JC Master Legal News Issue 850

Key Takeaways for This Issue

The China Securities Regulatory Commission has officially issued the Measures for the Administration of Information Technology in Securities and Fund Operating Institutions.

To safeguard the safe and stable operation of the capital market, protect the legitimate rights and interests of investors, and guide securities and fund operating institutions (hereinafter referred to as “operating institutions”) to continuously strengthen the role of modern information technology in supporting their business activities—while ensuring compliance with laws and regulations and effectively managing risks—the China Securities Regulatory Commission recently issued the Measures for the Administration of Information Technology in Securities and Fund Operating Institutions (hereinafter referred to as the “Measures”), which will take effect on June 1, 2019.

Financial Commission: Strengthen the information disclosure regime and enhance investor protection.

On the morning of December 20, the Office of the Financial Stability and Development Committee of the State Council convened a symposium on capital market reform and development.

Premier Li Keqiang signed a State Council order promulgating the revised Regulations for the Implementation of the Individual Income Tax Law of the People’s Republic of China.

On December 22, Premier Li Keqiang of the State Council signed a State Council decree promulgating the revised Regulations for the Implementation of the Individual Income Tax Law of the People’s Republic of China.

The Supreme People’s Court has released the 19th batch of guiding cases.

Recently, the Supreme People’s Court released the 19th batch of five guiding cases—comprising one criminal case, three civil cases, and one administrative case—for reference by people’s courts at all levels when adjudicating similar cases.

The General Office of the State Council has issued guiding opinions to accelerate the development of the sports competition and performance industry.

On December 21, the General Office of the State Council issued the “Guiding Opinions on Accelerating the Development of the Sports Competition and Performance Industry” (hereinafter referred to as the “Opinions”).

Table of Contents

Table of Contents

Finance & Capital Markets

The China Securities Regulatory Commission has officially issued the Measures for the Administration of Information Technology in Securities and Fund Operating Institutions.

CSRC: Treat the establishment of the STAR Market and the pilot registration-based system as a top priority.

CSRC: Severely Crack Down on Cross-Border Illegal and Non-Compliant Activities

For the first time, the private equity fund industry has been included in the National Economic Census.

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

The Shanghai Stock Exchange has revised the Guidelines on Liquidity Services for Listed Funds.

The Shenzhen Stock Exchange has released the revised Rules of Procedure for the Listing Committee, incorporating delisting for material violations into the review process.

The Shanghai Stock Exchange’s bond financing support tool for private enterprises has been implemented.

Corporate & Commercial

Financial Commission: Strengthen the information disclosure regime and enhance investor protection.

The General Administration of Customs has launched a special campaign to facilitate cross-border trade.

NDRC: New projects for the establishment of Sino‑foreign joint‑venture passenger car manufacturers, among others, have been reclassified as subject to filing-based administration.

The China Banking and Insurance Regulatory Commission’s branch institutions have been officially unveiled.

State-owned assets transferred to the social security system total 8.7 trillion yuan; the number of enterprises in the second batch of transfers has been increased.

Effective January 1 next year, goods originating in Hong Kong will enjoy zero tariffs upon import into the mainland.

China Securities Depository and Clearing Corporation: Going forward, the registration of securities pledges will require the submission of 20 basic items.

Eight departments: 148 enterprises have been added as national key leading enterprises in agricultural industrialization.

Taxation

Premier Li Keqiang signed a State Council order promulgating the revised Regulations for the Implementation of the Individual Income Tax Law of the People’s Republic of China.

A Key Step in Deepening Individual Income Tax Reform: Focusing on the Provisional Measures for Special Additional Deductions under the Individual Income Tax Law

Interpretation of the “Announcement of the State Taxation Administration on the Issuance of the ‘Administrative Measures for Special Additional Deductions under the Individual Income Tax (Trial)’”

The State Taxation Administration has issued an announcement on issues related to the seamless implementation of the new individual income tax administration system.

State Taxation Administration: Adjustments to the Individual Income Tax “Tax Payment Certificate” to a “Tax Payment Record” and Related Matters

Litigation & Arbitration

The Supreme People’s Court has released the 19th batch of guiding cases.

The Supreme People’s Procuratorate has released the twelfth batch of guiding cases, clarifying the criteria for determining the limits of legitimate self-defense.

Wuhan Intermediate People’s Court responds to the case of “a thief electrocuted while stealing a battery and awarded 50,000 yuan in compensation”

Other

The General Office of the State Council has issued guiding opinions to accelerate the development of the sports competition and performance industry.

The People’s Bank of China: Strengthen management of the reserve requirement ratio and further standardize penalties for violations.

Registration revoked! The China E-Commerce Association has been added to the list of entities with illegal and untrustworthy conduct.

Finance & Capital Markets

The China Securities Regulatory Commission has officially issued the Measures for the Administration of Information Technology in Securities and Fund Operating Institutions.

To safeguard the safe and stable operation of the capital market, protect the legitimate rights and interests of investors, and guide securities and fund operating institutions (hereinafter referred to as “operating institutions”) to continuously strengthen the role of modern information technology in supporting their business activities—while ensuring compliance with laws and regulations and effectively managing risks—the China Securities Regulatory Commission recently issued the Measures for the Administration of Information Technology in Securities and Fund Operating Institutions (hereinafter referred to as the “Measures”), which will take effect on June 1, 2019.

The Measures were publicly solicited for comments from May 5 to June 4, 2017. During this period, financial institutions, industry self-regulatory organizations, experts and scholars, the general public, and relevant government departments all paid close attention. The China Securities Regulatory Commission carefully reviewed each comment received, thoroughly incorporated reasonable suggestions, and accordingly revised and refined the Measures.

The Measures comprise 7 chapters and 64 articles. Their key provisions are as follows: First, they ensure comprehensive coverage of all types of market participants, clarifying information‑technology regulatory arrangements to encourage the industry to increase IT investment and enhance competitiveness. Second, they establish three core pillars—governance, security, and compliance. Building on traditional information‑security oversight, the Measures set out regulatory requirements for IT governance, data governance, and business compliance, mandating that operating institutions establish an IT Governance Committee and appoint a Chief Information Officer, thereby fostering deep integration between IT and business operations, risk management, and compliance. Third, they reinforce the principal responsibility of market participants in managing information technology. Guided by the principle that “whoever operates is responsible, and whoever uses is responsible,” the Measures urge both operating and service‑providing institutions to uphold information‑security safeguards, return to their core functions, and jointly ensure the stable functioning of the securities market. Fourth, they support operating institutions in leveraging information technology to improve service efficiency. The Measures permit operating institutions to establish specialized IT subsidiaries and allow parent–subsidiary entities to share IT infrastructure, while also articulating clear regulatory requirements to address emerging circumstances and challenges in the application of IT. Fifth, to ensure that all market participants effectively fulfill their IT‑management obligations, the Measures specify corresponding enforcement measures and penalties.

Given that various market entities require a certain period of preparation to implement the provisions of the Measures, the Measures shall enter into force on June 1, 2019.

Going forward, the China Securities Regulatory Commission will continue to strengthen information technology oversight of the industry, guiding market participants to fully leverage modern IT tools to enhance their customer service systems, refine business operating models, elevate internal governance, and bolster compliance and risk‑control capabilities, thereby better serving the real economy.

CSRC: Treat the establishment of the STAR Market and the pilot registration-based system as a top priority.

At 10:00 a.m. on December 18, the大会 celebrating the 40th anniversary of reform and opening-up was solemnly held at the Great Hall of the People. The Party Committee of the China Securities Regulatory Commission organized all cadres and employees across the system to watch the live broadcast and promptly study and grasp the spirit of General Secretary Xi Jinping’s important speech. That afternoon, the Party Committee convened a meeting to further deepen its study and understanding of the spirit of General Secretary Xi Jinping’s important speech and to make arrangements for the system-wide efforts to study, implement, and carry out the directives.

Party committee members unanimously agreed that General Secretary Xi Jinping’s important speech, from the perspectives of history, the overall situation, and strategy, profoundly summarized the great achievements and invaluable experiences our Party and country have attained over the past 40 years of reform and opening-up. It solemnly reafofficeed our confidence and determination to continue deepening reform and opening-up at this new stage and in this new era, and clearly set forth the goals and requirements for advancing reform and opening-up in the new era. The speech is highly relevant to the times, deeply ideological, and officely grounded in practice, greatly bolstering the sense of pride and self-confidence of the Chinese nation and the Chinese people. Drawing on their personal experiences and the practical realities of China’s capital market reform and development, party committee members shared their insights. They concluded that General Secretary Xi Jinping’s important speech is both consistent with and a continuation of the spirit of the 19th National Congress of the Communist Party of China, with content that is broad and profound. Listening to it left them deeply moved and greatly inspired. Over the past four decades, reform and opening-up have profoundly transformed China, the Chinese nation, the Chinese people, and the Communist Party of China, creating a global miracle. The nine principles of “must uphold” put forward by the General Secretary represent invaluable experience and will undoubtedly serve as the fundamental guiding framework for carrying reform and opening-up through to the end.

Party committee members deeply recognize that reform and opening-up is the pivotal move that has shaped contemporary China’s destiny, and the key to achieving the Two Centenary Goals and realizing the great rejuvenation of the Chinese nation. Reform and opening-up is an ongoing process; there is no finish line. The best way to celebrate the 40th anniversary of reform and opening-up is to continue to be staunch advocates and pragmatic doers of reform. All cadres and employees across the system must take Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as their fundamental guide, thoroughly study, deeply understand, and accurately grasp the spirit of General Secretary Xi Jinping’s important speeches, officely uphold the “Four Consciousnesses,” confidently maintain the “Four Confidences,” resolutely safeguard the “Two Upholds,” always adhere to the correct political stance, and steadfastly follow the reform direction of marketization, rule of law, and internationalization. Remaining true to our original aspiration and keeping our mission officely in mind, we must advance capital market reform and opening-up with greater determination, courage, and vigor, fully unleashing market vitality and enhancing the capital market’s capacity to support supply-side structural reform and promote high-quality development of the real economy. At present, the most pressing task is to treat General Secretary Xi Jinping’s important instructions—establishing the STAR Market at the Shanghai Stock Exchange and piloting the registration-based IPO system—as the top priority for deepening capital market reform in the new era, and to ensure their swift and effective implementation. We must vigorously expand high‑level opening-up of the capital market, using openness to drive reform; place the prevention and resolution of financial risks in an even more prominent position; uphold law‑based, comprehensive, and stringent regulation; accelerate efforts such as revising the Securities Law; and further improve the legal and regulatory framework of the capital market. We must solidly advance full‑scale Party self‑governance, with political building as the overarching principle, strengthen the Party committees’ own development, conscientiously fulfill principal, supervisory, and oversight responsibilities, rigorously select and appoint personnel, motivate cadres to assume responsibility and act proactively, and strive to build a high‑quality cadre team that is politically strong, of excellent conduct, and highly competent, thereby providing crucial organizational support for deepening capital market reform and opening-up.

