JC Master Legal News Issue 854

Key Takeaways for This Issue

The China Securities Regulatory Commission has issued the “Guidance on the Investment of Publicly Offered Mutual Funds in Credit Derivatives.”

To safeguard the safe and stable operation of the capital market, protect the legitimate rights and interests of investors, enrich risk-management tools for public mutual funds, meet their risk-management needs, and enhance the industry’s capacity to manage credit risk, the China Securities Regulatory Commission recently issued the “Guidance on the Investment of Publicly Offered Securities Investment Funds in Credit Derivatives” (hereinafter referred to as the “Guidance”), which shall take effect from the date of its promulgation.

The State-owned Assets Supervision and Administration Commission has set the tone for 2019 state‑owned enterprise reform: expanding the scope of mixed‑ownership reform in key sectors.

Recently, the 2019 reform of state-owned assets and enterprises has continued to advance in depth, with new measures under consideration. Going forward, efforts will be sustained to promote specialized consolidation across multiple sectors, including power and nonferrous metals, while actively encouraging mixed‑ownership reforms among enterprises invested in by state capital investment and management companies, as well as commercially oriented SOEs whose core businesses operate in competitive markets, thereby expanding the scope of such reforms in key areas. In addition, a range of other reforms—covering risk prevention and control, independent innovation, and corporatization—will continue to be deepened.

Two departments have clarified the universal tax relief and exemption policies for small and micro enterprises.

On January 18, in order to implement the decisions and arrangements of the CPC Central Committee and the State Council and further support the development of small and micro enterprises, the Ministry of Finance and the State Taxation Administration jointly issued a notice stating that, from January 1, 2019, to December 31, 2021, universal tax relief measures would be applied to small and micro enterprises.

The Supreme People’s Court has issued a document to supplement and add new categories of causes of action in civil cases.

Recently, the Supreme People’s Court issued the “Notice on Supplementing and Adding Causes of Action in Civil Cases” (hereinafter referred to as the “Notice”), which shall take effect as of January 1, 2019.

The General Office of the State Council: Mobilize private enterprises and other social forces to participate in consumption-driven poverty alleviation.

On January 14, the General Office of the State Council issued the “Guiding Opinions on Deepening Consumption‑Driven Poverty Alleviation to Help Win the Battle Against Poverty” (hereinafter referred to as the “Opinions”).

Table of Contents

Table of Contents

Finance & Capital Markets

The China Securities Regulatory Commission has issued the “Guidance on the Investment of Publicly Offered Mutual Funds in Credit Derivatives.”

The China Securities Regulatory Commission and the German Federal Financial Supervisory Authority have renewed and signed the Memorandum of Understanding on Cooperation in Securities and Futures Regulation.

The Shanghai Stock Exchange has issued the “Pilot Measures for the Administration of Credit Protection Instrument Business” and its accompanying rules.

Strengthening the Institutional Foundations for Credit Enhancement to Support the Healthy Development of Private Enterprises — The Shenzhen Stock Exchange Issues the Pilot Measures for the Administration of Credit Protection Instruments

The Shanghai and Shenzhen stock exchanges have refined the stock pledge repurchase mechanism, creating a favorable market environment for providing relief.

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

Corporate & Commercial

The State-owned Assets Supervision and Administration Commission has set the tone for 2019 state‑owned enterprise reform: expanding the scope of mixed‑ownership reform in key sectors.

The State-owned Assets Supervision and Administration Commission will accelerate the shift from managing enterprises to managing capital.

China has achieved mutual recognition of Customs AEO programs with 36 countries and regions.

Ministry of Natural Resources: Strictly prohibits illegal financing using government‑reserved land.

China Banking and Insurance Regulatory Commission: In principle, rural commercial banks shall not establish branches outside their home county, nor conduct business across county boundaries.

The State Administration for Market Regulation has conducted administrative guidance with several e-commerce enterprises.

Taxation

Two departments have clarified the universal tax relief and exemption policies for small and micro enterprises.

State Taxation Administration: Ensuring that tax and fee reduction policies and measures are effectively implemented and take root.

Seizing the New Situation and Demonstrating New Achievements — The National Tax Work Conference Held in Beijing

Litigation & Arbitration

The Supreme People’s Court has issued a document to supplement and add new categories of causes of action in civil cases.

The Supreme People’s Procuratorate has released the first batch of typical cases involving judicial protection for private enterprises.

The Mainland and Hong Kong have signed an arrangement on the mutual recognition and enforcement of civil and commercial judgments.

Other

The General Office of the State Council: Mobilize private enterprises and other social forces to participate in consumption-driven poverty alleviation.

Key priorities of the National Healthcare Security Administration: Adding more emergency medicines to the national medical insurance coverage.

Finance & Capital Markets

The China Securities Regulatory Commission has issued the “Guidance on the Investment of Publicly Offered Mutual Funds in Credit Derivatives.”

To safeguard the safe and stable operation of the capital market, protect the legitimate rights and interests of investors, enrich risk-management tools for public mutual funds, meet their risk-management needs, and enhance the industry’s capacity to manage credit risk, the China Securities Regulatory Commission recently issued the “Guidance on the Investment of Publicly Offered Securities Investment Funds in Credit Derivatives” (hereinafter referred to as the “Guidance”), which shall take effect from the date of its promulgation.

The Guidelines comprise eleven articles and primarily address the following matters: First, they clarify that fund investments in credit derivatives are intended solely for risk hedging; second, they prohibit money market funds from investing in credit derivatives; third, they require fund managers to prudently determine the investment amount, tenor, and other parameters of credit derivatives, while strengthening risk management with respect to counterparties and originating institutions; fourth, they mandate detailed disclosure of credit derivative investments in periodic reports and offering documents; fifth, they explicitly stipulate that valuation shall be conducted in accordance with the relevant rules of industry associations; sixth, they reinforce the duties of fund managers and custodians; and seventh, they specify that existing funds investing in credit derivatives must comply with applicable legal procedures.

Going forward, fund managers should further strengthen their risk-management awareness, enhance their risk-management capabilities, and ensure full compliance with information-disclosure requirements. The China Securities Regulatory Commission will continue to intensify its regulatory oversight, rigorously investigate and prosecute violations of laws and regulations in accordance with the law, and foster the long-term, sound development of the public‑fund industry.

The China Securities Regulatory Commission and the German Federal Financial Supervisory Authority have renewed and signed the Memorandum of Understanding on Cooperation in Securities and Futures Regulation.

On January 18, 2019, under the joint witness of Vice Premier Liu He of the State Council and German Vice Chancellor and Finance Minister Olaf Scholz, the China Securities Regulatory Commission and the German Federal Financial Supervisory Authority renewed and signed a bilateral Memorandum of Understanding on Cooperation in Securities and Futures Regulation in Beijing during the Second China–Germany High-Level Financial Dialogue, marking the entry of cooperation between the two countries’ securities and futures regulators into a new phase.

