of open access to basic patent data, and progressively open up the trademark database, thereby facilitating enterprises’ access to intellectual property information. Leverage the role of intellectual property information service platforms to enhance private enterprises’ capacity to obtain and utilize patent information, and launch support initiatives for private enterprises.

9. Strengthen efforts to cultivate intellectual property talent in private enterprises. Actively conduct IP training for private enterprises and support national IP training bases in vigorously developing IP professionals for this sector. Local IP authorities should enhance IP capacity-building for private enterprises by offering multi‑tiered, targeted training programs aimed at leading executives, managerial staff, practicing professionals, and innovation‑and‑entrepreneurship talent. By the end of 2018, each province (autonomous region, municipality) shall provide training to at least 100 participants from private enterprises, while pilot provinces and demonstration cities with strong IP capabilities shall train no fewer than 200 such participants.

X. Enhancing Intellectual Property Awareness Among Private Enterprises. Actively promote a culture of innovation, prioritizing private and small, medium, and micro enterprises, and intensify efforts to raise awareness of intellectual property. Seizing opportunities presented by major events such as the 40th anniversary of reform and opening-up, organize training sessions, seminars, and other outreach activities targeted at private and SMEs, disseminating knowledge of relevant laws, regulations, and policies. Strengthen communication on support measures for private enterprises by launching dedicated topics, columns, and special sections, and leveraging both traditional and new media to conduct extensive publicity and reporting, thereby fostering a favorable public discourse on intellectual property. Publicize and report on exemplary cases, conduct thematic interviews under initiatives such as “Intellectual Property: Shaping the Future of Competition,” and commission central media outlets to produce in-depth features on how private and SMEs leverage intellectual property to enhance their competitive edge, telling compelling stories about the role of IP in these enterprises.

Local intellectual property offices should attach great importance to this issue, intensify efforts to implement relevant policies, and focus on addressing the key challenges and pain points faced by private enterprises in the field of intellectual property. The National Intellectual Property Administration will strengthen the assessment and evaluation of policy implementation, incorporating it into the annual priority assessment criteria for building strong provinces, cities, and counties in the IP domain. By year’s end, the intellectual property offices of all provinces, autonomous regions, and municipalities directly under the central government are required to submit to the National Intellectual Property Administration a report detailing the measures adopted, the results achieved, existing problems, plans for next steps, as well as any relevant suggestions or recommendations.

Ministry of Justice: Leveraging the functions and roles of judicial administration to support the development of private enterprises.

On December 11, the Ministry of Justice convened a videoconference to discuss how the judicial administration system can support and promote the development of private enterprises. Minister of Justice Fu Zhenghua attended the meeting and delivered a speech, while Yuan Shuhong, Secretary of the Party Group of the Ministry of Justice, presided over the session.

The meeting comprehensively reviewed the interim achievements made over the past month in the judicial administration system’s efforts to support and promote the development of private enterprises, and emphasized the need to thoroughly implement the important instructions of General Secretary Xi Jinping, elevate political awareness across the board, strengthen organizational leadership and accountability, and further ensure the effective implementation of the “Opinions on Fully Leveraging Functional Roles to Foster a Favorable Rule-of-Law Environment for the Development of Private Enterprises” (hereinafter referred to as the “20 Measures”).
It is reported that, following the Ministry of Justice’s issuance of the “Implementation Plan for Launching a Special Campaign on ‘Rule-of-Law Health Checks’ for Private Enterprises,” lawyers have enthusiastically engaged in conducting such assessments. Across the country, more than 2,700 lawyer service teams have been organized, with 11,000 lawyers participating. Over 1,400 policy briefings and explanatory sessions have been held, directly reaching and serving 11,000 private enterprises. Lawyers have put forward 15,000 recommendations for legal risk prevention and control, and have collectively mediated and resolved more than 2,100 disputes and conflicts. Efforts to ensure strict, standardized, impartial, and civilized law enforcement have advanced steadily. The “Public Complaints–Proof‑Item Cleanup and Complaint‑Supervision Platform” has received a total of 1,705 public complaints, including 1,007 related to the streamlining of proof‑required matters. All issues raised by private enterprises have been promptly forwarded and closely monitored, effectively addressing difficulties and excessive burdens associated with administrative procedures. The review and cleanup of laws, regulations, and normative documents has gotten off to a smooth start. Localities have formulated work plans, clearly defining the scope, criteria, procedures, and requirements for the review, thereby comprehensively eliminating legal and regulatory provisions and normative documents that hinder the development of private enterprises.
Fu Zhenghua emphasized the need to accelerate the implementation of “rule-of-law health checks,” focusing on key areas and enhancing the precision of legal services. He also called for expediting the review and revision of regulations and normative documents, ensuring that any provisions inconsistent with the principle of equal protection or detrimental to the development of the private sector are either amended or repealed as appropriate. Furthermore, he urged the swift advancement of efforts to streamline certification requirements, with strict adherence to law and expedited procedures: by the end of December, decisions should be submitted to the provincial people’s governments in accordance with the law, or, following review, forwarded through the prescribed legal channels to the people’s congresses and their standing committees of provinces, autonomous regions, and municipalities directly under the central government for legislative amendments or decisions to repeal or conoffice such requirements.
While presiding over the meeting, Yuan Shuhong called for further alignment of thinking and heightened awareness, reinforcing a sense of responsibility and urgency in carrying out this work. He urged participants to tailor their efforts to local conditions, meticulously plan and carefully organize, and implement robust measures to ensure the effective implementation of the “20 Measures,” thereby striving to build an open, fair, and impartial business environment underpinned by the rule of law, and to support and promote the sustained, healthy, and rapid development of private enterprises.
At the meeting, responsible officials from the justice departments of Jiangsu, Anhui, and Hebei, along with a representative of Guangdong’s legal profession and a representative of Zhejiang’s private-sector entrepreneurs, each delivered remarks.
Members of the Party Leadership Group and the leading team of the Ministry of Justice, as well as all cadres from the Secretariat of the Central Commission for Law-Based Governance, the Commission’s Discipline Inspection and Supervision Group stationed at the Ministry, the Ministry’s Inspection Office, and all departments and bureaus within the Ministry, together with the leading teams of directly affiliated units based in Beijing, attended the meeting.