CSRC: Severely Crack Down on Cross-Border Illegal and Non-Compliant Activities

Recently, the China Securities Regulatory Commission and the Securities and Futures Commission of Hong Kong held their seventh joint enforcement cooperation working meeting. This meeting represents a further step in strengthening the cross-border enforcement cooperation mechanism between the two jurisdictions, undertaken with the overarching goal of effectively upholding market order and safeguarding the legitimate rights and interests of investors.

The meeting noted that in recent years, there has been a growing number of cases involving false statements by listed companies on both sides of the border, as well as market manipulation conducted through the mutual market access mechanisms between the two stock markets. Cross-border violations are increasingly characterized by concealment of offending entities, sophistication of illicit methods, and escalating harm, posing greater challenges to enforcement efforts. Strengthening law enforcement cooperation between the mainland and Hong Kong in the securities and futures sectors is an imperative for curbing cross-border illegal and non‑compliant activities and a crucial safeguard for advancing the reform, opening-up, and development of China’s capital market. Overall, the cross-border enforcement cooperation between the two jurisdictions reveals a relatively concentrated pattern in terms of case types and geographic distribution; the number of cross-border market manipulation cases has risen, while the effectiveness of collaborative responses to major cases continues to improve.

The meeting focused on the salient issues in cross-border law enforcement cooperation between the two regions and examined specific measures to optimize the working mechanisms. First, it refined the collaboration framework, laying a institutional foundation for both sides to jointly combat cross-border violations. Second, it innovated cooperation models by promptly launching joint, coordinated investigations into major, high-profile cross-border illegal and non-compliant activities, thereby leveraging the complementary strengths of both parties. Third, it streamlined inter-agency coordination procedures: for critical cases involving multiple departments, it further strengthened the working mechanisms to continuously enhance the efficiency of collaborative inquiries. Fourth, it improved supporting arrangements by reinforcing regular communication channels and expanding opportunities for law enforcement officers to undertake internships, training, and exchanges, thus broadening and deepening the scope of law enforcement cooperation.

Going forward, the China Securities Regulatory Commission will resolutely implement the decisions and arrangements of the CPC Central Committee and the State Council on deepening reform and opening up in the capital markets. Working closely with the Hong Kong Securities and Futures Commission, and in accordance with the requirements of the IOSCO Multilateral Memorandum of Understanding—of which both authorities are signatories—and the bilateral memoranda under the Stock Connect mechanisms, the CSRC will continue to ensure the efficient operation of cross-border enforcement cooperation mechanisms, vigorously crack down on cross-border violations and illegal activities, and safeguard the sound and stable development of the capital markets in both jurisdictions.

For the first time, the private equity fund industry has been included in the National Economic Census.

On December 17, the Asset Management Association of China issued a notice regarding matters related to the nationwide census of the private equity fund industry. The notice stated that, in accordance with the Statistics Law of the People’s Republic of China, the Regulations on the National Economic Census, the State Council’s Notice on Conducting the Fourth National Economic Census, and the Plan for the Fourth National Economic Census, the private equity fund industry has been included in the national economic census for the first time.

The notice emphasizes that the Fourth National Economic Census, for the first time, has incorporated the private equity fund industry into the national economic census framework, underscoring the state’s high regard for this sector. In accordance with the notice, the data collected in this census will be based on relevant indicators from the Asset Management Business Comprehensive Reporting Platform (AMBERS system) and the Personnel Management System.

Attachment: Notice on Matters Related to the Census of the Private Equity Fund Industry in the Context of the Steady Advancement of the Fourth National Economic Census

To All Private Fund Managers:

In accordance with the Statistics Law of the People’s Republic of China, the Regulations on the National Economic Census (Decree No. 415 of the State Council of the People’s Republic of China), the State Council’s Notice on Conducting the Fourth National Economic Census (Guofa [2017] No. 53), and the Plan for the Fourth National Economic Census, the private equity fund industry has been included in the national economic census for the first time. The Asset Management Association of China (hereinafter referred to as “the Association”), as the self-regulatory organization of the fund industry, operates under the leadership of the China Securities Regulatory Commission and, in line with the arrangements for the census of capital market service industries, is responsible for the specific implementation of the census within the private equity fund sector.

To conduct the private fund industry census effectively and substantially reduce the reporting burden on the industry, this census will use data indicators from the Asset Management Business Comprehensive Reporting Platform (AMBERS System) and the Practitioner Management System as the foundational data sources.

For the first time, the Fourth National Economic Census has incorporated the private equity fund industry into its national census framework, underscoring the state’s high regard for this sector. All private equity fund managers are urged to attach great importance to this effort and, with a strong sense of responsibility, diligently fulfill their obligations to submit quarterly, annual, and material‑event information on both the fund manager and the funds under management. Furthermore, by the end of April 2019, they must promptly file their 2018 annual financial reports, audited by an accounting office, thereby ensuring the quality of census data for the private equity fund industry and providing a comprehensive, accurate picture of its development.

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

Recently, 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 stock market connectivity arrangements between the two jurisdictions. The two sides will refine the look-through mechanism for investors in the Shanghai–Shenzhen–Hong Kong Stock Connect programs and strengthen information sharing within the framework of the cross-border stock market connectivity mechanism.

It is reported that, with the strong support of the Hong Kong Securities and Futures Commission, the look-through regulatory mechanism for Shanghai‑Hong Kong Stock Connect and Shenzhen‑Hong Kong 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 China Securities Regulatory Commission will provide necessary assistance to establish an identity‑verification code system for Hong Kong stocks under the Stock Connect framework.

The Shanghai Stock Exchange has revised the Guidelines on Liquidity Services for Listed Funds.

Recently, the Shanghai Stock Exchange revised the “Guidelines for Liquidity Services of Listed Funds of the Shanghai Stock Exchange” (SSE Document No. [2015]48), resulting in the issuance of the “Guidelines for Liquidity Services of Listed Funds of the Shanghai Stock Exchange,” which took effect on December 21, 2018.

A relevant official from the Shanghai Stock Exchange stated that, following the formal implementation of the guidelines, fund liquidity service providers already registered with the Exchange will automatically be designated as general market makers and may, in accordance with the relevant provisions of the guidelines, apply to the Exchange for primary market maker status. The guidelines clarify that market makers are categorized into primary market makers and general market makers, and the Exchange adopts differentiated regulatory measures for each category. Primary market makers may apply to provide either primary liquidity services or general liquidity services for fund products, while general market makers may apply to provide general liquidity services for fund products.

The Shenzhen Stock Exchange has released the revised Rules of Procedure for the Listing Committee, incorporating delisting for material violations into the review process.

On December 20, the revised “Detailed Rules for the Work of the Listing Committee of the Shenzhen Stock Exchange (Revised in December 2018)” (SZSE [2018] No. 640) was officially promulgated and came into effect as of the date of its publication.

The key points of this rule amendment are as follows: First, the scope of responsibilities of the Listing Committee has been adjusted and refined. Under this revision, matters such as the determination and revocation of mandatory delisting for material violations have been brought within the purview of the Listing Committee’s review. Second, the procedures and related matters concerning hearings on the termination of a listed company’s stock trading and the determination of circumstances warranting mandatory delisting for material violations have been clarified. Third, certain revisions have been made to the composition of the Listing Committee; in principle, a member’s consecutive term shall not exceed two terms. Fourth, the deliberation process has been explicitly defined. The new rules classify the listing of convertible corporate bonds, the suspension of stock trading due to circumstances triggering mandatory delisting for material violations, and the termination of stock trading resulting from such circumstances as falling under the special procedure category.

The Shanghai Stock Exchange’s bond financing support tool for private enterprises has been implemented.

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‑Electric 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.

Commercial & Corporate

Financial Commission: Strengthen the information disclosure regime and enhance investor protection.

On the morning of December 20, the Office of the Financial Stability and Development Committee of the State Council convened a symposium on capital market reform and development.

The meeting was chaired by Liu Guoqiang, Deputy Governor of the People’s Bank of China and Deputy Director of the Office of the Financial Stability and Development Committee of the State Council. Attendees included heads of several commercial banks, securities offices, insurance institutions, trust companies, and fund management companies, as well as relevant officials from the China Banking and Insurance Regulatory Commission and the China Securities Regulatory Commission.

This meeting was timely! It articulated an important judgment and, at the same time, charted the course for the future reform and development of the capital market.

An important assessment: reform is currently at a relatively favorable juncture.

This key assessment is that “at present, risks in the capital market have been fairly fully unwound, endowing it with long-term investment appeal, and reform is poised to seize a favorable window of opportunity.”

Since the favorable window for reform has arrived, there is no reason not to seize it officely. Accordingly, the central authorities have clearly stated that a market‑oriented, law‑based capital market must be established, and the financial sector is expected to step up its efforts. The emphasis on “step up its efforts” underscores that capital market reform is about to enter the stage of concrete, incremental implementation, with an accelerated pace of progress.

So, how can we seize favorable opportunities to advance capital market reform?

The meeting outlined five key areas:

First, capital market reform should place greater emphasis on enhancing the quality of listed companies, strengthening corporate governance, and rigorously enforcing the delisting regime.

CSRC Chairman Liu Shiyu once likened the capital market to a string of pearls, emphasizing that listed companies should be both “numerous and of high quality.” At the same time, to ensure high-quality listings, underperforming companies must be weeded out of the capital market; hence, an effective delisting regime is indispensable. In July, the CSRC also issued the “Decision on Amending the Several Opinions on Reforming, Improving, and Strictly Implementing the Delisting System for Listed Companies.”

Secondly, it is necessary to strengthen the information disclosure regime and effectively safeguard investor protection.

Safeguarding investor protection is a perennial responsibility of regulatory authorities, and only in this way can investors truly engage in long-term investing.

Third, we must officely uphold the principle of marketization and reduce administrative interference in trading.