In recent years, the China Securities Regulatory Commission has actively supported the China‑Europe International Exchange in launching the D‑share market, providing support and facilitating access for high‑quality Chinese enterprises to European capital markets. The signing of this memorandum represents an update to the bilateral Memorandum of Understanding on Securities Regulatory Cooperation, originally concluded in 1998 between the China Securities Regulatory Commission and the German Federal Financial Supervisory Authority. It is of great significance for further strengthening regulatory cooperation between the two authorities, particularly in enhancing regulatory coordination on D‑share issuance and listing, as well as in cross‑border securities and derivatives oversight.

At present, the China Securities Regulatory Commission has established cross-border regulatory and law enforcement cooperation mechanisms with the securities and futures regulators of 63 countries and regions.

The Shanghai Stock Exchange has issued the “Pilot Measures for the Administration of Credit Protection Instrument Business” and its accompanying rules.

Recently, with the approval of the China Securities Regulatory Commission, the Shanghai Stock Exchange and China Securities Depository & Clearing Corporation jointly issued the “Pilot Measures for the Management of Credit Protection Instrument Business of the Shanghai Stock Exchange and China Securities Depository & Clearing Corporation Limited” (hereinafter referred to as the “Pilot Measures”). At the same time, the Shanghai Stock Exchange released the “Shanghai Stock Exchange Guidelines for Credit Protection Instrument Trading Business” (hereinafter referred to as the “Business Guidelines”) and the “Shanghai Stock Exchange Handbook on Credit Protection Instrument Trading Business” (hereinafter referred to as the “Business Handbook”). The aforementioned rules shall take effect from the date of their publication.

The Shanghai Stock Exchange’s launch of credit protection instruments is an effective measure to implement the guiding principles of the CPC Central Committee and the State Council on supporting the development of private enterprises, as well as to carry out the relevant work arrangements set forth in the CSRC’s “Implementation Plan for Bond Financing Support Tools for Private Enterprises in the Exchange Market.” It represents a proactive exploration of the exchange’s credit risk‑sharing mechanism, providing an effective tool for managing credit risk, helping to refine the risk‑pricing framework in the corporate bond market, and fostering corporate bond issuance to better serve the real economy. The promulgation of the Pilot Measures and their accompanying rules will facilitate the steady, market‑oriented and standardized rollout of credit protection instrument business, help establish and improve the exchange’s regulatory framework for such instruments, and, through financial product innovation, promote the high‑quality development of the exchange‑traded bond market.

The Pilot Measures and their accompanying rules set forth the key elements of credit protection instrument business across such areas as participant management, credit default swap and certificate‑related operational procedures, post‑credit‑event handling mechanisms, information disclosure, risk control, and self‑regulatory oversight, specifically encompassing the following aspects:

First, the product types are clearly defined: exchange‑traded credit protection instruments comprise two main categories—credit protection contracts and credit protection certificates. Contracts are entered into by the two parties and are non‑transferable, whereas certificates are issued by the certifying institution and may be transferred. In the initial pilot phase, only credit protection contracts will be offered; the launch date for credit protection certificate trading will be announced separately.

Second, a tiered management system is implemented for participants. Participants in credit protection contracts are categorized into core contract dealers and other investors, while participants in credit protection certificates are divided into certificate‑issuing institutions and other qualified investors. Both core contract dealers and certificate‑issuing institutions are required to file in advance with the Shanghai Stock Exchange.

Third, the scope of protected debt in the initial pilot phase is clearly defined. During this phase, it primarily includes RMB‑denominated corporate bonds (excluding subordinated bonds), convertible corporate bonds, and enterprise bonds that are issued within China and listed for trading on the Shanghai and Shenzhen stock exchanges or traded on over-the-counter markets, as well as other debt instruments approved by the Shanghai Stock Exchange.

Fourth, the business processes for credit protection contracts and certificates have been standardized. The rules set forth specific provisions regarding participant qualifications and filing requirements, contract reporting elements, premium payment methods, certificate issuance and transfer procedures, as well as notification and settlement processes following a credit event.

Fifth, a system for disclosing information on credit protection instruments and a centralized monitoring mechanism have been established, thereby strengthening risk control management and self-regulatory oversight. The business rules specify requirements for periodic disclosures, ad hoc disclosures, and maturity‑related risk warnings by the certificate‑issuing institutions, effectively safeguarding investors’ legitimate rights and interests.

Sixth, clarify the settlement arrangements following a credit event, defining the principal types of credit events, the settlement methods applicable upon their occurrence, and the associated operational procedures. Credit events primarily include bankruptcy, payment default, and debt restructuring; the specific types of credit events to be applied shall be agreed upon by the parties to the transaction.

Previously, the Shanghai and Shenzhen Stock Exchanges, together with the Securities Association, the Asset Management Association, and the Futures Association, jointly issued the “China Securities and Futures Market Derivatives Master Agreement (Special Version for Credit Protection Contracts)” and organized pilot programs in which selected institutions provided credit protection instruments to private enterprises, thereby facilitating corporate bond issuance and yielding positive results. Recently, the Shanghai Stock Exchange will host training on credit protection instrument transactions to guide various market participants in more effectively engaging in this business, promote the sound development of exchange‑based credit protection products, and further enhance the exchange’s ability to support the real economy through its bond market.

Strengthening the Institutional Foundations for Credit Enhancement to Support the Healthy Development of Private Enterprises — The Shenzhen Stock Exchange Issues the Pilot Measures for the Administration of Credit Protection Instruments

On January 18, in accordance with the unified deployment of the China Securities Regulatory Commission, the Shenzhen Stock Exchange, together with China Securities Depository & Clearing Corporation, issued the “Pilot Measures for the Administration of Credit Protection Instrument Business of the Shenzhen Stock Exchange and China Securities Depository & Clearing Corporation Limited” (hereinafter referred to as the “Pilot Measures”). These measures are designed to earnestly implement the guiding principles of the CPC Central Committee and the State Council on leveraging market-based mechanisms to support bond financing for private enterprises, strengthen the institutional foundation for credit protection instruments, and harness the bond market’s characteristics of openness and transparency as well as its guiding role, thereby helping to alleviate the difficulties private enterprises face in accessing financing.

Since last year, the Shenzhen Stock Exchange has actively advanced a pilot program for credit protection instruments, supporting the steady development of private enterprises. To date, under the pilot framework, 15 transactions have been concluded, involving a total notional principal of RMB 170 million, and the Exchange has successfully launched the first bond‑financing support tool for private enterprises in the Shenzhen market. All pilot transactions were structured as credit protection contracts (hereinafter referred to as “contracts”), with reference entities all being private companies, including Suning Appliance Group Co., Ltd., Zhejiang Hengyi Group Co., Ltd., and Guangzhou Zhiguang Electric Co., Ltd. These contracts were issued concurrently with the corresponding corporate bonds, effectively boosting investor appetite and reducing issuers’ financing costs.