General Administration of Customs: Simplify Registration Procedures for Customs Declaration Entities to Reduce Business Costs

Recently, the General Administration of Customs issued the “Announcement on Further Optimizing Matters Related to the Registration and Management of Customs Declaration Entities” (General Administration of Customs Announcement [2018] No. 191), which streamlines relevant registration procedures and reduces enterprises’ institutional transaction costs. The announcement takes effect as of February 1, 2019.

Among them, branch offices legally established by importers and exporters may file for registration as branch offices of importers and exporters. Such registration shall be applied for with the customs authority at the location of the branch office, upon presentation of the “Registration Form for Customs Declaration Entities” by the importer or exporter. Both the importer or exporter and its customs‑registered branch offices may conduct import and export customs clearance nationwide.

An applicant seeking temporary customs registration may submit an application to the customs authorities by presenting the “Customs Brokerage Entity Registration Form” together with supporting documentation demonstrating non‑commercial activities.

Accelerating the reform of state-owned enterprises through mixed ownership, Zhejiang has launched 40 mixed-ownership projects.

To accelerate the advancement of mixed-ownership reform in Zhejiang Province’s state-owned enterprises, a project promotion event held recently in Hangzhou showcased 40 mixed-ownership reform initiatives, aiming to attract diverse forms of social capital to actively participate in state‑owned enterprise reform and Zhejiang’s economic development.

Zhejiang is one of the earliest provinces in China to embark on mixed-ownership reform, having gradually advanced state‑owned enterprise restructuring centered on mixed ownership as early as the beginning of the 1990s. In recent years, Zhejiang has successfully completed a series of major mixed‑ownership reform projects, including the full public listing of Wuchan Zhongda Group, the initial public offering of Zhejiang Securities, the establishment of Zhejiang Provincial Petroleum Company, and equity participation in the Zhoushan Green Petrochemical Base. By the end of last year, mixed‑ownership enterprises under provincial jurisdiction accounted for 70.7% of all such entities, with their total assets, operating revenue, and total profits representing 65%, 85%, and 84%, respectively.

This round of 40 mixed‑ownership reform projects launched in Zhejiang spans multiple sectors, including transportation, energy, environmental protection, chemicals, machinery, construction, and finance. Among them are key initiatives such as the Wuchan Zhongda Group’s refinancing plan to raise up to RMB 4 billion through a non‑public issuance of shares, and the Zhejiang Provincial Salt Industry Group’s strategy to attract strategic investors via a combination of capital increases and share expansions alongside secondary‑market share transfers. Once these 40 projects are implemented, they are expected to draw in over RMB 40 billion in private capital.

Feng Bosheng, Secretary of the Party Committee and Director of the State-owned Assets Supervision and Administration Commission of Zhejiang Province, stated that Zhejiang boasts a well-developed private sector and a high degree of marketization, giving it inherent advantages and a solid foundation for developing a mixed‑ownership economy. The Zhejiang SASAC will vigorously support the participation of various forms of social capital in state‑owned enterprise reform and resource integration, facilitate the transformation of operating mechanisms in mixed‑ownership enterprises, and refine regulatory approaches to ensure that, following reform, these enterprises are fully integrated into the market and better serve Zhejiang’s economic and social development.