Reducing administrative intervention can boost the enthusiasm and creativity of market participants and strengthen the price‑discovery function of the capital market. This is also consistent with the principle of allowing the market to play a decisive role in resource allocation.

Fourth, we should draw on internationally accepted practices, actively cultivate medium- and long-term investors, and ensure smooth channels for various asset management products to enter the capital market in a standardized manner.

Compared with mature capital markets, China’s capital market is characterized by a large proportion of retail investors and a strong speculative component, making it prone to sharp ups and downs. Accordingly, encouraging more sophisticated institutional investors to enter the market represents a viable approach. Notably, one key provision of the new wealth-management regulations recently issued by the China Banking and Insurance Regulatory Commission is the authorization for bank wealth-management products to invest in the stock market.

Fifth, regulatory authorities should strengthen communication with the market and actively listen to market feedback.

Engaging with the market is an important channel for regulatory authorities to obtain feedback on policy outcomes. Various communication mechanisms, including symposiums, are expected to be continuously refined and improved.

The General Administration of Customs has launched a special campaign to facilitate cross-border trade.

On December 14, General Administration of Customs Commissioner Ni Yuefeng presided over a deployment meeting at the Administration to advance a special campaign aimed at facilitating cross-border trade, reviewed plans for next year’s efforts to optimize the business environment at ports, and announced the launch of a three-month special initiative to promote cross-border trade facilitation at port facilities in Beijing, Tianjin, and Shanghai.

Ni Yuefeng emphasized the importance of fully recognizing the significance of facilitating cross-border trade and continuously improving the business environment at ports, benchmarking against international best practices to identify shortcomings and areas for improvement, and earnestly implementing targeted initiatives to ensure that all tasks are effectively carried out.

Zhang Guangzhi, a member of the Party Committee of the General Administration of Customs and Director of the National Port Office, along with the vice mayors in charge of port affairs from Beijing, Tianjin, and Shanghai, as well as representatives from the National Development and Reform Commission, the Ministry of Finance, the Ministry of Transport, the Ministry of Commerce, and the State Administration for Market Regulation, and from the port offices of Beijing, Tianjin, and Shanghai, together with relevant officials from departments within the Administration and certain directly affiliated customs authorities, attended the meeting.

NDRC: New projects for the establishment of Sino‑foreign joint‑venture passenger car manufacturers, among others, have been reclassified as subject to filing-based administration.

On December 10, 2018, the National Development and Reform Commission issued Order No. 22, promulgating the Regulations on the Administration of Automobile Industry Investment, which took effect on January 10, 2019.

This year marks the 40th anniversary of China’s reform and opening-up. The promulgation and implementation of these Regulations represent a major step in earnestly carrying out the CPC Central Committee and the State Council’s decisions and arrangements to deepen the “delegation, regulation, and service” reform and fully liberalize general manufacturing. They also reflect an objective necessity to proactively adapt to the overarching trends of the new round of industrial transformation, improve investment management in the automotive industry, and accelerate the shift in the mode of industrial development. These measures are of great significance for deepening supply-side structural reform and achieving high-quality development of the automotive sector.

The Regulations constitute a comprehensive policy document governing investment in China’s automotive industry in the new era. Comprising nine chapters and 48 articles, they cover all aspects, including industrial investment priorities, project‑specific standards, project filing and registration procedures, coordinated regulatory requirements, and capacity‑monitoring and early‑warning mechanisms. The key features are as follows: First, administrative streamlining and delegation of authority have been significantly strengthened. With the approval of the State Council, the approval requirement for automobile investment projects has been abolished, with all such projects now subject to local filing and registration; in particular, complete‑vehicle projects are filed with the provincial development and reform authorities. Second, policy orientation has been emphasized, guiding enterprises to align with major industry trends by optimizing production capacity deployment, achieving breakthroughs in core technologies, and pursuing strategic partnerships, thereby enhancing resource allocation efficiency and driving industrial transformation and upgrading. Third, entry thresholds for investment projects have been raised: new capacity for conventional internal‑combustion‑engine vehicles is strictly controlled, conditions for establishing new pure‑electric vehicle enterprises have been further tightened, and the healthy, orderly development of new‑energy vehicles is actively encouraged. Fourth, regulatory accountability has been reinforced: inter‑departmental coordination has been strengthened, non‑compliant projects are rigorously investigated and penalized, relevant personnel are held strictly accountable, and responsibilities for managing investment projects have been further clarified and enforced.

The China Banking and Insurance Regulatory Commission’s branch institutions have been officially unveiled.

On December 17, the branch institutions of the China Banking and Insurance Regulatory Commission held a unified unveiling ceremony. Comrade Wang Zhaoxing, Member of the Party Committee and Vice Chairman of the CBIRC, unveiled the plaque for the Beijing Bureau of Banking and Insurance Regulation on behalf of the CBIRC Party Committee and set forth requirements for the bureau’s work following its establishment.

It is essential to fully recognize the importance and urgency of reforming the financial regulatory system. The newly established China Banking and Insurance Regulatory Commission must earnestly align its thinking and actions with Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era and with the CPC Central Committee’s decisions and arrangements for deepening the reform of Party and state institutions, ensuring that the requirements of this institutional reform are implemented in full and without compromise.

We must approach all tasks during the reform period with a strong sense of political responsibility. Following the establishment of the Banking and Insurance Regulatory Bureau, all Party members and cadres should officely uphold the “Four Consciousnesses,” confidently maintain the “Four Confidences,” and resolutely safeguard the “Two Upholds,” ensuring that they remain in full alignment—in thought, politics, and action—with the Party Central Committee with Comrade Xi Jinping at its core. Leading team members should set an exemplary standard by prioritizing political awareness, unity, and adherence to rules, working together in harmony, engaging in joint deliberation and planning, and truly acting as one family—speaking with one voice and working toward common goals. In building the cadre workforce, we must earnestly implement the requirements of “loyalty, professionalism, and pragmatism” put forward by Vice Premier Liu He, comprehensively strengthen ideological and political work, promptly improve grassroots Party organizations, promote mechanisms for mutual learning, and continuously advance the integration of business operations, the convergence of functions, and the fostering of close bonds among personnel. We must coordinate and advance both the establishment of branch bureaus within our jurisdiction and the implementation of key regulatory priorities, pursue concrete results through diligent effort, and ensure that institutional reform and regulatory work proceed without compromise, mutually reinforcing each other.

It is imperative to strictly enforce integrity and disciplinary requirements during the institutional reform. All local banking and insurance regulatory bureaus must thoroughly study and implement the spirit of General Secretary Xi Jinping’s important instructions on the Lai Xiaomin case of disciplinary and legal violations, as well as the deployment requirements outlined in the notices issued by the Central Commission for Discipline Inspection and the National Supervisory Commission. They should take each case as a cautionary tale, use it to drive reform, engage in profound self-reflection, draw valuable lessons, address systemic shortcomings, plug institutional loopholes, and ensure full compliance with established regulations. Regulatory oversight must be both law-based and rigorous, with equal emphasis on comprehensively strengthening Party governance and on preventing and controlling financial risks. On this new starting point, we must make a strong start and set a solid course, ushering in a new chapter through concrete actions.

State-owned assets transferred to the social security system total 8.7 trillion yuan; the number of enterprises in the second batch of transfers has been increased.

On December 16, it was reported that following the pilot transfer of shares from three central state-owned enterprises, the second batch of state‑owned asset transfers to social security funds has been preliminarily identified. The eligible SOEs are expected to number around 15 to 20, primarily concentrated in several major industries that posted strong profits this year.

Meanwhile, at the local level, many regions have begun exploring ways to further expand the list of state-owned enterprises subject to equity transfer. Provinces such as Anhui and Yunnan have already issued plans to initiate the transfer of shares in their local SOEs.

“The second batch of state‑owned capital transferred to bolster the social security fund comprises more enterprises than the first, yet progress has been somewhat slower than anticipated. Each entity selected must undergo asset verification and joint‑venture restructuring to gain a clear picture of its financial standing—factors such as the clarity of its equity structure and the ease of transferring assets will all play a role,” said Dong Dengxin, director of the Institute of Finance and Securities at Wuhan University of Science and Technology and a core member of the China Pension Finance 50 Forum, on December 12. He added that, for now, the transfer of state‑owned assets to the social security fund in the first batch is essentially complete.

Transferring state‑owned assets to bolster the social security system helps ensure the fairness and sustainability of the social security framework, while delivering a triple benefit: advancing deep‑seated reforms of state‑owned enterprises, reducing social security contribution rates and easing the burden on businesses, and fostering a healthy, well‑functioning capital market. For these reasons, the allocation of state‑owned assets to replenish the social security fund has long been a subject of close attention.

The first batch of state-owned asset transfers fell slightly short of expectations.

In November 2017, the State Council issued the “Implementation Plan for Transferring a Portion of State-Owned Capital to Replenish the Social Security Fund” (hereinafter referred to as the “Plan”), which set out a clear roadmap and timetable. Under the implementation plan, 10% of the equity in state-owned enterprises is to be transferred to bolster the basic old-age insurance fund, with the scope of the transfer encompassing large and medium-sized state-owned and state-controlled enterprises, as well as financial institutions, at both the central and local levels.

In fact, prior to this round of transferring state-owned capital to the social security fund, China conducted two pilot programs in June 2001 and June 2009 to bolster the social security fund with state capital. However, during those first two rounds of capital transfers, despite the presence of roughly 1,100 domestically and internationally listed state-owned enterprises, only slightly more than 100 listed companies had their state‑owned equity included, owing to historical reasons related to the “old‑versus‑new” demarcation in the timing of the transfers.

To this end, immediately following the release of the latest plan, the Ministry of Finance, the State-owned Assets Supervision and Administration Commission, and other relevant departments began vigorously advancing its implementation at the operational level. Moreover, Lou Jiwei, a member of the National Committee of the Chinese People’s Political Consultative Conference and Chairman of the National Council for Social Security Fund, explicitly stated that steps to transfer a portion of state‑owned capital to bolster the social security fund should be accelerated, with pilot programs promptly finalized and the transfer process expedited in 2018.

As with the previous two rounds of transfers, the allocation rate remains set at 10%. However, whereas earlier transfers were based on 10% of the IPO‑raised capital, this time the figure is calculated as 10% of the total state‑owned equity. Accordingly, many experts had predicted that the nominal scale of this round would be substantial. Yet the actual amount—just over RMB 20 billion—is lower than previously anticipated.