The “Pilot Measures” were formulated by drawing extensively on the Shenzhen Stock Exchange’s prior experience in piloting credit protection instruments, and they incorporate feedback and suggestions from market participants. The Measures set out the overall business framework for credit protection instruments, including requirements for market participants, operational models, trading and settlement procedures, information disclosure, and risk‑management arrangements. Credit protection instruments comprise two product categories: contracts and certificates. Contracts consist of a series of contractual documents, including the Master Agreement for Derivatives Trading in the Chinese Securities and Futures Markets (Special Version for Credit Protection Contracts) (“the Master Agreement”) and supplementary agreements; the Master Agreement was previously jointly issued by the China Securities Association, the China Futures Association, the Asset Management Association of China, and the Shenzhen and Shanghai Stock Exchanges. Once concluded, contracts are non‑transferable, though they may be terminated early by mutual agreement of the parties. Both parties to a contract must meet the suitability requirements applicable to investors in the reference entity’s protected debt, and the aggregate net short position in credit protection instruments held by market participants must comply with relevant position‑limiting rules, thereby ensuring the sound and stable operation of the business.

Going forward, under the leadership of the China Securities Regulatory Commission, the Shenzhen Stock Exchange will promptly introduce supporting regulations for credit protection instruments, accelerate the development of market participants, conduct relevant business training, promote the institutionalization of credit protection‑related activities, and steadily expand the coverage of bond financing support tools for private enterprises.

The Shanghai and Shenzhen stock exchanges have refined the stock pledge repurchase mechanism, creating a favorable market environment for providing relief.

To implement the relevant requirements of the Financial Stability and Development Committee of the State Council on preventing and resolving risks associated with stock pledge financing by listed companies, and to encourage and assist market participants in proactively mitigating such risks, the Shanghai and Shenzhen Stock Exchanges, with the approval of the China Securities Regulatory Commission, issued the “Notice on Matters Relating to Stock Pledge Repurchase Transactions” (hereinafter referred to as the “Notice”) on January 18, 2019, which took effect upon its publication.

The Notice covers two main aspects: First, it optimizes the rollover arrangements for defaulted contracts. Specifically, when a borrowing party defaults and an extension is genuinely necessary to mitigate its credit risk, if the cumulative repurchase period has already reached or is about to reach three years, the parties may, by mutual agreement, extend the contract such that the total repurchase period exceeds three years, thereby alleviating the borrower’s repayment burden through existing‑contract rollovers. Second, it introduces special provisions for new stock‑pledge repurchase transactions undertaken to address pledge‑related risks. For such new transactions where all borrowed funds are used exclusively to repay obligations under defaulted contracts, certain restrictions set forth in the current business rules—such as caps on the concentration of exposure to a single lender and on the overall market‑wide pledge ratio, the prohibition against asset‑management plans serving as lenders in performance‑guarantee‑linked stock‑pledge repurchase transactions, and limits on the pledge ratio—will not apply. This measure seeks to ease liquidity pressures on borrowers by relaxing the conditions for new financing. At the same time, the Notice requires members to prudently assess borrowers’ credit risks and their ability to perform, and to maintain robust risk management for stock‑pledge repurchase activities.

Relevant officials stated that, in recent times, all parties have actively engaged in addressing the risks associated with stock pledges, particularly among private‑sector listed companies. The issuance of this Notice aims to foster a favorable market environment for alleviating the challenges posed by stock pledge financing, support the implementation of relief measures by relevant stakeholders, and help private enterprises overcome difficulties in accessing financing. Going forward, the Shanghai and Shenzhen Stock Exchanges will continue to prioritize risk prevention and resolution and the maintenance of stable market operations, proactively leveraging market‑based mechanisms to mitigate stock pledge risks, and working in concert with all parties to win the tough battle of preventing and defusing major financial risks.

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

The Shanghai and Shenzhen Stock Exchanges recently revised and issued the “Detailed Rules for Bond Trading,” extending the trading hours for bond repurchase transactions under pledge, as well as the time windows for submitting applications to pledge or release pledged bonds, to 3:30 p.m. on each trading day. The revised rules will take effect on January 21.

In response to media inquiries regarding the extension of bond repo trading hours, the Shanghai Stock Exchange stated that this adjustment applies solely to trading hours: the closing time for repo transactions will be extended from the current 3:00 p.m. to 3:30 p.m. For now, this extension of auction‑based trading hours pertains only to the SSE’s bond repo products and does not affect the auction‑based trading hours of other securities, such as equities or funds. As for individual investors, participating in overnight reverse repos after the close of cash‑bond auctions will not preclude them from engaging in equity or other cash‑bond trading on the following trading day.

Commercial & Corporate

The State-owned Assets Supervision and Administration Commission has set the tone for 2019 state‑owned enterprise reform: expanding the scope of mixed‑ownership reform in key sectors.

Recently, the 2019 reform of state-owned assets and enterprises has continued to advance in depth, with new measures under consideration. Going forward, efforts will be sustained to promote specialized consolidation across multiple sectors, including power and nonferrous metals, while actively encouraging mixed‑ownership reforms among enterprises invested in by state capital investment and management companies, as well as commercially oriented SOEs whose core businesses operate in competitive markets, thereby expanding the scope of such reforms in key areas. In addition, a range of other reforms—covering risk prevention and control, independent innovation, and corporatization—will continue to be deepened.

Notably, on January 15, Lian Weiliang, Deputy Director of the National Development and Reform Commission, stated at a press conference held by the State Council Information Office that efforts to advance mixed‑ownership reform of state-owned enterprises will be intensified. Building on the first three batches of 50 pilot projects, the authorities will issue implementation guidelines to further deepen such reforms and accelerate the launch of a fourth batch comprising more than 100 additional pilot enterprises.

Looking back at last year’s reform achievements, steady progress in restructuring and integration has gradually brought to the fore economies of scale and synergistic effects. According to reports, in 2018 the State-owned Assets Supervision and Administration Commission (SASAC) facilitated the restructuring of China National Nuclear Corporation and China Nuclear Construction Group, as well as Wuhan Institute of Post and Telecommunications Technology and China Telecom Research Institute; oversaw the transfer and reassignment of the Armed Police Hydropower Corps; and advanced the orderly preparation for the consolidation of China Aneng. These efforts have encouraged restructured enterprises to deepen integration and convergence, resulting in steady improvements in operating performance across entities such as China Energy Investment Corporation, SINOMACH, China Baowu Steel Group, China COSCO Shipping, COFCO Group, China Merchants Group, and CRRC Corporation. Meanwhile, SASACs at the provincial, autonomous region, and municipal levels have overseen the restructuring of 36 pairs of first-tier supervised enterprises, effectively contributing to the optimization of the state‑owned economic layout and the enhancement of state‑capital operational efficiency.