At the promotion event, Zhejiang also officially launched the “Zhejiang Province Mixed-Ownership Reform Project Release Platform.” According to officials, the platform, built on the Zhejiang Equity Exchange, will better coordinate mixed-ownership reform project resources across the province, establish an authoritative information‑dissemination channel, and promote the transparent and fair implementation of such projects, thereby ensuring the preservation and appreciation of state‑owned assets.

China-Japan-South Korea Free Trade Area Negotiations: Further Enhancing the Level of Trade and Investment Liberalization

On December 7, the 14th round of negotiations on the China-Japan-ROK Free Trade Area was held in Beijing. Vice Minister of Commerce and Deputy Chief Negotiator for International Trade, Wang Shouwen, along with Japan’s Vice-Minister for Foreign Affairs Kazuyuki Yamazaki and South Korea’s Assistant Minister of Trade, Industry and Energy, Yoo Myung-hee, led their respective delegations to the meeting. The three sides unanimously agreed to advance the implementation of the consensus reached by the leaders of the three countries and to accelerate the negotiation process for the China-Japan-ROK Free Trade Area.

All three parties agreed that, with substantial progress in the Regional Comprehensive Economic Partnership (RCEP) negotiations—into which they are jointly engaged—the groundwork has been laid for accelerating talks on a China–Japan–ROK Free Trade Area. Building on the achievements already attained under RCEP, the three sides will explore ways to further enhance the liberalization of trade and investment through such a free trade area. They also decided that the next round of negotiations will be held in Japan and that, starting with this round, working-group meetings will resume to conduct substantive consultations on issues including trade in goods, trade in services, and investment.

The China-Japan-South Korea Free Trade Area negotiations are among the largest and most trade‑intensive free trade agreements that China is currently pursuing. On November 5, during his keynote address at the opening ceremony of the China International Import Expo, President Xi Jinping called for accelerating the negotiation process. At the seventh Trilateral Leaders’ Meeting held in Japan this May, the participating leaders issued a joint declaration reafofficeing their commitment to further expedite the China-Japan-South Korea FTA talks, with the aim of concluding a comprehensive, high‑level, mutually beneficial free trade agreement that delivers intrinsic value.

Taxation TAXATATION

The State Council has made it clear that the tax burden on individual partners in venture capital offices will only be reduced, not increased.

On December 12, Premier Li Keqiang of the State Council presided over an executive meeting of the State Council, which decided to introduce income tax incentives to promote the development of venture capital and strengthen support for entrepreneurship and innovation; outlined measures to accelerate the mechanization of agriculture and upgrade the agricultural machinery and equipment industry, thereby bolstering rural revitalization and the development of agriculture, rural areas, and farmers; and approved the results of the 2018 National Science and Technology Awards review.

To further implement the CPC Central Committee and the State Council’s directives to strengthen support for entrepreneurship and innovation, encourage the development of venture capital, harness market forces to pool more resources, enhance the effectiveness of entrepreneurial and innovative endeavors, and promote job creation, the commercialization of scientific and technological advances, and industrial upgrading, the meeting decided that, building on this year’s nationwide preferential policy—under which venture capital offices may deduct 70% of their investment in seed‑stage and early‑stage technology enterprises from their taxable income—starting January 1 next year, legally registered venture capital offices will be permitted to opt for either: (1) individual partnership income derived from equity transfers and dividend distributions received from such funds to be taxed at a flat rate of 20%; or (2) the office’s annual aggregate income to be taxed according to a progressive tax rate ranging from 5% to 35%. The duration of these measures is tentatively set at five years, ensuring that the tax burden on individual partners of venture capital offices will be reduced, with no increase.