“As of the end of October, the three pilot enterprises have transferred state-owned capital totaling more than 20 billion yuan, and the corresponding property‑rights change registrations have been completed,” said Dong Dengxin. However, he added that, in terms of the overall scale of the first batch of state‑asset transfers, 20-plus billion yuan is not a substantial amount.

In addition, according to the Plan, it was stipulated that the transfer of state-owned capital from three to five enterprises should be completed by the end of 2017; however, as of October 15 this year, only three enterprises had undertaken pilot transfers of equity, leaving the process nearly a year behind schedule.

The second batch of state‑owned asset transfers to the social security system is being stepped up.

In both pace and scale, the first batch of state‑owned asset transfers to the social security system fell slightly short of expectations. In light of this, many experts believe that the second phase of such transfers is likely to accelerate and be scaled up.

Li Jin, Executive Dean of the China Enterprise Research Institute, believes that the next phase of transferring state‑owned capital to the social security system will accelerate significantly. On the one hand, over the past two years, state‑owned enterprises—particularly central SOEs—have maintained strong revenue and profit growth, creating favorable conditions for such transfers. On the other hand, as tax cuts have been scaled up, national tax revenues have declined markedly, heightening the urgency of this reform. The number of pilot enterprises participating in the transfer is also expected to increase substantially compared with the first batch, and during this process, the mechanisms governing the transfer should be further refined.

According to the “Comprehensive Report on the Management of State-Owned Assets in 2017,” in 2017, the total value of state-owned assets nationwide—comprising corporate state-owned assets (excluding financial enterprises), financial enterprise state-owned assets, and administrative and public‑service state-owned assets—stood at RMB 454.5 trillion, with net state-owned assets totaling RMB 87 trillion.

According to the newly released comprehensive data on state-owned assets, assuming a 10% transfer rate, the total scale of asset transfers could reach as high as RMB 8.7 trillion. Excluding the initial tranche of over RMB 20 billion, there remains substantial room for further expansion in both the scale and scope of subsequent transfers.

“By the national standard, the figure stands at 8.7 trillion yuan; however, achieving this remains quite challenging. Conservatively speaking, it is more likely that the total scale of the transfer will reach around 5 trillion yuan,” said Dong Dengxin.

In addition, pilot programs for transferring state-owned capital to the social security system in provinces and regions such as Yunnan, Xinjiang, and Anhui have also been accelerated, with local implementation plans issued to allocate a portion of state-owned capital to bolster the social security fund. For example, the Yunnan Provincial Government has promulgated the “Implementation Plan for Transferring a Portion of State-Owned Capital to Strengthen the Social Security Fund,” under which the scope of the transfer encompasses all large and medium-sized state‑owned and state‑controlled enterprises (first‑tier entities) and financial institutions across the province. The uniform transfer ratio is set at 10% of the state equity held by enterprises within the designated scope, with the funds earmarked specifically to address the shortfall in the basic pension insurance fund for enterprise employees.

A pilot program was launched to transfer state-owned equity in selected provincial enterprises, followed by the phased transfer of state-owned equity from other eligible provincial enterprises. In other words, the transfer of state-owned equity has expanded from the central level to local governments, now encompassing a broader range of state-owned enterprises and state‑controlled companies.

Meanwhile, the second batch of state-owned assets to be transferred to social security funds has been preliminarily screened, with an estimated 15 to 20 eligible SOEs. In other words, the number of enterprises slated for transfer in this second wave is at least five times that of the first.

Effective January 1 next year, goods originating in Hong Kong will enjoy zero tariffs upon import into the mainland.

With the approval of the State Council, on the morning of December 14, 2018, Fu Ziying, China’s Vice Minister and Chief Negotiator for International Trade, and Hong Kong’s Financial Secretary Paul Chan signed the CEPA Agreement on Trade in Goods in Hong Kong. The agreement entered into force upon signature and will be formally implemented as of January 1, 2019. Hong Kong Special Administrative Region Chief Executive Carrie Lam and Qiu Hong, Deputy Director of the Liaison Office of the Central People’s Government in the HKSAR, witnessed the signing ceremony.

The CEPA Agreement on Trade in Goods is a key component of the CEPA upgrade. It represents a special economic and trade arrangement between the Mainland and Hong Kong, concluded under the “One Country, Two Systems” framework and in accordance with World Trade Organization rules. It constitutes a concrete measure to implement the important spirit articulated in the report of the 19th National Congress of the Communist Party of China—namely, pursuing a policy of high‑level trade liberalization and facilitation, comprehensively advancing mutually beneficial cooperation between the Mainland and Hong Kong, and supporting Hong Kong’s integration into the overall national development strategy. This agreement fully demonstrates the central government’s steadfast support for Hong Kong’s long-term prosperity and stability. As a sub‑agreement to CEPA, it, together with the previously signed CEPA Agreement on Trade in Services, the CEPA Investment Agreement, and the CEPA Economic and Technical Cooperation Agreement, has successfully completed the CEPA upgrade, thereby achieving ahead of schedule the CEPA upgrade objectives set forth in the 13th Five-Year Plan.

The “CEPA Agreement on Trade in Goods” systematically reviews and consolidates the provisions related to trade in goods contained in CEPA and its associated agreements. Drawing on the economic and trade developments between the Mainland and Hong Kong over the 15 years since CEPA’s signing, and taking into account the latest advances and outcomes of international and regional economic cooperation on trade-in-goods agreements, this agreement builds upon the full liberalization of trade in goods between the two regions to further enhance trade facilitation and provide a more comprehensive institutional framework for bilateral trade flows. The key elements of the agreement include: First, the rules of origin are designed to align with international standards while addressing Hong Kong’s specific needs, adopting a hybrid approach that combines a unified general rule applicable to all tariff lines with product‑specific rules covering only certain categories. This establishes origin criteria for virtually all tariff lines, enhancing transparency, improving precision, and better targeting industry requirements, thereby supporting the stable and healthy development of Hong Kong’s industries. Second, a dedicated chapter on facilitation measures for the Guangdong–Hong Kong–Macao Greater Bay Area has been established. Based on a comprehensive review and synthesis of existing opening-up and facilitation initiatives, and in light of the actual conditions and evolving needs of economic cooperation between the Mainland and Hong Kong, the agreement proposes a series of targeted facilitation measures within the Greater Bay Area. These measures aim to promote mutual recognition of regulatory standards, information sharing, and law‑enforcement cooperation among port authorities in Guangdong, thereby strengthening customs clearance capacity and efficiency and fostering the efficient and convenient flow of production factors.

The signing and implementation of the CEPA Agreement on Trade in Goods will help safeguard Hong Kong’s status as an international trade and shipping hub, promote the sound development of economic and trade exchanges and cooperation between the Mainland and Hong Kong, and achieve mutual benefit and win-win outcomes for both sides.

China Securities Depository and Clearing Corporation: Going forward, the registration of securities pledges will require the submission of 20 basic items.

China Securities Depository and Clearing Corporation Limited recently issued an announcement revising and refining the elements required for securities pledge registration. Going forward, when processing securities pledge registration, 20 basic items must be declared.

These 20 basic elements include the type of business, the amount of financing, the financing interest rate, the financing term, the intended use of funds, the warning line, the liquidation line, the market to which the corresponding initial pledge account belongs, and the registration number of the corresponding initial pledge transaction, among others. They are categorized into four major groups: pledgee information, pledgor and pledged securities information, business type information, and risk management information.

Attachment: Notice on Improving the Elements of Securities Pledge Registration

To all market participants:

To further strengthen the management of securities pledge registration and risk monitoring, and to enhance the completeness, accuracy, and reasonableness of relevant data collection, our company has revised and refined the key elements required for securities pledge registration. Henceforth, when processing securities pledge registration, applicants must submit a total of 20 basic elements across four categories. The specific details and requirements are set out below:

I. Pledgee Information

(1) Name of the Pledgee

This refers to the name of the entity that holds a pledge right over the pledged securities in accordance with the terms of the pledge agreement. The full legal name must be provided, and it must match the name on the pledgee’s identification document.

(2) Type of Identity Document of the Pledgee

It refers to the type of document issued by the competent authority to the pledgee, certifying the latter’s legal identity, and specifically includes the Resident Identity Card, Business License, Registration Certificate for Social Organizations, and Registration Certificate for Public Institutions, among others.

(3) Identity document number of the pledgee

It refers to the identification number of the document held by the pledgee that verifies their identity.

II. Pledgor and Pledged Securities Information

(4) Name of the Pledgor

This refers to the name of the investor applying for pledge registration of the securities held. The full legal name must be provided, and it must match the pledgor’s securities account name.

(5) Securities Account

It refers to the securities account number held by the pledgor for the pledged securities.

(6) Security Code

It refers to the listing (trading) code of the securities subject to pledge at the relevant trading venue, which must be consistent with the code assigned by that venue.

(7) Securities Abbreviation

It refers to the abbreviated name of the pledged security, which must be consistent with the abbreviation compiled by the trading venue.

(8) Custody Unit

It refers to the basic business unit number of the securities company that holds the pledged securities and participates in registration and settlement (since the Shanghai market operates a designated‑trading system, the custody unit is also known as the designated‑trading unit in the Shanghai market).

(9) Securities Category

This classification is based on the nature of the rights represented by the pledged securities and includes stocks, bonds, mutual funds, and others. Among these, stocks are further categorized—according to their trading status—into non‑tradable shares, restricted‑trade shares, and freely tradable shares.

(10) Number of Securities Pledged

It refers to the number of securities for which both parties to the pledge have applied to register the pledge. The units of measurement are as follows: shares are counted in “shares,” funds in “units,” Shanghai‑market bonds in “yuan (face value),” and Shenzhen‑market bonds in “bonds.”

III. Business Types and Risk Management Information

(11) Business Type

They are categorized into three types: financing‑related pledge (initial pledge), financing‑related pledge (supplementary pledge), and non‑financing‑related pledge. Specifically:

For financing‑related pledges (initial pledges), the following information must be provided: pledgee’s name, type of the pledgee’s identification document, pledgee’s identification document number, pledgor’s name, pledgor’s securities account, security code, security abbreviation, custody unit, security category, number of pledged securities, business type, financing amount, annualized financing rate, financing term, intended use of funds, warning line, liquidation line, and the pledge contract number.