“In 2019, we will deepen integration and consolidation and continue to optimize the layout and structure of state-owned capital,” said Xiao Yaqing, Director of the State-owned Assets Supervision and Administration Commission of the State Council. He added that strategic restructuring of enterprises in sectors such as equipment manufacturing, shipbuilding, and chemicals will be advanced in a proactive yet prudent manner, while specialized integration in areas including power, nonferrous metals, steel, offshore engineering equipment, environmental protection, and duty-free goods will be steadily promoted. Efforts will also be made to integrate regional resources and reduce homogeneous competition.

“Problems such as severe redundant investment in certain industries, low industrial concentration, weak independent innovation capacity, and relatively weak market competitiveness remain particularly acute,” said Zhou Lisha, an associate researcher at the Research Center of the State-owned Assets Supervision and Administration Commission of the State Council. She added that, under the new circumstances—characterized by increasingly stringent resource and environmental constraints, intensifying international industrial competition, and a marked resurgence of trade protectionism—it is imperative to vigorously advance corporate mergers and reorganizations, deepen enterprise reform, promote the optimization and upgrading of the industrial structure, accelerate the transformation of the development model, enhance the quality and efficiency of development, strengthen resilience to international market risks, and achieve sustainable development.

According to reports, China Baowu has established China’s first steel industry restructuring fund—the Siyuanhe Steel Industry Restructuring Fund—undertook the restructuring of Chongqing Iron & Steel, and achieved optimal allocation of industrial resources. The fund platform is currently advancing regional steel‑industry consolidation; following the restructuring, its combined production capacity will approach 100 million tonnes, ranking second worldwide.

The consolidation of state-owned power‑sector enterprises has also drawn significant attention. Earlier, it was widely reported in the industry that Datang Group and China Huadian Corporation were in talks to merge, with the two sides having reached agreement on most technical issues. However, neither company has officially conofficeed this news.

“In addition to traditional industrial mergers and acquisitions, this round specifically calls for specialized restructuring in sectors such as offshore engineering equipment, environmental protection, and duty‑free retail,” said Zhou Lisha. She added that, as China National Travel Service Group refocuses on its core duty‑free business and with the implementation of Hainan’s duty‑free policies, integrating the duty‑free sector will help optimize and adjust its business structure, further clarifying its strategic positioning.

The State-owned Assets Supervision and Administration Commission will accelerate the shift from managing enterprises to managing capital.

On January 17, the State Council Information Office held a press conference. In 2018, central enterprises overcame the difficulties and challenges posed by downward economic pressures, achieving steady improvements in quality and efficiency, and further consolidating the momentum of progress amid stability and enhanced quality in the course of development.

At the press conference, Peng Huagang, Secretary-General and Spokesperson of the State-owned Assets Supervision and Administration Commission of the State Council, stated that six measures will be implemented to ensure steady growth in the performance of central enterprises in 2019, while the pace of state‑owned asset and state‑owned enterprise reform will also be accelerated.

Last year, the profits of central state-owned enterprises reached a record high.

In 2018, the rapid growth in revenue and profits of central state-owned enterprises was the most notable highlight. Collectively, these enterprises recorded total operating revenue of RMB 29.1 trillion, up 10.1% year on year; total profits reached RMB 1.7 trillion, the highest level in history, a year-on-year increase of 16.7%; net profit stood at RMB 1.2 trillion, up 15.7% year on year; and net profit attributable to owners of the parent company amounted to RMB 610.01 billion, an increase of 17.6% over the previous year.

Deleveraging and debt reduction have yielded significant results. As of the end of December 2018, the average asset-liability ratio of central enterprises stood at 65.7%, down 0.6 percentage points from the beginning of the year, with 50 enterprises recording declines exceeding 1 percentage point.

Fixed asset investment continued to grow. In 2018, central enterprises recorded fixed asset investment totaling RMB 2.5 trillion, up 4.9% year on year, maintaining positive growth throughout the year. The annual growth rate accelerated by 2.2 percentage points compared with the first three quarters.

In Peng Huagang’s view, the above‑mentioned achievements of central enterprises have been attained through the diligent implementation of the decisions and arrangements of the CPC Central Committee and the State Council, adherence to the overarching principle of seeking progress while maintaining stability, the office establishment of the new development philosophy, and alignment with the requirements for high‑quality development. By taking supply‑side structural reform as the main thread and focusing on enhancing quality, efficiency, and core competitiveness, these enterprises have demonstrated a spirit of bold initiative and unwavering dedication to hard work.

Enhanced market competitiveness and management capabilities

In 2018, the performance of central state-owned enterprises posted substantial growth, drawing widespread attention. Peng Huagang attributed this success to seizing market opportunities, effective macroeconomic regulation, and enhanced corporate capabilities.

Peng Huagang stated that the substantial growth in the performance of central state-owned enterprises (SOEs) can be attributed, first and foremost, to the sustained and stable expansion of the macroeconomy. As a country with a large population, robust consumer demand, and a vast market, China has seen its central SOEs play a pivotal role in economic development, while simultaneously bolstering their own growth. Secondly, the macroeconomic policies and regulatory measures introduced by the state in response to evolving economic conditions have created favorable external conditions for enterprise development. Thirdly, through the diligent implementation of reforms, development initiatives, and Party building efforts, central SOEs have continuously strengthened their vitality, momentum, and cohesion, leading to ongoing improvements in market competitiveness and operational management capabilities.

In 2018, central state-owned enterprises deepened supply-side structural reform, further consolidating the foundation for high-quality development. By focusing on their core real‑economy businesses, these enterprises saw a further enhancement in the profitability of their principal operations.

“Over the past few years, state-owned enterprises have steadily advanced efforts to enhance quality and efficiency, improving the quality of development and boosting profitability,” said Peng Huagang, citing concrete figures. In 2018, the cost and expenses borne by central industrial enterprises per 100 yuan of operating revenue declined by 0.4 yuan year on year. While this may seem like a small reduction at first glance, given that central industrial enterprises generated more than 20 trillion yuan in sales revenue, the resulting savings translate into nearly 100 billion yuan in additional profits.

Inspire entrepreneurs’ enthusiasm for starting businesses and getting things done.

In 2019, both the domestic and global economic landscapes remained stable yet subject to change, with risks and challenges mounting significantly and corporate operating pressures intensifying. In this context, how are central state-owned enterprises responding, and will their profit growth rate slow down this year?

At the recently convened meeting of heads of central enterprises and local state-owned asset supervision and administration commissions, analysts concluded that, on the one hand, we must anticipate difficulties and challenges more thoroughly, devise more robust measures and contingency plans, and be fully prepared to rise to the occasion. On the other hand, it is important to recognize that China’s economic development remains in a critical period of strategic opportunity; we must maintain office strategic confidence, uphold strategic resolve, and officely grasp the stage‑specific characteristics of China’s economic development in the new era. By seizing every favorable condition and mobilizing all positive factors, we can continue to advance the cause of reform and development of state‑owned assets and state‑owned enterprises.