The meeting noted that, in line with the strategic plan for rural revitalization, accelerating agricultural mechanization and upgrading agricultural machinery and equipment is a crucial pillar for modernizing agriculture and increasing farmers’ incomes, while also helping to expand the domestic market. To meet the needs of developing diversified, appropriately scaled operations, it is essential to respect farmers’ wishes, leverage market mechanisms and grassroots creativity, and advance this effort in an orderly, locally tailored manner. First, we will enhance the level of mechanized planting and harvesting for major crops such as rice, wheat, corn, potatoes, rapeseed, cotton, and sugarcane. Subsidies will be provided, in accordance with regulations, for practices like deep tillage and subsoiling, as well as for machine sowing and harvesting. Domestic and imported agricultural machinery will be treated equally, financial institutions will be encouraged to offer collateral‑based loans, and local governments will be urged to provide interest subsidies. Areas with suitable conditions should take the lead in achieving basic full‑process mechanization of major crop production. Second, we will promote advanced, practical agricultural machinery and technologies. Support will be given to the demonstration and widespread adoption of precision seeding, efficient fertilization, targeted pesticide application, water‑saving irrigation, and high‑horsepower, high‑performance machinery. At the same time, we will develop and disseminate small and medium‑sized machinery and mechanization technologies suited to smallholder farming and hilly, mountainous regions. Third, focusing on weak links and shortcomings, we will accelerate innovation in agricultural machinery and equipment and drive industrial transformation. Large enterprises will be encouraged to shift toward integrated, turnkey equipment solutions. We will promptly address the shortage of available machinery for key cash crops. The quality of agricultural machinery and equipment will be improved, and new R&D‑and‑production models—such as “enterprise + cooperative + base”—will be explored. Fourth, we will improve the infrastructure for agricultural machinery operations. Efforts will be made to consolidate small, fragmented fields into larger, more uniform plots; to shorten short, irregularly shaped fields; to straighten curved sections; and to enhance connectivity among farmlands. In hilly and mountainous areas, we will support the “machinery‑friendly” transformation of farmland. Fifth, we will actively develop socialized agricultural machinery services. We will foster specialized machinery operators and cooperatives, and encourage service providers to form production alliances with family farms, large-scale growers, and agricultural enterprises, sharing machinery and resources. We will also advance the integration of “Internet Plus Agricultural Machinery Operations,” thereby promoting the development of smart agriculture.

The meeting heard a report on the results of the 2018 National Science and Technology Awards review, approved the list of awardees as well as the categories and levels of the awards, and encouraged more science and technology professionals—especially young researchers—to engage in cutting-edge research and tackle key technological challenges. It also called for expanding international innovation cooperation, achieving more significant original breakthroughs, and ensuring that science and technology better serve and underpin economic development and improvements in people’s livelihoods.

The State Taxation Administration has issued a document clarifying the administrative matters related to the issuance of the “Tax Payment Certificate.”

In accordance with the Measures for the Administration of Tax Receipts (Order No. 28 of the State Taxation Administration), the State Taxation Administration has issued the Notice on Clarifying Matters Related to the Issuance and Management of the “Certificate of Tax Payment” (Documentary Form), deciding that, effective January 1, 2019, adjustments will be made to the issuance of the “Certificate of Tax Payment” (documentary form, hereinafter the same).

Effective January 1, 2019, the “Certificate of Tax Payment” is no longer managed as a tax receipt and will no longer bear the official seal of the State Taxation Administration. The seal affixed by the tax authority has been changed from the “Special Seal for Tax Collection” to the “Special Seal for Business.” For individual income tax payers requesting a certificate pertaining to taxes paid or refunded for tax periods on or after January 1, 2019, the tax authorities shall issue an Individual Income Tax “Tax Payment Record” in accordance with the “Announcement of the State Taxation Administration on Adjusting the Individual Income Tax ‘Certificate of Tax Payment’ (Documentary Form) to a ‘Tax Payment Record’” (State Taxation Administration Announcement No. 55 of 2018), and will no longer issue the “Certificate of Tax Payment.”

Individual income tax deductions are set to be implemented; a big data platform for individual income tax administration is being explored.

Effective January 1 next year, the six special additional deductions under the individual income tax system will be fully implemented. At present, tax authorities across the country are stepping up preparations to ensure the smooth implementation of the new Individual Income Tax Law.

Zhan Liren, Director of the Individual Income Tax Division of the Guangdong Provincial Tax Service, stated that the Guangdong Provincial Tax Service will further explore the development of a big-data platform for individual income tax administration and conduct more comprehensive, detailed, and dynamic analyses of the impact of tax reform. The service will strengthen interdepartmental collaboration to vigorously advance the establishment of a province-wide framework for collaborative tax governance, leveraging coordination and data sharing to enhance collection and administration efficiency. Additionally, it will innovate approaches to public outreach and training, proactively preparing for the implementation of the new tax system.

According to Zhan Liren, the Guangdong Provincial Tax Service has proposed that the provincial government strengthen coordinated planning and accelerate the establishment of a new provincial‑wide framework for collaborative tax governance, thereby providing institutional safeguards to promote the sharing of tax‑related information—including that pertaining to individuals—and to build a society‑wide network of coordinated tax administration and protection. In addition, the Guangdong Provincial Tax Service has recommended that the provincial government take the lead in setting up a unified, standardized platform or mechanism for sharing tax‑related information, clearly defining the requirements for relevant departments and entities to provide such information, as well as their specific obligations and responsibilities, and establishing a collaborative mechanism for province‑wide tax governance.