For financing‑related pledges (supplementary pledges), the following information must be provided: the pledgee’s name, the type of the pledgee’s identification document, the pledgee’s identification document number, the pledgor’s name, the pledgor’s securities account, the security code, the security abbreviation, the custody unit, the security category, the quantity of pledged securities, the business type, the market to which the initial pledged securities belong, the registration number of the corresponding initial pledge transaction, and the pledge contract number.

For non‑financing pledges, the following information must be provided: pledgee’s name, type of the pledgee’s identification document, the pledgee’s identification document number, pledgor’s name, the pledgor’s securities account, the security code, the security’s abbreviated name, the custody unit, the security category, the quantity of pledged securities, the business type, and the pledge contract number.

(12) Financing Amount

This refers to the amount of funds raised by the pledgor, either directly or through a third party, that is secured by the securities pledged in this transaction. Here, you must indicate whether the securities constitute the sole collateral and whether they are subject to a maximum‑amount pledge. If there are additional forms of collateral or credit guarantees beyond the pledged securities, you must report the aggregate value of all such collateral.

When the pledgor and pledgee apply for partial release of the pledge registration, they must declare the remaining financing amount; if there are collateral items other than the pledged securities or credit guarantees, they must also report the total value of the remaining bundled collateral.

(13) Annualized Financing Rate

It refers to the ratio of the annual interest amount to the financing amount, expressed as an annual interest rate.

(14) Financing Term

It refers to the period agreed upon by the two parties to a financing arrangement, from the disbursement of funds to their repayment.

(15) Financing Allocation

It refers to the intended use of funds raised through the pledgor’s securities‑pledge transaction, specifically including: production and operations; replenishment of working capital; equity‑type investments; debt‑instrument investments; real estate‑related investments; secondary market securities trading; debt repayment; personal consumption; providing loans or guarantees to the listed (or挂牌) company itself; providing loans or guarantees to other listed (or挂牌) companies; and other purposes.

(16) Early Warning Line

Also known as the alert line, it refers to the percentage agreed upon by the parties to the pledge. During the pledge period, if the ratio of the market value of the pledged securities to the financing amount falls below the alert line, the pledgee may notify the pledgor of the risks arising from a decline in the securities’ price.

(17) Liquidation Line

It refers to the percentage agreed upon by the parties to the pledge. During the pledge period, if the ratio of the market value of the pledged securities to the financing amount falls below the liquidation threshold, the pledgee is entitled, in accordance with the terms of the agreement, to dispose of the pledged securities.

(18) The market to which the corresponding initial pledged securities belong

It refers to the trading venue where the securities underlying the previously registered pledge are held, when the pledgor and pledgee, in accordance with the contract, provide supplementary collateral for an already‑registered initial pledge.

(19) The corresponding initial pledge business registration number

If the initial pledge is an over-the-counter pledge (including securities pledge registration conducted through the counter of China Securities Depository & Clearing Corporation Limited or through securities companies that handle agency‑based pledge registration), it refers to the registration number recorded on the securities pledge registration certificate for the previously registered pledge corresponding to this supplementary pledge registration. If the initial pledge is an exchange‑traded pledge (i.e., a stock‑pledge repurchase transaction), it refers to the initial contract number of the exchange‑traded pledge.

IV. Other

(20) Pledge Contract Number

It refers to the contract number of the agreement entered into by the pledgor and the pledgee regarding the pledge of securities.

Among the aforementioned nineteen pledge registration elements, nine—namely, the type of transaction, the amount of financing, the financing interest rate, the financing term, the intended use of funds, the warning threshold, the liquidation threshold, the market to which the corresponding initial pledge account belongs, and the registration number of the corresponding initial pledge transaction—will not be reflected in the securities pledge registration certificates issued by our company to external parties.

Eight departments: 148 enterprises have been added as national key leading enterprises in agricultural industrialization.

On December 14, the Ministry of Agriculture and Rural Affairs, the National Development and Reform Commission, and other departments jointly issued the “Notice on Adding 148 Enterprises to the List of National Key Leading Enterprises in Agricultural Industrialization” (hereinafter referred to as the “Notice”).

According to the Notice, the 148 enterprises designated as supplementary national key leading enterprises in agricultural industrialization include Beijing Kaida Hengye Agricultural Technology Development Co., Ltd., Shanxi Jinrun Meat Products Co., Ltd., Jiangsu Junlebao Dairy Co., Ltd., and others.

Attachment: “Notice from the Ministry of Agriculture and Rural Affairs, the National Development and Reform Commission, the Ministry of Finance, the Ministry of Commerce, the People’s Bank of China, the State Taxation Administration, the China Securities Regulatory Commission, and the All‑China Federation of Supply and Marketing Cooperatives on Adding 148 Enterprises to the List of National Key Leading Enterprises in Agricultural Industrialization”

To the Departments (Bureaus, Commissions, Offices) of Agriculture (Agricultural and Rural Affairs, Animal Husbandry and Agriculture, Rural Economy), Development and Reform Commissions, Finance Departments (Bureaus), Commerce Authorities, and Supply and Marketing Cooperatives of all provinces, autonomous regions, municipalities directly under the central government, the Xinjiang Production and Construction Corps, and cities separately listed in the national plan; to the Shanghai Headquarters of the People’s Bank of China, its branches, business management departments, and central sub-branches in provincial capital (seat) cities; to the tax authorities of all provinces, autonomous regions, municipalities directly under the central government, and cities separately listed in the national plan under the State Taxation Administration; and to all branch institutions of the China Securities Regulatory Commission:

In accordance with the Measures for the Recognition and Operational Monitoring of National Key Leading Enterprises in Agricultural Industrialization (No. 1 [2018] of the Department of Agricultural Economics), national key leading enterprises are subject to dynamic management, with monitoring and evaluation conducted every two years to ensure a system of both entry and exit, supplemented by equal‑number replacements. In 2018, eight departments of the National Joint Conference on Agricultural Industrialization jointly carried out the eighth round of monitoring for national key leading enterprises. Provinces, autonomous regions, municipalities directly under the central government, and the Xinjiang Production and Construction Corps, in compliance with the requirements, rigorously and impartially recommended replacement enterprises. Following expert review, approval by the Joint Conference, and public announcement in the media, it was decided to designate 148 additional enterprises, including Beijing Kaida Hengye Agricultural Technology Development Co., Ltd., as national key leading enterprises in agricultural industrialization.

It is hoped that the key national leading enterprises seeking to fill vacancies will seize the major opportunities presented by the implementation of the rural revitalization strategy, leverage their close ties with agriculture and farmers, strengthen the development of raw-material production bases, accelerate technological and institutional innovation, and innovate mechanisms for aligning interests with farmers. By continuously growing and strengthening themselves, they will enhance their capacity to drive rural development and better serve the “three rural issues” and the successful implementation of the rural revitalization strategy.

All regions and relevant departments should, in light of the new tasks for revitalizing rural industries, further strengthen support for leading agricultural enterprises. By offering competitive remuneration, enhancing their reputation, and creating new opportunities, they can provide more targeted and effective assistance to help these enterprises grow stronger and larger, turning them into vanguards of rural industrial revitalization, unleashing fresh momentum for rural development, and making new contributions to achieving rural revitalization and building a moderately prosperous society in all respects.

Taxation TAXATATION

Premier Li Keqiang signed a State Council order promulgating the revised Regulations for the Implementation of the Individual Income Tax Law of the People’s Republic of China.

On December 22, Premier Li Keqiang of the State Council signed a State Council decree promulgating the revised Regulations for the Implementation of the Individual Income Tax Law of the People’s Republic of China.

On August 31, 2018, the Fifth Session of the Standing Committee of the 13th National People’s Congress adopted the newly revised Individual Income Tax Law of the People’s Republic of China. This amendment to the Individual Income Tax Law established a tax system that combines comprehensive and categorized approaches, introduced comprehensive taxation on certain types of labor income, optimized and adjusted the tax rate structure, raised the basic deduction for comprehensive income, instituted special additional deductions, and accordingly improved the administration and collection mechanisms for individual income tax.

To ensure the smooth implementation of the new Individual Income Tax Law, the State Council has amended the Regulations for the Implementation of the Individual Income Tax Law, which were promulgated in 1994. The main revisions include: strengthening tax incentives for non-residents who meet the criteria of resident individuals, thereby better attracting overseas talent; providing deductions for necessary household living expenses when calculating business income for individual industrial and commercial households and other business entities, in order to support and encourage self‑employment; clarifying that contributions to enterprise annuities and occupational annuities that comply with state regulations, expenditures on commercially available health insurance and tax‑deferred commercial pension insurance that meet national standards, as well as other items specified by the State Council, may be deducted in accordance with the law; and optimizing taxpayer services related to the special additional deductions policy, stipulating that for wages and salaries, the withholding agent may deduct these special additional deductions at the time of tax withholding, while for other types of comprehensive income, such deductions are applied during the annual final settlement; taxpayers may also authorize the withholding agent or other entities and individuals to handle the annual final settlement on their behalf.

The revised Regulations for the Implementation of the Individual Income Tax Law shall come into force on January 1, 2019, concurrently with the new Individual Income Tax Law.

A Key Step in Deepening Individual Income Tax Reform: Focusing on the Provisional Measures for Special Additional Deductions under the Individual Income Tax Law

Following the initial release on October 1 of tax‑cut benefits stemming from the increase in the personal income tax threshold, the highly anticipated Interim Measures for Special Additional Deductions under the Individual Income Tax Law was officially unveiled on the 22nd, marking a pivotal step in China’s comprehensive, categorized individual income tax reform and sending a stronger, people‑benefiting signal.

Children’s education, continuing education, major‑illness medical expenses, housing loan interest, housing rent, and eldercare—how exactly are these six individual income tax special additional deductions, which affect hundreds of millions of people, calculated? How much can be deducted? And how much tax can taxpayers save?

Children’s Education: A Fixed Monthly Deduction of One Thousand Yuan; New Addition for Skilled-Trade Education

With children attending school, parents’ financial burden is eased. The interim measures stipulate that expenses incurred by taxpayers for their children’s full-time education at the degree level shall be deducted on a fixed monthly basis of 1,000 yuan per child.

Parents may choose to have one parent claim the full 100% of the deduction, or they may opt for each parent to claim 50% of the deduction. Once a specific allocation method is selected, it cannot be changed within the same tax year.

Professor Liu Yi of the School of Economics at Peking University noted that, compared with the previously released draft for public comment, the Provisional Measures have added “vocational and technical education” under the category of senior secondary education, which specifically encompasses academic schooling.