Peng Huagang stated that, to ensure the goal of steady profit growth this year, the State-owned Assets Supervision and Administration Commission has introduced six key measures, which primarily include: strengthening risk management and control to safeguard against major risks; bolstering independent innovation to accelerate high-quality development; reinforcing core business operations and deepening supply-side structural reform; ensuring effective implementation of reforms to continuously invigorate enterprises’ internal vitality and momentum; enhancing management practices by proactively benchmarking against industry-leading companies and striving to reach world-class standards; and accelerating the transformation of its functions to shift from managing individual enterprises to managing capital.

Peng Huagang stated: “To accelerate the shift from managing enterprises to managing capital, the overarching principle is to focus more on bolstering corporate vitality and motivating entrepreneurs to pursue innovation and entrepreneurship, all while strengthening oversight and preventing asset loss.”

China has achieved mutual recognition of Customs AEO programs with 36 countries and regions.

On January 15, the General Administration of Customs announced that China has established mutual recognition of the Authorized Economic Operator (AEO) program with 36 countries and regions, and exports to these countries and regions account for approximately 45% of China’s total export value.

The AEO system, initiated by the World Customs Organization, aims to certify enterprises that demonstrate a high level of compliance, sound creditworthiness, and robust security standards, thereby granting them streamlined customs clearance. Through mutual recognition among national customs authorities, eligible enterprises in one country can enjoy preferential treatment when trading with partner countries. According to available information, when Chinese AEO‑certified companies export goods to countries and regions that have implemented mutual recognition, their inspection rates can be reduced by 60% to 80%, while clearance times and costs can be cut by more than 50%.

Customs data show that in 2018, China signed mutual recognition arrangements with Japan and formally implemented such arrangements with Israel. It also concluded mutual recognition consultations with Mongolia, Kazakhstan, and Belarus, while ongoing consultations are underway with more than ten countries, including Malaysia, Serbia, Russia, Iran, and Mexico. Domestically, taking the integration of customs and inspection reforms as an opportunity, the General Administration of Customs promulgated a new Measures for the Administration of Enterprise Credit, achieving full coverage of credit management for all types of enterprises participating in the international trade supply chain.

Yongqi (Changzhou) Bicycle Co., Ltd. is a major bicycle manufacturer in Jiangsu Province, with its products exported to more than 40 countries and regions. The company has reaped significant benefits from the AEO mutual recognition system. “Since China and the European Union implemented AEO mutual recognition in 2015, we have obtained certification in China and, as a result, automatically enjoy the same treatment as certified enterprises in the other country—our inspection rates are very low, and our customs clearance is efficiently assured,” said Sheng Juan, a company official.

The General Administration of Customs stated that this year it will continue to actively advance mutual recognition consultations on the Authorized Economic Operator (AEO) program with Belt and Road partner countries, including Russia, Iran, and Malaysia, while providing stronger support for Chinese enterprises expanding overseas and promoting global trade security and facilitation.

Ministry of Natural Resources: Strictly prohibits illegal financing using government‑reserved land.

Recently, the General Office of the Ministry of Natural Resources issued the “Notice on Further Regulating Mortgage Financing of Reserve Land and Accelerating the Disposal of Land That Has Been Approved but Remains Unsupplied” (hereinafter referred to as the “Notice”), which strictly prohibits any new mortgage‑based financing involving government‑reserved land and calls for expediting the lawful release of liens on existing mortgaged reserve land, thereby ensuring the rational and effective allocation of such land.

The Notice explicitly prohibits the use of reserved land as an asset to be injected into state-owned enterprises. Land‑reserve activities may only be undertaken by land‑reserve institutions that are duly listed and managed; no other entities shall engage in such activities. Unless the land has been legally allocated, it is forbidden to assign, by means of government meeting minutes, official letters, or other forms, land that has been reclaimed, acquired, or expropriated by the government directly to government‑affiliated platform companies or other enterprises and public institutions. Furthermore, land held in the name of a land‑reserve institution may not be transferred directly to government‑affiliated platform companies, state‑owned enterprises, or other enterprises and public institutions. Real estate registration authorities shall not process any corresponding initial registration or transfer registration.

Attachment: “Notice on Further Standardizing Mortgage Financing for Reserve Land and Accelerating the Disposal of Land That Has Been Approved but Remains Unsupplied”

To the natural resources authorities of all provinces, autonomous regions, and municipalities directly under the central government; to the natural resources authority of the Xinjiang Production and Construction Corps; to the relevant directly affiliated units of the Ministry; to the relevant departments and bureaus of the Ministry’s organs; and to the State Natural Resources Inspection Bureaus stationed in various localities:

To better implement the “linkage between increased land supply and existing stock” mechanism for construction land, accelerate the disposal of approved but unsupplied land, strictly prohibit any new financing activities using government‑reserved land as collateral, and expedite the lawful release of liens on existing mortgaged reserve land to ensure its rational and effective allocation, the following matters are hereby notified.

I. It is strictly prohibited to engage in unauthorized financing using government‑reserved land. The “Notice on Standardizing Land Reserve and Fund Management and Related Matters” (Cai Zong [2016] No. 4, hereinafter referred to as “Document Cai Zong No. 4”) explicitly stipulates that, effective January 1, 2016, local authorities may no longer obtain land‑reserve loans from banking and financial institutions. Land‑reserve agencies are forbidden from incurring debt outside the budget in violation of laws and regulations, and they may not, by any means, provide guarantees for the debts of any entity or individual. Real‑estate registration authorities are likewise prohibited from processing mortgage registrations for reserved land. However, according to the “Report on the Status of National Land Supervision in the First Half of 2018” (Ziran Zi Fa [2018] No. 66), “Since January 1, 2016, there have been 473 cases of unauthorized mortgage‑based financing involving reserved land, with a total mortgaged area of 4,786.07 hectares (72,000 mu) and a total financing amount of RMB 71.618 billion.” Accordingly, it must be reiterated that all localities are required to strictly enforce the relevant provisions of Document Cai Zong No. 4 and resolutely prevent any unauthorized mortgage‑based financing using government‑reserved land.

II. It is strictly prohibited to inject reserved land into state-owned enterprises as an asset. Land‑reserve activities may be undertaken only by land‑reserve institutions that are duly registered and managed; no other entities may engage in such activities. Unless the land has been legally allocated, it shall not be directly assigned—by means of government meeting minutes, official letters, or other formal instruments—to government platform companies or other enterprises and public institutions. Nor may land under the name of a land‑reserve institution be directly transferred to government platform companies, state-owned enterprises, or other enterprises and public institutions. Real‑estate registration authorities shall not process any corresponding initial registration or transfer registration.