Mao Jiang, Director of the Individual Income Tax Department of the Beijing Municipal Tax Service, stated that, to ensure the precise implementation of the new individual income tax policies, the bureau has, building on its earlier training and guidance efforts, proactively coordinated policy alignment, intensified public outreach and taxpayer education, and enhanced information sharing, thereby fully supporting the smooth rollout of the revised Individual Income Tax Law.

Mao Jiang stated that, in order to better advance the development of the information platform, enrich and refine Beijing’s Big Data Action Plan, and foster a collaborative governance model involving all sectors of society, the Beijing Municipal Tax Service has strengthened communication and coordination with the municipal government, securing its strong support. A leading group for information sharing has been established, and data channels have been set up through the Beijing Municipal Government Information Sharing Platform. Once relevant tax-related data are uploaded to this platform, they are promptly synchronized to the Beijing Municipal Tax Service’s central database and seamlessly integrated with the State Taxation Administration’s Individual Income Tax Management System (ITS).

During the first tax collection period of the transitional policy for the November individual income tax reform, Guizhou Province recorded 464,000 withholding agents and 4.121 million taxpayers filing and paying individual income tax. According to the bureau’s estimates, more than 900,000 wage‑and‑salary taxpayers are now exempt from paying individual income tax, reducing the share of individual income tax on wages and salaries from 45.8% to 24%.

According to Xu Hong, Director of the Individual Income Tax Division of the Guizhou Provincial Tax Service Bureau, the bureau will further refine its measures for implementing the individual income tax reform, clarify job responsibilities and work procedures, advance the initialization of the natural person tax administration system, verify and cleanse the system’s natural person data, and conduct publicity on the new individual income tax policies as well as training on system operation procedures, thereby laying a solid foundation for the full implementation of the Individual Income Tax Law on January 1, 2019.

General Administration of Customs: Promoting the “self-declaration and self-payment” tax regime for domestic sales of processed‑trade materials.

Recently, the General Administration of Customs issued the “Notice on Promoting the ‘Self-Declaration and Self-Payment’ System for Taxes on In‑Country Sales of Processing Trade Materials” (General Administration of Customs Announcement No. 196 of 2018). The Administration has decided to extend the self‑declaration and self‑payment system for taxes on in‑country sales of processing trade materials, effective January 1, 2019.

When import and export enterprises and entities perform pre‑entry for the taxation of domestically sold processed‑trade materials, after selecting “self‑declaration and self‑payment,” they are no longer required to enter the “date of first import of the materials.” They may then use the customs tax (fee) calculation tool within the pre‑entry system to compute the applicable taxes and fees, conoffice the results displayed by the system, and submit these together with the pre‑entered contents of the customs declaration to the customs authorities.

LITIGATION & ARBITRATION

New Judicial Interpretation of the Supreme People’s Court: Refining the System of Conduct Preservation in Intellectual Property Disputes

On December 13, the Supreme People’s Court promulgated the “Provisions on Several Issues Concerning the Application of Law in Reviewing Cases of Behavioral Preservation in Intellectual Property Disputes” (hereinafter referred to as the “Provisions”).

The Regulations stipulate that an application for interim measures shall be filed with the people’s court, accompanied by a written application and relevant evidence. The application shall set forth the following matters:

(1) The identities, service addresses, and contact information of the applicant and the respondent;

(2) The content and duration of the requested interim measures;

(3) The facts and grounds on which the application is based, including a specific description of how the respondent’s conduct would cause irreparable harm to the applicant’s legitimate rights and interests or render the enforcement of the case’s adjudication extremely difficult;

(4) Information on the property or creditworthiness supporting the security for interim measures, or the grounds for waiving the requirement to provide such security;

(5) Other matters that require to be stated.

Attachment: Provisions on Several Issues Concerning the Application of Law in the Review of Cases Involving Preservation Measures in Intellectual Property Disputes