“In this way, every stage and type of formal education—from primary and junior high school, through general senior high schools, secondary vocational and technical education, to associate degrees, bachelor’s programs, master’s degrees, and doctoral studies—is now fully covered,” she said. “This sends a clear message: regardless of the kind of education one receives, the state treats all learners equally.”

In addition, the Provisional Measures stipulate that children aged 3 and above but below the age of primary school enrollment—during their preschool education period—may also qualify for a monthly deduction of RMB 1,000 per child.

　Continuing education: A fixed deduction of RMB 400 per month or RMB 3,600 per year; the deduction period for the same degree shall not exceed four years.

Boost your career development—starting next year, you can both acquire new knowledge and enjoy tax deductions.

According to the Provisional Measures, taxpayers who undertake continuing education leading to a degree or diploma within China may claim a fixed deduction of RMB 400 per month during the period of such education. For individuals pursuing continuing education at the undergraduate level or below, provided they meet the prescribed conditions, they may elect to have the deduction claimed by their parents or by themselves.

However, the tax‑reduction benefit is not “permanent.” The regulations stipulate that the deduction period for continuing education leading to the same academic degree or diploma may not exceed 48 months. Experts believe this approach both meets the needs of most individuals pursuing continuing education and helps prevent potential loopholes.

For non-degree continuing education, taxpayers who undertake continuing education for skilled personnel professional qualifications or for professional and technical personnel professional qualifications may claim a fixed deduction of RMB 3,600 in the year they obtain the relevant certificate. Taxpayers are advised to retain pertinent certificates and other supporting documents for inspection purposes.

Major Medical Expenses: The cap has been raised to RMB 80,000, and family members’ illnesses are now taken into account.

When a family member falls ill—especially with a serious condition—it always fills one with anxiety and worry.

The Provisional Measures stipulate that, within a tax year, the portion of medical expenses related to basic medical insurance that exceeds RMB 15,000 after deducting amounts reimbursed by the insurance scheme may be deducted on an actual‑cost basis by the taxpayer during the annual tax reconciliation and settlement, up to a cap of RMB 80,000. Under the earlier draft for public comment, this cap was set at RMB 60,000.

Compared with the draft for public comment, the most closely watched change is the shift in the deduction method. Taxpayers may choose to deduct their own medical expenses or those of their spouse; for medical expenses incurred by minor children, taxpayers may opt to have one parent claim the deduction.

“This is both heartwarming and highly necessary,” said Liu Yi. When taxpayers suffer from a serious illness, their income typically declines, potentially falling below the threshold for tax deductions and leaving them unable to benefit from the relevant tax‑deduction policies. Allowing a deduction for a spouse can effectively ease the financial burden on the taxpayer’s household.

First-home mortgage: a fixed monthly deduction of 1,000 yuan, with a maximum term of 20 years.

Mortgage payments can be burdensome, but personal income tax can help offset them. Under the Provisional Measures, if an individual or their spouse, either alone or jointly, uses a commercial bank loan or a housing provident fund personal housing loan to purchase residential property within China for themselves or their spouse, the interest expense on the first home loan may be deducted at a fixed rate of RMB 1,000 per month in the year the interest is actually incurred, with a maximum deduction period of up to 20 years.

Notably, the Provisional Measures clearly define “first-home mortgage” as a housing loan for which the borrower qualifies for the first-home mortgage interest rate. Upon mutual agreement between the spouses, either spouse may claim the deduction, and the chosen method remains unchanged throughout a given tax year.

How should the first-home mortgage interest incurred by each spouse when purchasing a home prior to marriage be deducted? The Provisional Measures clarify that, for such mortgage interest expenses, after marriage, the couple may choose one of the homes they purchased: the purchaser may claim the full 100% deduction according to the prescribed standard, or both spouses may each claim a 50% deduction for the home they individually purchased.

Zhang Bin, a researcher at the Institute of Financial Strategy of the Chinese Academy of Social Sciences, stated that compared with the draft for public comment, the Provisional Measures provide clearer definitions for certain concepts and scenarios related to the deduction of mortgage interest, with more detailed provisions that facilitate implementation and administration.

Housing rent: A fixed monthly allowance is divided into three tiers, with deductions ranging from 800 to 1,500 yuan.

Mortgage interest is deductible, and rent is also deductible. Under the Provisional Measures, taxpayers who do not own a home in their primary place of employment may claim a standard deduction for housing rental expenses according to the following rates:

— For municipalities directly under the central government, provincial capitals, cities separately listed in state planning, and other cities designated by the State Council, the deduction standard is RMB 1,500 per month;

— Except for the cities listed in the first item, for cities with a registered population of over one million in their urban districts, the deduction standard is RMB 1,100 per month;

— For cities with a registered population in urban districts not exceeding 1 million, the deduction standard is RMB 800 per month.

Attentive observers will note that the deduction standards in major cities have been raised compared with the draft for public comment. Zhang Bin stated that the interim measures have incorporated feedback from the consultation period regarding the previously low rent‑deduction thresholds, appropriately increasing the rent‑deduction rates for first- and second‑tier cities. Specifically, the deduction for first‑tier cities has been raised from RMB 1,200 per month to RMB 1,500, while for second‑tier cities it has been increased from RMB 1,000 to RMB 1,100 per month.

For married individuals, whether rental expenses are ultimately deductible depends on the circumstances of their spouse. Under the interim measures, if the spouse owns a home in the taxpayer’s primary place of employment, the taxpayer is deemed to own a home in that city as well. If both spouses have their primary place of employment in the same city, only one spouse may claim the deduction for housing rental expenses.

In addition, a taxpayer and their spouse may not simultaneously claim both the housing loan interest deduction and the housing rent special additional deduction within the same tax year.

Supporting elderly parents: A standard fixed deduction of RMB 2,000 per month may be shared among siblings.

Ensuring that the elderly are cared for and supported is precisely the original intent behind the personal income tax reform’s enhancement of policies related to supporting aging parents.

Under the Provisional Measures, taxpayers may claim a standard deduction of RMB 2,000 per month for supporting one or more dependents. For non‑only children, the monthly deduction of RMB 2,000 may be shared among siblings, with each individual’s share not exceeding RMB 1,000 per month.

It should be noted that “dependents” refer to parents who have reached the age of 60, as well as grandparents—both maternal and paternal—who have also reached the age of 60 and whose children have all passed away.

Effective burden reduction: Individual income tax on an annual income of 10,000 yuan is minimal; for a monthly income of 20,000 yuan, tax cuts exceed 70 percent.

The addition of six special additional deductions means a further reduction in taxpayers’ individual income tax burden. Although the specific deduction amounts will vary from person to person, as previously stated at the State Council Executive Meeting, it is certain that, following these increases, the overall deduction level will significantly exceed 5,000 yuan, thereby providing further relief to the public.

Under the new regulations, suppose Li is employed in Beijing, is an only child, has one child attending primary school, has parents who are both over 60 years old, does not own a home in Beijing but rents instead, and is pursuing a part-time graduate degree. In this case, he would be eligible for four special additional deductions: for children’s education, continuing education, housing rent, and elder care.

Suppose Li’s monthly salary is RMB 20,000. Before the personal income tax reform took effect on October 1 this year, and excluding contributions to the three social insurances and one housing fund, his monthly taxable income would be calculated based on the basic deduction of RMB 3,500, resulting in a monthly personal income tax liability of RMB 3,120. After October 1, with the basic deduction increased to RMB 5,000 and the revised tax rate schedule applied, his monthly tax liability would drop to RMB 1,590, representing a nearly 50% reduction in the tax burden.

On this basis, after receiving his salary starting January 1, 2019, Mr. Li is entitled to the following special additional deductions: RMB 1,000 for children’s education, RMB 400 for continuing education, RMB 1,500 for housing rental, and RMB 2,000 for supporting elderly parents, for a total deduction of RMB 4,900.

By this calculation, Li’s monthly tax liability is reduced to RMB 800, a decrease of RMB 790 from the RMB 1,590 levied after October 1 this year, representing a 49.7% reduction in his tax burden. Compared with the RMB 3,120 he would have paid prior to the personal income tax reform on October 1, his tax bill is now lower by RMB 2,320, reflecting a 74.4% drop in his tax burden.

Based on this calculation, assuming the same household and personal circumstances as described above, if Li’s monthly salary is RMB 10,000 or less, then after January 1, 2019, upon receiving his salary and claiming the special additional deductions, Li’s individual income tax liability would be virtually zero.

Convenient Tax Services: Robust Measures in Tax Administration Ensure Policy Implementation

The six special additional deductions are new to tax authorities, withholding agents, and taxpayers alike, and will require fresh exploration and experimentation.

China will adopt a new tax administration model based on the presumption of honest declaration, establishing a system that encompasses withholding and remittance, self‑declaration, annual tax reconciliation and final settlement, refunds for overpayments and additional payments for underpayments, optimized services, and post‑event spot checks. At the same time, the tax authorities will roll out a series of supporting administrative and service measures to help taxpayers understand the policies and benefit from the associated incentives.

“The policy on special additional deductions covers a broad range of taxpayers and encompasses numerous aspects. By issuing detailed operating procedures for these deductions, the tax authorities have clearly specified the information required for each item and the channels through which it must be reported, thereby facilitating compliance for taxpayers,” said Professor Fan Yong of the Central University of Finance and Economics.

In response to concerns among some taxpayers that the complexity of individual income tax deductions could increase their administrative burden, starting next year, with the exception of major‑illness medical expenses, which will continue to be settled through annual final tax reconciliation, the other five categories of deductions can all be applied at the withholding stage by employers. Taxpayers need only retain relevant supporting documents for record‑keeping; they are not required to submit these documents to the tax authorities when filing. The tax authorities will primarily rely on post‑event verification to help curb tax evasion and underpayment.

In terms of tax‑filing methods, following the full launch of the individual income tax mobile app on January 1, 2019, taxpayers can independently choose to enter their special additional deduction information via the mobile app or the web portal, enabling end-to-end “tax filing at your fingertips” and effectively reducing the administrative burden on taxpayers.

To ensure that taxpayers and withholding agents are both well-versed in the relevant policies and proficient in filing, the tax authorities have conducted large-scale policy training sessions and encouraged and supported the financial personnel of withholding units to overcome challenges and do their utmost to meet taxpayers’ needs for claiming special additional deductions, applying these deductions when paying January salaries. If individual units fail to make timely deductions, they may retroactively apply the applicable deductions for January when issuing February or subsequent monthly paychecks.