III. Properly manage existing land‑reserve loans to facilitate lawful release of mortgages and ensure their rational allocation. With respect to outstanding land‑reserve loans—whether incurred by land‑reserve institutions or by non‑reserve entities using reserved land as collateral—the municipal and county natural resources authorities shall maintain detailed records, submit individualized disposal recommendations to the respective local governments, and actively coordinate with finance, financial regulatory, and other relevant departments to expedite the resolution and absorption of these loans, thereby preventing reserved land from being held up due to mortgage restrictions. Where genuinely necessary, in accordance with the guiding principles and relevant requirements of the CPC Central Committee and the State Council on preventing and defusing risks associated with local government implicit debt, such debts may be repaid through coordinated arrangements with the pertinent departments or by legally replacing the mortgaged assets. For reserve land that was already mortgaged prior to the issuance of Document No. 4 of the Ministry of Finance, subject to mutual agreement with the relevant departments and financial institutions, land supply may be initiated first; upon the sale of the land, the corresponding loan shall be repaid in a unified manner, effectively mitigating debt risks and promoting the disposition and development of land that has been approved but remains unallocated. Provincial natural resources authorities are required to compile the records and disposal proposals from all cities and counties within their jurisdictions and submit them to the Ministry for filing by the end of April 2019, with copies forwarded to the National Natural Resources Inspection Bureaus stationed in each locality.

IV. Strengthening the Reporting of Land Reserve Information Local land reserve institutions shall, in strict accordance with requirements, submit relevant information through the Ministry’s Land Reserve Information System. In particular, the status of mortgage‑related disposals of reserved land will serve as a key basis for updating the institutional roster for 2019. The Ministry will further refine the Land Reserve Information System, enhance data sharing and coordination with fiscal, financial regulatory, and other relevant departments, and gradually establish a comprehensive monitoring and oversight mechanism covering the entire lifecycle of reserved land—from source to entry into the reserve and subsequent release. This will enable unified coding for land projects and reserved parcels, linking such data to documents such as “agricultural‑to‑non‑agricultural” approval notices, allocation decisions, or paid‑use contracts. Starting in 2019, all related statistical reporting, special bond quota allocations, and institutional rating assessments will be based on system‑generated data. For cases of non‑submission, late submission, concealment, omissions, or erroneous reporting, the Ministry will institute an early‑warning and notification mechanism. Natural resources authorities at all levels shall strengthen guidance and supervision over the systematic data entry by land reserve institutions, conduct timely data verification, ensure the timely and accurate capture of relevant information, and incorporate land reserve data into local governments’ reports to their respective people’s congresses on the status of natural resource assets owned by the whole people.

This document shall take effect from the date of its issuance and shall be valid for a period of five years.

China Banking and Insurance Regulatory Commission: In principle, rural commercial banks shall not establish branches outside their home county, nor conduct business across county boundaries.

The China Banking and Insurance Regulatory Commission recently issued the “Opinions on Promoting Rural Commercial Banks to Adhere to Their Core Mission, Strengthen Governance, and Enhance Financial Service Capabilities” (hereinafter referred to as the “Opinions”).

The Opinions stipulate that rural commercial banks should focus on serving the local economy, county‑level areas, and communities. They are required to conduct integrated and cross‑regional operations with strict prudence; in principle, branches shall not extend beyond their respective counties (or districts), and business activities shall not span multiple counties (or districts). Banks should prioritize local service, shift their service focus downward, and allocate the majority of newly available loanable funds to the local market in the current year.

Attachment: “Opinions on Promoting Rural Commercial Banks to Adhere to Their Core Mission, Strengthen Governance, and Enhance Financial Service Capabilities”

To implement the key reform measures and directives of the 19th National Congress of the Communist Party of China, as well as the spirit of the Fifth National Financial Work Conference and the Central Rural Work Conference, the China Banking and Insurance Regulatory Commission recently issued the “Opinions on Promoting Rural Commercial Banks to Stay True to Their Original Purpose, Strengthen Governance, and Enhance Financial Service Capabilities” (hereinafter referred to as the “Opinions”), with the aim of helping rural commercial banks better return to their roots as county-level legal entities, focus on their core business of providing credit to agriculture and small businesses, continuously strengthen their financial service capacity, support the priority development of agriculture and rural areas, and help address the challenges of difficult and expensive financing faced by micro and small enterprises.

Rural commercial banks are key corporate banking institutions in China’s county-level regions. As of the end of September 2018, there were 1,436 rural commercial banks nationwide, with total assets and liabilities exceeding RMB 23 trillion. Agricultural loans and small‑and‑micro enterprise loans have consistently accounted for roughly 60% and 50%, respectively, of all outstanding loans, while the average loan balances per borrower stood at RMB 300,000 for agricultural loans and RMB 1.31 million for small‑and‑micro enterprise loans. Despite representing only about 10% of the banking sector’s total assets, these banks contribute approximately 22% and 21% of the nation’s agricultural and small‑and‑micro enterprise lending, making them a veritable financial mainstay in supporting agriculture, rural areas, and farmers, as well as small and micro enterprises. They also play an irreplaceable role in fostering economic development at the county level. However, during the course of reform and development, a small number of rural commercial banks have exhibited a tendency toward blind expansion, resulting in an operational focus that has drifted away from serving agriculture and small businesses.

The China Banking and Insurance Regulatory Commission, focusing on the new circumstances, developments, and challenges emerging in the reform and development of rural commercial banks, has formulated and issued the “Opinions,” with a particular emphasis on rural commercial banks operating in county‑level and urban areas. The document stipulates that rural commercial banks must accurately define their differentiated role within the banking system, establish development strategies, strategic positioning, and operational priorities aligned with the economic scale and industrial characteristics of their respective regions, and refine corporate governance frameworks tailored to small financial institutions and their mission of supporting agriculture and small businesses. They are expected to concentrate on serving local communities, county‑level economies, and neighborhoods, prioritize support for agriculture, rural areas, and farmers, as well as micro and small enterprises, continuously strengthen financial service innovation, effectively manage financing costs, and consolidate their position as the mainstay in providing financial services to agriculture and small businesses.

To ensure the effective implementation of the aforementioned regulatory policy requirements within the rural commercial banking system, the “Opinions” have specifically established a set of indicators for monitoring and assessing the operational positioning and financial service capabilities of rural commercial banks. This framework comprises four major categories—operational positioning, financial supply, financial infrastructure, and financial service mechanisms—encompassing a total of 15 indicators, thereby providing robust support for the scientific and rational monitoring, evaluation, and assessment of rural commercial banks’ performance in delivering agricultural and small‑business financial services.