In order to ensure the proper adjudication of preservation-of-rights cases involving intellectual property disputes and to promptly and effectively safeguard the lawful rights and interests of the parties, these Provisions are hereby formulated in accordance with the relevant provisions of the Civil Procedure Law of the People’s Republic of China, the Patent Law of the People’s Republic of China, the Trademark Law of the People’s Republic of China, the Copyright Law of the People’s Republic of China, and other applicable laws, taking into account the practical realities of judicial trial and enforcement work.
Article 1: In these Provisions, “intellectual property disputes” refer to intellectual property and competition disputes as defined in the Provisions on the Causes of Action in Civil Cases.
Article 2: Where the parties to an intellectual property dispute, prior to the entry into force of a judgment, ruling, or arbitral award, apply for interim measures pursuant to Articles 100 and 101 of the Civil Procedure Law, the people’s court shall accept the application.
Where the licensee under an intellectual property licensing agreement applies for a pre-litigation order to cease infringement of intellectual property rights, the licensee under an exclusive license may file such an application independently with the people’s court; the licensee under an exclusive‑right license may file such an application independently if the rights holder fails to do so; and the licensee under a non‑exclusive license may file such an application independently if expressly authorized by the rights holder to bring suit in its own name.
Article 3: An application for pre-litigation interim measures shall be filed with the people’s court at the domicile of the respondent that has jurisdiction over the relevant intellectual property dispute, or with the people’s court that has jurisdiction over the case.
Where the parties have agreed to arbitration, they shall apply to the people’s court specified in the preceding paragraph for interim measures.
Article 4: An application for an injunction shall be filed with the people’s court, accompanied by a written application and relevant evidence. The application shall set forth the following matters:
(1) The identities, service addresses, and contact information of the applicant and the respondent;
(2) The content and duration of the requested interim measures;
(3) The facts and grounds on which the application is based, including a specific description of how the respondent’s conduct would cause irreparable harm to the applicant’s legitimate rights and interests or render the enforcement of the case’s adjudication extremely difficult;
(4) Information on the property or creditworthiness supporting the security for interim measures, or the grounds for waiving the requirement to provide such security;
(5) Other matters that require to be stated.
Article 5. Before a people’s court rules to adopt measures for behavioral preservation, it shall hear the views of both the applicant and the respondent, unless circumstances are urgent or such hearing might prejudice the execution of the preservation measures.
Where the people’s court issues an order to adopt measures for behavioral preservation or dismisses the application, it shall serve the order on both the applicant and the respondent. If serving the order on the respondent may prejudice the implementation of the preservation measures, the people’s court may, after taking such measures, promptly serve the order on the respondent, but in any event no later than five days.
Where a party applies for interim measures during the arbitration proceedings, it shall submit to the people’s court, through the arbitral institution, an application, the notice of acceptance of the arbitration case, and other relevant documents. If the people’s court rules to adopt interim measures or dismisses the application, it shall serve the ruling on the parties and notify the arbitral institution.
Article 6: Where any of the following circumstances exists and failure to promptly adopt provisional measures would be sufficient to harm the applicant’s interests, such circumstances shall be deemed to fall within the “urgent circumstances” as stipulated in Articles 100 and 101 of the Civil Procedure Law:
(1) The applicant’s trade secrets are about to be unlawfully disclosed;
(2) The applicant’s rights of publication, right to privacy, and other personal rights are about to be infringed;
(3) The intellectual property in dispute is about to be unlawfully disposed of;
(4) The applicant’s intellectual property rights are being or are about to be infringed upon in time-sensitive settings such as trade fairs;
(5) Highly time-sensitive, popular programs are currently being or are about to be infringed upon;
(6) Other circumstances in which interim measures are required to be taken immediately.
Article 7. When reviewing applications for interim measures, the people’s courts shall comprehensively consider the following factors:
(1) Whether the applicant’s request is supported by factual grounds and legal basis, including whether the intellectual property rights sought to be protected are stable in validity;
(2) Whether the failure to adopt interim measures would result in irreparable harm to the applicant’s legitimate rights and interests, or render the enforcement of the case’s adjudication excessively difficult;
(3) Whether the harm caused to the applicant by failing to adopt interim measures exceeds the harm that would be caused to the respondent by adopting such measures;
(4) Whether the adoption of interim measures would harm the public interest;
(5) Other factors that should be taken into consideration.
Article 8. When reviewing and determining whether the intellectual property right for which protection is sought by the applicant is stable, the people’s court shall comprehensively consider the following factors:
(1) The type or nature of the rights involved;
(2) Whether the rights in question have undergone substantive examination;
(3) Whether the rights in question are subject to invalidation or revocation proceedings, and the likelihood that they will be declared invalid or revoked;
(4) Whether there is any dispute over the ownership of the rights in question;