The policy on special additional deductions under the individual income tax covers a broad range of taxpayers and involves highly complex circumstances, posing new challenges to tax administration, taxpayer compliance, and the overall level of social governance.

Professor Tang Jiqiang of Southwestern University of Finance and Economics stated that, given the current institutional and infrastructural conditions, ensuring that the public truly benefits from the reform dividends brought by the individual income tax special additional deductions will require a concerted effort across society. On the one hand, taxpayers must act with honesty and integrity and file accurate returns; on the other, withholding agents must fulfill their duties diligently and process withholdings promptly, thereby jointly ensuring that the benefits of the individual income tax reform reach every taxpayer.

Interpretation of the “Announcement of the State Taxation Administration on the Issuance of the ‘Administrative Measures for Special Additional Deductions under the Individual Income Tax (Trial)’”

In order to implement the newly amended Individual Income Tax Law of the People’s Republic of China and the State Council General Office’s Notice on Issuing the Interim Measures for Special Additional Deductions under the Individual Income Tax Law, among other relevant provisions, and to ensure that the broad taxpayer base can promptly benefit from the reform, the State Taxation Administration recently issued the “Announcement on the Release of the Operational Measures for Special Additional Deductions under the Individual Income Tax Law (Trial)” (State Taxation Administration Announcement No. 41 of 2018, hereinafter referred to as the “Announcement”). The following is an interpretation:
I. Background to the Issuance of the Announcement
To implement the decisions and arrangements of the CPC Central Committee and the State Council and to respond positively to calls from all sectors of society to include expenses such as children’s education and major‑illness medical care in the pre‑tax deductions under the individual income tax, this revision of the Individual Income Tax Law has, for the first time, introduced six special additional deductions: for children’s education, continuing education, major‑illness medical care, housing loan interest or rent, and support for elderly parents. To ensure the effective and precise implementation of these special additional deduction policies—enabling taxpayers to clearly understand how they may claim such deductions, including the applicable start dates, standards, and procedures, and to inform withholding agents of how to process these deductions at the withholding stage, as well as the responsibilities and obligations they bear in administering these deductions—the State Taxation Administration has issued a public notice.
II. Main Provisions of the Measures
The Measures consist of five chapters—General Provisions, Eligibility for Deductions and Filing Deadlines, Submission of Information and Retention of Supporting Documentation, Methods of Information Submission, and Subsequent Administration—comprising a total of 30 articles. The main contents are as follows:
(1) The start and end dates for calculating each special additional deduction have been clearly defined. In addition to the general timeframes, it has been specified that, for individuals undergoing academic education or continuing education leading to a degree, the period of suspension—whether due to illness or other non‑subjective reasons while maintaining active student status—and any consecutive periods of vacation, such as winter and summer breaks, organized by the educational institution in accordance with relevant regulations, shall be counted continuously.
(2) The procedures and timing for claiming special additional deductions have been clarified. For example, taxpayers eligible for the special additional deductions for children’s education, continuing education, housing loan interest, housing rent, or eldercare may, from the date they meet the eligibility criteria, provide the relevant information to the withholding agent that pays their wages and salaries. The withholding agent will then apply the cumulative deduction amount allowable for the current year at the time of withholding and prepaying taxes. Alternatively, such deductions may be claimed during the annual tax reconciliation and settlement period, from March 1 to June 30 of the following year, by filing a return with the tax authority having jurisdiction over the place of final tax settlement. As for the special additional deduction for major illness medical expenses, taxpayers must claim it themselves by filing an annual tax reconciliation and settlement return with the tax authority having jurisdiction over the place of final tax settlement, between March 1 and June 30 of the following year. In addition, clear guidance has been provided on how taxpayers who receive wage and salary income from two or more sources may claim these special additional deductions.
(3) The Announcement stipulates that if a taxpayer changes employers during the year, the amount of special additional deductions already claimed may not be duplicated at the new employer.
(4) It is clarified that taxpayers who receive only income from labor services, manuscript fees, or royalty payments and wish to claim special additional deductions must, between March 1 and June 30 of the following year, independently submit the relevant information on such deductions to the tax authority having jurisdiction over the place of final tax settlement, and have the deductions applied when filing their annual tax reconciliation return.
(5) To safeguard taxpayers’ legitimate rights and interests, the Announcement stipulates that, within a tax year, if a taxpayer fails to claim or does not fully claim a special additional deduction at the stage of withholding and advance payment by the withholding agent, the taxpayer may either request the withholding agent to make a supplementary deduction during the same year, or, between March 1 and June 30 of the following year, declare such deduction when filing the annual tax reconciliation with the competent tax authority at the place of final settlement.
(6) If a taxpayer chooses to claim the special additional deductions when the withholding agent pays wages and salaries, the taxpayer shall submit the relevant information on such special additional deductions to the withholding agent.
(7) Taxpayers who continue to claim special additional deductions shall conoffice the relevant information for such deductions each December.
(8) If a taxpayer elects to claim special additional deductions when filing the annual tax return and final settlement, they shall submit the relevant information on such deductions to the tax authority having jurisdiction over the place of final settlement.
(9) It is clarified that if the information submitted by a taxpayer is incomplete, the taxpayer shall supplement it to ensure completeness; and if any relevant information changes, the taxpayer shall promptly report such changes.
(10) Clarifies the information that taxpayers entitled to various special additional deductions are required to submit, as well as the relevant supporting documents to be retained for record‑keeping purposes.
(11) The methods for submitting taxpayers’ information on special additional deductions have been clarified. Specifically, taxpayers may submit such information to the withholding agent or the competent tax authority via remote tax‑filing platforms, electronic templates, or paper forms. Furthermore, in light of the different ways taxpayers claim these deductions, the specific submission methods and requirements have been refined and specified. At the same time, taxpayers are encouraged and guided to use remote tax‑filing platforms for submitting their information.
(12) Clarified the relevant provisions on the subsequent administration of special additional deductions. For example: Taxpayers shall be responsible for the authenticity, accuracy, and completeness of the information they submit for special additional deductions. Withholding agents shall promptly calculate and file withholding returns based on the information provided by taxpayers and may not unilaterally alter any information supplied by the taxpayer. The forms for reporting special additional deduction information, together with related supporting documentation, shall be retained for five years from the end of the statutory annual tax reconciliation and settlement period. Withholding agents shall retain, for five years starting from the year following the year in which the advance withholding and prepayment were made, the relevant special additional deduction information and materials submitted by taxpayers for inspection purposes. During tax audits, if a taxpayer is unable to provide the retained documentation or if such documentation fails to substantiate the relevant circumstances, the tax authorities may require the taxpayer to furnish additional corroborating evidence; if no further evidence can be provided, or if the available evidence remains insufficient, the taxpayer shall not be entitled to the corresponding special additional deductions. When verifying special additional deductions, tax authorities may request assistance from relevant entities and individuals, who are obligated to cooperate. If a taxpayer engages in any of the following behaviors—submitting false information for special additional deductions, claiming duplicate deductions, receiving deductions beyond the prescribed scope or standards, refusing to provide retained documentation, or other circumstances specified by the State Taxation Administration—the competent tax authority shall order the taxpayer to make corrections; should such violations be detected again within five years, the case shall, depending on the circumstances, be recorded in the relevant credit information system and subject to joint punitive measures in accordance with applicable national regulations; where the conduct constitutes a violation of the Law on the Administration of Tax Collection or other laws and regulations, the tax authorities shall impose penalties in accordance with the law.
(13) The Announcement specifies that the measures shall take effect on January 1, 2019.

The State Taxation Administration has issued an announcement on issues related to the seamless implementation of the new individual income tax administration system.

The State Taxation Administration recently issued the “Announcement on Several Issues Concerning the Seamless Implementation of the New Individual Income Tax Law” (State Taxation Administration Announcement No. 56 of 2018), clarifying the relevant administrative procedures for withholding and remitting individual income tax—both for resident individuals and non-resident individuals—on wages and salaries, labor compensation, manuscript fees, and royalty income for the 2019 tax year, which are urgently awaiting implementation, and providing interpretations on related issues.

Where a withholding agent makes payments of wages and salaries to resident individuals, it shall calculate the withheld tax using the cumulative withholding method and file full‑amount, full‑person withholding returns on a monthly basis. For payments of labor compensation, manuscript fees, and royalty income to resident individuals, the withholding agent shall withhold and remit individual income tax either on a per‑payment basis or on a monthly basis. When making payments of wages and salaries, labor compensation, manuscript fees, or royalty income to non‑resident individuals, the applicable individual income tax shall be calculated as follows: for wages and salaries, the taxable income is the balance remaining after deducting RMB 5,000 from the monthly income; for labor compensation, manuscript fees, and royalty income, the taxable income is the amount received each time.

The Announcement also promulgated the “Individual Income Tax Withholding and Declaration Form” along with its instructions for completion, as well as the “Individual Income Tax Rate Schedule and Withholding Rate Schedule.”

State Taxation Administration: Adjustments to the Individual Income Tax “Tax Payment Certificate” to a “Tax Payment Record” and Related Matters

Recently, the State Taxation Administration issued the “Announcement on Matters Relating to the Adjustment of the Individual Income Tax ‘Tax Payment Certificate’ (Documentary Form) to a ‘Tax Payment Record’” (State Taxation Administration Announcement No. 55 of 2018).

Effective January 1, 2019, for applications to issue certificates of individual income tax payment (or refund) covering tax periods on or after January 1, 2019, the tax authorities will no longer issue the “Certificate of Tax Payment” in document form; instead, they will issue a “Tax Payment Record.” For applications to issue certificates of individual income tax payment (or refund) covering tax periods on or before December 31, 2018, the tax authorities will continue to issue the “Certificate of Tax Payment” in document form.

Taxpayers may apply for a personal income tax “tax payment record” through the Electronic Tax Bureau or the mobile app, or they may visit a tax service hall to request issuance.

LITIGATION & ARBITRATION

The Supreme People’s Court has released the 19th batch of guiding cases.

Recently, the Supreme People’s Court released the 19th batch of five guiding cases—comprising one criminal case, three civil cases, and one administrative case—for reference by people’s courts at all levels when adjudicating similar cases.