The issuance of these Opinions represents both a concrete reform measure by the China Banking and Insurance Regulatory Commission to implement the spirit of the 19th National Congress of the Communist Party of China, and a detailed operationalization of the Fifth National Financial Work Conference’s call to guide financial institutions back to their core functions and focus on their primary businesses—specifically as applied to rural commercial banks. This development is of great significance for steering rural commercial banks onto the right path of reform and development, thereby better meeting the structural and diversified financial service needs of the real economy. First, it will help rural commercial banks further enhance their financial services to support agriculture and small businesses. Particularly at present, when some small and micro enterprises and private offices are facing operational challenges, rural commercial banks—as the principal local corporate banking institutions—can, by remaining deeply rooted in their communities and dedicating themselves to serving local clients, more effectively assist enterprises in overcoming difficulties and fostering positive interaction and shared prosperity between finance and the real economy. Second, it will contribute to building a multi-tiered, widely accessible, and differentiated financial institutional framework. By employing quantitative assessments based on monitoring indicators and imposing stringent regulatory constraints, the policy will recalibrate the business positioning of rural commercial banks, ensuring that they fully adhere to the mandate of being small and medium-sized banks. Third, it will enable rural commercial banks to better manage and contain financial risks. By reinforcing the requirement that they stay true to their designated roles and strengthen their financial services, the policy will promote the understanding that serving the real economy and focusing on small‑scale, dispersed clients constitute the fundamental strategy for risk prevention. It will also facilitate the establishment of robust risk‑management mechanisms tailored to the unique characteristics of their core mission of supporting agriculture and small businesses, thereby fundamentally preventing and mitigating financial risks.

Going forward, the China Banking and Insurance Regulatory Commission will urge rural commercial banks to earnestly implement and enforce the Guidelines, while continuously refining supporting institutional frameworks and regulatory incentive‑and‑constraint mechanisms. This will guide these banks to better integrate financial risk prevention and resolution with services for the real economy, thereby enhancing their own capacity for sound and sustainable development and comprehensively improving the efficiency and quality of financial services for agriculture, rural areas, farmers, and small and micro enterprises.

The State Administration for Market Regulation has conducted administrative guidance with several e-commerce enterprises.

Recently, in response to the surge in online consumer complaints and reports during the “Double 11” and “Double 12” shopping festivals, the State Administration for Market Regulation convened a meeting with several e‑commerce companies to provide administrative guidance. The meeting aimed to encourage these enterprises to handle consumer disputes promptly and appropriately, ensure they fulfill their principal responsibilities, and facilitate discussions on refining online dispute‑resolution mechanisms and further regulating the online market ahead of the Spring Festival.

At the meeting, a responsible official from the Network Supervision Department of the State Administration for Market Regulation outlined the agency’s key responsibilities in safeguarding consumer rights and reported on complaints and reports related to online consumption during the “Double 11” and “Double 12” shopping events. On one hand, as online sales surged, the volume of complaints and reports also increased significantly. According to data from the national 12315 Internet platform, as of December 24, 2018, a total of 43,032 consumers had filed 124,981 online‑consumption complaints and reports covering the “Double 11” period (November 1–11) and the “Double 12” period (December 1–12), involving 49,023 businesses—up 77.7% compared with the same period in 2017. Consumer grievances were concentrated in sectors such as household goods, apparel and footwear, food, cosmetics, and rental services. Notable issues included “refusal to honor contractual obligations,” “failure to fulfill the three‑guarantee obligations,” and “non‑compliance with agreed‑upon delivery or installation commitments.” On the other hand, online dispute‑resolution enterprises demonstrated strong performance in expediting rights protection and facilitating amicable settlements. Currently, the national 12315 Internet platform hosts 3,552 online dispute‑resolution entities (ODR providers), which directly engage with consumers to resolve disputes. The average processing time is 8.6 days, with an average settlement success rate of 50.35%, representing 2.6 times the efficiency of traditional methods and substantially enhancing consumer satisfaction.

An official from the Cyber Supervision Department pointed out that, as the “primary responsible party” for consumer rights protection, enterprises should take this notice as an opportunity to establish and refine systems such as the “first‑inquiry responsibility” mechanism, advance‑payment of compensation, and mediation of consumer disputes. They should proactively and appropriately address consumer complaints, promptly resolve issues related to product quality, after‑sales service, and contract performance, and, in particular, swiftly tackle the problem—of growing public concern—of prepaid services, where payments are easy to make but refunds are difficult, thereby actively safeguarding consumers’ legitimate rights and interests. Meanwhile, e‑commerce platform operators must earnestly assume their responsibilities as platform providers, ensure smooth channels for rights protection, strengthen oversight and review of merchants and products on their platforms, and vigorously uphold a fair and competitive market order during the Spring Festival period.

An official from the Network Supervision Department emphasized that, based on consumer feedback, ODR‑based enterprises handle disputes directly with consumers, which not only reduces the cost of rights protection and boosts operational efficiency but also better showcases their commitment to honest and lawful business practices. The official expressed hope that more businesses will join the fast‑track online dispute‑resolution system, continuously improve product quality and service standards, minimize consumer disputes, stimulate consumption growth, and foster a sound consumer and market environment. Moving forward, it is essential to earnestly implement the E‑Commerce Law and the Consumer Rights Protection Law, refine online dispute‑mediation mechanisms, fully publicize consumer complaints, and further advance a multi‑stakeholder governance model in which market regulators, e‑commerce platforms, industry associations, and consumers collaborate effectively to create a robust and inclusive consumer‑protection ecosystem.

JD Group, Beijing Baikeluo Technology Co., Ltd., Shanghai Xiangqi Electric Vehicle Service Co., Ltd., Zhejiang Taobao Network Co., Ltd., Suning.com Group Co., Ltd., Zhejiang Tmall Network Co., Ltd., Beijing Tuge Technology Co., Ltd., Xiaomi Technology Co., Ltd., Shanghai Xunmeng Information Technology Co., Ltd., Beijing Zhuanzhuan Spirit Technology Co., Ltd., along with market regulatory authorities from Beijing, Shanghai, Zhejiang, and other provinces and municipalities, attended the meeting.

Taxation TAXATATION

Two departments have clarified the universal tax relief and exemption policies for small and micro enterprises.

On January 18, in order to implement the decisions and arrangements of the CPC Central Committee and the State Council and further support the development of small and micro enterprises, the Ministry of Finance and the State Taxation Administration jointly issued a notice stating that, from January 1, 2019, to December 31, 2021, universal tax relief measures would be applied to small and micro enterprises.

According to the “Notice on Implementing Universal Tax Relief and Exemption Policies for Small and Micro Enterprises” issued by two departments, value-added tax is exempted for small-scale VAT taxpayers whose monthly sales do not exceed RMB 100,000 (inclusive). In addition, for small and low-profit enterprises, the portion of annual taxable income not exceeding RMB 1 million is calculated at 25% when determining taxable income, and corporate income tax is paid at a rate of 20%; for the portion of annual taxable income exceeding RMB 1 million but not exceeding RMB 3 million, it is calculated at 50% when determining taxable income, and corporate income tax is paid at a rate of 20%.

The notice clarifies that the aforementioned small and low-profit enterprises are those engaged in industries not restricted or prohibited by the state and that simultaneously meet all three of the following criteria: annual taxable income not exceeding RMB 3 million, number of employees not exceeding 300, and total assets not exceeding RMB 50 million.