(5) Other factors that may render the validity of the rights in question unstable.
Article 9: Where an applicant seeks an injunction based on a utility model or design patent, the applicant shall submit a search report, a patentability assessment report, or a decision by the Patent Reexamination Board upholding the validity of the patent, all issued by the patent administrative department under the State Council. If the applicant, without justifiable reason, refuses to submit such documents, the people’s court shall rule to dismiss the application.
Article 10: In cases involving preservation measures in disputes over intellectual property and unfair competition, any of the following circumstances shall be deemed to constitute “irreparable harm” as referred to in Article 101 of the Civil Procedure Law:
(1) The respondent’s conduct is likely to infringe upon the applicant’s goodwill or personal rights such as the right of publication and the right of privacy, thereby causing irreparable harm;
(2) The respondent’s conduct will render the infringing act difficult to control and substantially increase the applicant’s damages;
(3) The respondent’s infringing conduct will result in a significant reduction in the applicant’s relevant market share;
(4) Causing other irreparable harm to the applicant.
Article 11: Where an applicant seeks interim measures, they shall, in accordance with the law, provide security.
The amount of security provided by the applicant shall be equivalent to the losses that the respondent may incur as a result of the enforcement of interim measures, including reasonable losses such as the sales proceeds of products subject to an order to cease infringing acts and storage costs.
During the implementation of interim measures, if the losses that the respondent may suffer exceed the amount of the applicant’s security, the people’s court may order the applicant to provide additional security. If the applicant refuses to do so, the court may issue an order to lift or partially lift the interim measures.
Article 12: The measures of behavioral preservation adopted by the people’s courts shall, as a general rule, not be lifted upon the provision of security by the respondent, unless the applicant consents.
Article 13: Where a people’s court rules to adopt measures for behavioral preservation, it shall, in accordance with the applicant’s request and the specific circumstances of the case, reasonably determine the duration of such measures.
The effect of an order to cease infringement of intellectual property rights shall, as a general rule, remain in force until the judgment in the case becomes final.
The people’s court may, upon the applicant’s request and in light of any additional security provided, rule to continue the preservation measures. If the applicant seeks to renew such measures, the application must be filed no later than seven days before the expiration of the existing period.
Article 14: If a party disagrees with a ruling on interim measures and applies for a reconsideration, the people’s court shall, within ten days of receiving the application for reconsideration, review the matter and issue a ruling.
Article 15: The methods and measures for taking behavioral preservation shall be governed by the relevant provisions of the enforcement procedures.
Article 16: Where any of the following circumstances exists, it shall be deemed to constitute “an erroneous application” as stipulated in Article 105 of the Civil Procedure Law:
(1) The applicant fails to institute legal proceedings or apply for arbitration in accordance with the law within thirty days after the adoption of interim measures.
(2) The interim measures for preservation of rights are improper ab initio due to reasons such as the intellectual property right sought to be protected having been declared invalid;
(3) An application is made to order the respondent to cease infringing intellectual property rights or engaging in unfair competition, but a final judgment has determined that no infringement or unfair competition has occurred;
(4) Other circumstances in which the application is erroneous.
Article 17: Where a party applies for the lifting of interim measures, the people’s court, upon receipt of such application and after review, shall, if the circumstances fall within those specified in Article 166 of the Interpretations of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China, issue an order lifting the measures within five days.
If the applicant withdraws the application for interim measures or requests the lifting of such measures, this shall not exempt the applicant from liability for damages as provided in Article 105 of the Civil Procedure Law.
Article 18: Where the respondent brings a claim for damages pursuant to Article 105 of the Civil Procedure Law, and the applicant, after applying for pre-litigation preservation measures, neither institutes litigation nor the parties have agreed to arbitration, jurisdiction shall lie with the people’s court that ordered such preservation measures; if the applicant has already instituted litigation, jurisdiction shall lie with the people’s court that accepted the lawsuit.
Article 19: Where an applicant simultaneously applies for interim measures concerning conduct, property, or evidence, the people’s court shall, in accordance with the law, separately review whether each type of application meets the statutory requirements and render a ruling.
To prevent the respondent from engaging in acts such as transferring assets or destroying evidence that would render the purpose of the preservation measure unattainable, the people’s court may, depending on the specific circumstances of the case, determine the order in which different types of preservation measures are implemented.
Article 20: When an applicant seeks interim measures, they shall pay the application fee in accordance with the provisions of the Measures for the Payment of Litigation Costs governing applications for such measures.
Article 21: These Provisions shall come into force on January 1, 2019. In the event of any inconsistency between these Provisions and any relevant judicial interpretations previously issued by the Supreme People’s Court, these Provisions shall prevail.