Guiding Case No. 97, “Wang Lijun’s Re‑trial and Acquittal in an Illegal Business Operation Case,” aims to clarify the application of Paragraph 4 of Article 225 of the Criminal Law concerning the crime of illegal business operation. The key ruling holds that business activities that, while violating relevant administrative regulations, have not yet seriously disrupted market order should not be classified as illegal business operations. In this case, the retrial court overturned the original first‑instance judgment and acquitted Wang Lijun, thereby advancing the rule of law—centered on good laws and sound governance—and reforms in the fields of economic and administrative regulation through a specific judicial decision, achieving a harmonious balance between legal and social outcomes.

Guiding Case No. 98, “Zhang Qingfu and Zhang Diankai v. Zhu Zhenbiao Dispute over the Right to Life,” aims to clarify that people’s courts may recognize acts of courageous and righteous conduct and, in accordance with the law, protect the legitimate rights and interests of those who perform such acts. By rendering a fair judgment, this case establishes proper behavioral norms and principles for assuming legal responsibility, thereby effectively promoting the core socialist values.

Guiding Case No. 99, “Ge Changsheng v. Hong ZhenkuaI Dispute over Right to Reputation and Right to Honor,” clarifies that, with respect to acts infringing upon the reputation or honor of heroes and martyrs, their close relatives may bring a lawsuit before the people’s courts. The deeds and spirit of heroes and martyrs constitute a shared historical memory of the Chinese nation and an important embodiment of core socialist values; their reputation and honor are protected by law, and no organization or individual may distort, vilify, desecrate, or deny the deeds and spirit of heroes and martyrs. This case facilitated the enactment of the Law on the Protection of Heroes and Martyrs, promoted societal moral integrity in safeguarding heroic figures, and has served as a model and guiding precedent for the adjudication of similar cases.

Guiding Case No. 100, “Shandong Denghai Xianfeng Seed Industry Co., Ltd. v. Shaanxi Nongfeng Seed Industry Co., Ltd. and Shanxi Dafeng Seed Industry Co., Ltd. Dispute over Infringement of Plant Variety Rights,” further clarifies the evidentiary rules and issues of legal application when the results of two distinct identification methods—DUS testing and DNA fingerprinting—disagree in determining infringement of plant variety rights. The principles established in this case have been recognized by the UPOV Union (International Union for the Protection of New Varieties of Plants) as the first judicial contribution made by Asian countries to the enforcement of plant variety protection, and they hold significant guiding value for the adjudication of similar cases.

Guiding Case No. 101, “Luo Yuanchang v. the Local Maritime Administration of Pengshui Miao and Tujia Autonomous County, Chongqing Municipality—Government Information Disclosure Case,” clarifies that, in government information disclosure proceedings, when the defendant responds to the plaintiff on the ground that the relevant government information does not exist, the people’s court must examine whether the defendant has fulfilled its obligation to conduct a thorough and reasonable search and retrieval. The adjudicatory rule established in this case further specifies the standards for reviewing such cases, carrying significant guiding value and playing an important role in effectively supervising the government’s lawful disclosure of information and in safeguarding citizens’ right to know government information in accordance with the law.

The Supreme People’s Procuratorate has released the twelfth batch of guiding cases, clarifying the criteria for determining the limits of legitimate self-defense.

On December 19, the Supreme People’s Procuratorate issued its twelfth batch of guiding cases. All four cases involved legitimate self-defense or excessive self-defense, and the Yu Haiming case of legitimate self-defense—which has drawn widespread public attention—was included among them.

The twelfth batch of guiding cases issued by the Supreme People’s Procuratorate comprises the following: the case of Chen regarding legitimate defense, the case of Zhu Fengshan involving intentional injury (excessive self-defense), the case of Yu Haiming on legitimate defense, and the case of Hou Yuqiu on legitimate defense.

Sun Qian, Deputy Procurator-General of the Supreme People’s Procuratorate, stated that in recent years, the issue of legitimate defense has attracted widespread public attention. Although originating from isolated cases, it reflects the broad aspirations of the people in the new era for democracy, the rule of law, fairness, justice, and security. In this context, clarifying the boundaries and criteria for legitimate defense and addressing public concerns have become a pressing and prominent task for judicial authorities. The Supreme People’s Procuratorate has released the twelfth batch of guiding cases, specifically elaborating on the limits and standards for determining legitimate defense, thereby further strengthening the protection of the right to legitimate defense, actively resolving key issues in its application, and providing guidance for procuratorial organs in handling cases. At the same time, these four cases serve not only as examples of legitimate defense but also as illustrative instances of how procuratorial organs, through legal means, uphold the core socialist values. By issuing these guiding cases, we aim to further punish wrongdoing and promote good conduct, foster moral integrity, protect those who act bravely and righteously, and transmit positive energy to society.

The case of Chen’s self‑defense addresses the issue of ordinary self‑defense, with the key principle being that “when a person is assaulted and their personal rights are unlawfully infringed upon, even if the defensive act results in significant harm, it does not constitute excessive self‑defense—and thus no criminal liability arises—so long as the defensive measures do not clearly exceed the necessary limits.” The case of Zhu Fengshan, involving intentional injury (excessive self‑defense), concerns interpersonal disputes. This guiding case focuses on the problem of excessive self‑defense, clarifying that, during the escalation of private conflicts, one may lawfully defend oneself against ongoing unlawful entry into a residence or minor physical assault; however, if the intensity of the defensive response is unnecessary and causes serious injury or death to the aggressor, such conduct constitutes an obvious excess of necessary limits resulting in substantial harm, thereby giving rise to criminal liability—though the punishment should be mitigated or exempted. The cases of Yu Haiming and Hou Yuqiu, concerning special self‑defense, respectively set forth the criteria for identifying “violent assault” and “other violent crimes that seriously endanger personal safety.”

Sun Qian specifically pointed out that, in addition to focusing on the theme of legitimate self-defense, the twelfth batch of guiding cases also highlights the distinctive features of the procuratorial organs in performing their legal supervisory functions in accordance with the law. By addressing four key aspects—participation in investigative work, review of arrest decisions, review of prosecution, and second-instance procuratorial oversight—the cases demonstrate both the principle of exercising supervision during case handling and the effectiveness of conducting case handling through supervision.

Wuhan Intermediate People’s Court responds to the case of “a thief electrocuted while stealing a battery and awarded 50,000 yuan in compensation”

The Wuhan Intermediate People’s Court recently issued a statement indicating that the city’s two-level courts have not accepted the compensation case involving the death by electrocution of a stolen electric scooter, as reported and commented on by the media in recent days.

According to a notice, recent media reports indicated that a thief died of electrocution while stealing an electric scooter belonging to Mr. Liu, which had been parked downstairs for charging in Wuhan. The thief’s family subsequently sought 200,000 yuan in compensation from Mr. Liu. Following court-mediated settlement, the vehicle owner paid the thief’s family 50,000 yuan as compensation for emotional distress.

According to the announcement, following media reports, the two-level courts of Wuhan City attached great importance to the matter and promptly conducted a thorough review and verification of the “case” reported and commented on by the media. The investigation revealed that, in recent years, the two-level courts of Wuhan have not accepted any cases corresponding to those reported or discussed by the media, nor any similar cases. We note that the original media outlet that first published the report has already removed the relevant article.

The notice stated that the two-level courts in Wuhan express their gratitude to the media, readers, and internet users for their concern, oversight, and support of the courts’ work. At the same time, we will join forces with the media, readers, and internet users to jointly combat false information and safeguard a healthy online environment.

Other

The General Office of the State Council has issued guiding opinions to accelerate the development of the sports competition and performance industry.

On December 21, the General Office of the State Council issued the “Guiding Opinions on Accelerating the Development of the Sports Competition and Performance Industry” (hereinafter referred to as the “Opinions”).

The Opinions clearly state that sports competition and performance enterprises with their own brands, innovative capabilities, and competitive strength should be encouraged to grow stronger and larger, building robust intangible assets such as event brands. Through methods like management franchising and chain operations, they are to extend both their industrial and profit chains, thereby forming corporate groups with core competitiveness and the capacity to drive industry development. Enterprises are also supported in pursuing vertical, niche‑focused, and specialized growth, while all types of small, medium, and micro‑sized sports competition and performance offices are encouraged to move toward the “specialized, refined, distinctive, and innovative” model.

The People’s Bank of China: Strengthen management of the reserve requirement ratio and further standardize penalties for violations.

On the evening of December 20, the People’s Bank of China issued the “Notice on Matters Concerning the Strengthening of Reserve Requirement Management” (hereinafter referred to as the “Notice”), which calls for improving the methods used to supervise the base for reserve requirement deposits and further standardizing the penalties imposed for violations of reserve requirement regulations.

The Notice stipulates that branches of the People’s Bank of China shall urge financial institutions to refine their business systems and enhance the quality of reporting the base for reserve requirement deposits. Where feasible, financial institutions are required to directly export general deposit data from their business systems and submit it to the Central Bank Accounting and Settlement Data Centralization System (ACS), thereby preventing errors arising from manual data entry. In addition, the Notice further clarifies the penalties for violations of reserve requirement regulations: for first-time under‑payment of reserve requirements within a two‑year period, where the shortfall does not exceed 3% of the base (inclusive) and is promptly made up, no penalty will be imposed; instead, measures such as admonitory talks or warnings will be applied. If the shortfall exceeds 3% but is nevertheless promptly rectified, a fine will be levied at a rate of 0.06% of the unpaid amount, with a minimum of RMB 10,000 and a maximum of RMB 200,000.

Registration revoked! The China E-Commerce Association has been added to the list of entities with illegal and untrustworthy conduct.

Recently, the Ministry of Civil Affairs imposed an administrative penalty of revoking the registration of the China E‑Commerce Association.

Upon investigation, it was found that the China E‑Commerce Association engaged in unlawful conduct by failing to undergo the annual national-level inspection of social organizations as required for three consecutive years, thereby violating Article 28 of the Regulations on the Registration and Administration of Social Organizations, with serious consequences. In accordance with Paragraph 1, Item (3) of Article 30 of the same Regulations, the Ministry of Civil Affairs has imposed an administrative penalty of revoking the association’s registration. Furthermore, pursuant to the Measures for the Administration of Credit Information of Social Organizations, effective from the date the administrative penalty decision takes effect, the Ministry of Civil Affairs will place the China E‑Commerce Association on the List of Seriously Illegal and Dishonest Social Organizations.

In accordance with Articles 19 and 20 of the Regulations on the Registration and Administration of Social Organizations, following the revocation of its registration, the China E‑Commerce Association shall establish a liquidation committee, complete the liquidation process, and apply for deregistration. During the liquidation period, it shall not engage in any activities other than those necessary for liquidation.

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