The second-instance trial in Shanghai’s “wife‑killing and body‑hiding case” has begun, with the question of whether a self‑surrender can serve as grounds for exemption from the death penalty at the center of attention.

On December 13, the Shanghai Higher People’s Court held a public second-instance trial in the case of defendant Zhu Xiaodong’s appeal for intentional homicide (“the case of murdering his wife and concealing her body”). The Shanghai People’s Procuratorate dispatched personnel to appear in court and perform their duties, while the appellant Zhu Xiaodong, his defense counsel, and the victim’s litigation agent were present to participate in the proceedings.

On the morning of October 17, 2016, Zhu Xiaodong got into an argument with his wife, Yang Liping, at home and strangled her, causing her to die of mechanical asphyxiation. Subsequently, he wrapped her body in a duvet cover and concealed it inside a freezer on the balcony of their residence. In the days that followed, Zhu Xiaodong used Yang Liping’s savings to travel extensively and posted messages on WeChat Moments using her phone, fabricating the false impression that she was still alive, until he voluntarily turned himself in to the public security authorities on February 1, 2018.

In the first instance, the Second Intermediate People’s Court of Shanghai sentenced the defendant, Zhu Xiaodong, to death for intentional homicide and deprived him of political rights for life. Following the verdict, Zhu Xiaodong, dissatisfied with the ruling, filed an appeal with the Shanghai Higher People’s Court.

During the trial, Zhu Xiaodong argued that he killed his wife in a moment of rage and, after the murder, felt “hopeless” and “despairing,” which led him to entertain suicidal thoughts. He further claimed that he used Yang Liping’s savings to travel and indulge in leisure activities in an attempt to numb himself before taking his own life.

Zhu Xiaodong’s defense counsel argues that his killing of his wife was a crime of passion arising from domestic disputes. Although Zhu Xiaodong did not turn himself in until more than three months after the incident, he has demonstrated a sincere attitude of guilt and remorse since his surrender, warranting a lighter sentence.

The prosecution contends that Zhu Xiaodong committed premeditated murder with particularly cruel methods and, after the killing, concealed the body and falsified the facts, demonstrating an extremely grave degree of subjective malice. Furthermore, the findings of fact in the first-instance judgment are clear, the evidence is solid and sufficient, and the law was applied correctly. Accordingly, the prosecution recommends that the appellate court dismiss the appeal and uphold the original verdict.

At 12:23 p.m. that day, the court announced a recess, and judgment in this case will be delivered at a later date.

Other

The Ministry of Justice has amended the Measures for the Administration of Law Offices.

On December 13, the Ministry of Justice promulgated the “Decision on Amending the Measures for the Administration of Law Offices,” which shall take effect as of January 15, 2019.

Among them, the Decision explicitly stipulates that Article 3, paragraph 1, shall be amended to read: “Law offices shall adhere to Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as their guiding principle, uphold and strengthen the Party’s overall leadership over legal practice, officely safeguard the authority of the CPC Central Committee with Comrade Xi Jinping at its core and its centralized, unified leadership, regard upholding the leadership of the Communist Party of China and upholding socialist rule of law as fundamental requirements for practicing law, and enhance the sense of consciousness and resolve of the broad body of lawyers in following the path of socialist rule of law with Chinese characteristics.”

Changsheng Bio has been penalized; Gao Junfang and others have been banned for life from the securities market.

On the 11th, Changsheng Bio‑Technology Co., Ltd. announced that it had received an administrative penalty decision from the China Securities Regulatory Commission, and that relevant individuals had been issued market‑ban orders. According to the announcement, the CSRC issued a warning to Changsheng Bio and imposed a fine of RMB 600,000; in addition, Gao Junfang, Zhang Jing, Liu Jingye, and Jiang Qianghua were each subjected to a lifetime ban from the securities market.

Another announcement issued concurrently by Changsheng Bio stated that it has received a preliminary notice of mandatory delisting for material violations from the Shenzhen Stock Exchange, which intends to impose such delisting on the company’s shares.

Three agencies: The pre-issuance of government bonds will implement a performance-guarantee system.

Recently, the National Interbank Funding Center, Central Government Bond Registration and Settlement Co., Ltd., and China Government Securities Depository & Clearing Corporation Co., Ltd. jointly issued the “Notice on Matters Relating to Performance Guarantees for Pre‑Issuance of Treasury Bonds in the Interbank Bond Market” (hereinafter referred to as the “Notice”) (Document No. [2018]455 of the Central Government Bond Registration and Settlement Co., Ltd.). At the same time, Central Government Bond Registration and Settlement Co., Ltd. also issued the “Notice on Matters Relating to the Pre‑Issuance of Treasury Bonds in the Interbank Bond Market” (Document No. [2018]161 of the Central Government Bond Registration and Settlement Co., Ltd.).

The Notice clarifies that pre‑issuance trading of government bonds is subject to a performance‑guarantee system. The performance‑guarantee mechanism for pre‑issued government bonds comprises margin deposits and guarantee securities. Trading parties may opt for bilateral performance guarantees or entrust a third party to provide centralized management services for such guarantees.

The “Notice on Matters Relating to the Pre‑Issuance of Government Bonds in the Interbank Bond Market” stipulates that, prior to commencing pre‑issuance operations, participating institutions shall, in accordance with the relevant business rules, submit preparatory materials to the Central Settlement Company and obtain the requisite business qualifications.

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