The notice further states that, in accordance with local conditions and macroeconomic regulation needs, the people’s governments of provinces, autonomous regions, and municipalities directly under the central government may, within a range of 50% of the applicable tax rate, reduce resource tax, urban maintenance and construction tax, property tax, urban land use tax, stamp duty (excluding stamp duty on securities transactions), cultivated land occupation tax, as well as the education surcharge and the local education surcharge, for small-scale value-added taxpayers.

In addition, pursuant to the notice, Article 2, Paragraph (1) of the “Notice of the Ministry of Finance and the State Taxation Administration on Relevant Tax Policies for Venture Capital Enterprises and Angel Investors” has been amended: the criterion for start-up technology enterprises stating “the number of employees does not exceed 200” is now revised to “the number of employees does not exceed 300,” and the requirement that “total assets and annual sales revenue each do not exceed RMB 30 million” is now revised to “total assets and annual sales revenue each do not exceed RMB 50 million.”

The two departments stated that fiscal and tax authorities at all levels should intensify their efforts, adopt innovative approaches, strengthen publicity and guidance, optimize tax administration services, and enhance taxpayer convenience, thereby ensuring that taxpayers and payers fully benefit from the policy dividends of tax and fee reductions.

State Taxation Administration: Ensuring that tax and fee reduction policies and measures are effectively implemented and take root.

On the 17th, at the National Tax Work Conference, State Taxation Administration Director Wang Jun emphasized that tax authorities at all levels should make ensuring the effective implementation of tax and fee reduction policies the central theme of this year’s tax work, further easing the burden on enterprises, boosting the vitality of market entities, and fostering economic growth.

Wang Jun stated that in 2018, the tax authorities adhered to lawful tax collection and prudent fiscal planning, raising tax revenues—after deducting export tax rebates—of RMB 13.7967 trillion, up 9.5% year on year. Nationwide, export tax rebates totaled RMB 1.5014 trillion, an increase of 9.7%. At the same time, the national tax system rigorously and fully implemented the tax‑cut policies introduced by the CPC Central Committee and the State Council, surpassing the annual target for tax reductions and effectively easing the operational and production challenges faced by enterprises, thereby providing strong support for advancing the “Six Stabilities” initiative. Starting May 1, 2018, the three‑part VAT reform was rolled out smoothly and in an orderly manner. From May to December, the reduction in VAT rates resulted in tax cuts of approximately RMB 270 billion, with manufacturing accounting for 35% of this amount. The unified standard for small‑scale taxpayers benefited 500,000 taxpayers, yielding tax reductions of about RMB 8 billion; refundable input VAT credits were processed totaling RMB 114.8 billion. Beginning October 1, the first phase of the personal income tax reform was implemented for three months, delivering tax cuts of roughly RMB 100 billion and exempting over 70 million salaried taxpayers from further tax liabilities. Additionally, newly introduced tax incentives supporting innovation and entrepreneurship generated approximately RMB 50 billion in tax relief. The diligent and efficient implementation of these tax‑cut measures is reflected in a pattern of “two declines and one rise”: the growth rate of tax revenue gradually decelerated, falling from 16.8% in the first four months to 5.2% in the final eight months; the effects of tax reductions continued to materialize; taxpayer complaints decreased by 11%; and taxpayers’ sense of gain was further enhanced.

In 2018, tax authorities nationwide launched the fifth consecutive “Spring Breeze Action” to facilitate tax services, formulated a five-year action plan to further optimize the tax‑related business environment and a five-year work plan to deepen the “delegation, regulation, and service” reform, and introduced a total of 120 specific measures. Tax authorities at all levels made concerted efforts to address the challenge of corporate deregistration, with over 880,000 taxpayers benefiting from “exemption‑from‑application” and “instant‑processing” services for tax deregistration between October and December. The dual expansion—extending the pilot program allowing small‑scale taxpayers to issue their own invoices and broadening the scope of invoice verification exemption—benefited 11 million taxpayers. For the first time, the number of electronic invoices issued surpassed that of paper invoices, enhancing convenience for both taxpayers and consumers. In addition, an initiative titled “New Institutions, New Services, New Image” was rolled out, accompanied by 26 measures to further support and serve the development of the private sector. Furthermore, policies raising export tax rebate rates were implemented twice, with improvements in rebate‑processing services; the average processing time for routine tax rebates was shortened from 13 days to 9.7 days.

The scale and scope of the reform of the national and local tax administration systems, as well as the depth of its impact on vested interests, are unprecedented. In 2018, tax authorities at all levels established reform task forces and dedicated reform offices, dispatching 3,477 liaison (supervision) teams to every administrative level. The State Taxation Administration issued 36 successive liaison‑supervision checklists, providing detailed guidance on 350 specific tasks; it also uniformly produced 420 sets of guiding opinions, fundamental principles, and even operational templates. A comprehensive master ledger covering nearly 700 concrete reform items was compiled, enabling visualized management and progress tracking against clear timelines to ensure the smooth and orderly implementation of the reforms. Across the country, nearly 23,000 new tax bureaus—along with their branches and sub‑offices—at the provincial, municipal, county, and township levels were systematically and smoothly inaugurated. Tax authorities at all levels, together with their internal departments, dispatched agencies, and public institutions, underwent substantial streamlining, resulting in optimized organizational structures and clearer delineations of functions and responsibilities. This has laid the groundwork for an improved, efficient, and unified tax administration system, significantly enhancing taxpayers’ and payers’ sense of gain.

Wang Jun emphasized that in 2019, the national tax system should prioritize ensuring the effective implementation and sustained impact of policies and measures to cut taxes and fees, thereby fostering high-quality economic development; ensure the successful completion of budget‑approved tax and fee revenue targets, providing robust financial support for economic and social progress; optimize tax enforcement practices and strengthen the tax supervision framework; adhere to a strategy of continuous refinement, upgrading, and consolidation, further solidifying and expanding the achievements of the reform of the national and local tax collection and administration systems; deepen international tax cooperation to advance all‑round opening-up; and invigorate the workforce while enhancing professional competence, thereby strengthening the ranks of tax officials.

Wang Jun stated that it is essential to officely uphold the principle that implementing tax and fee reduction policies is a top priority. He called for in-depth publicity and interpretation of these policies, the adoption of more effective service measures to facilitate taxpayers’ access to benefits, and the further expansion of measures such as shifting from filing requirements to record‑keeping for tax-related documentation and allowing taxpayers to enjoy preferential treatment upon filing. Efforts should be made to streamline procedures wherever possible and simplify supporting documents whenever feasible, ensuring that every taxpayer and payer eligible for such benefits can conveniently avail themselves of them. The State Taxation Administration has already established a leading group to oversee the implementation of tax and fee reductions, and local authorities are likewise required to set up similar groups, adopting a tiered accountability system to ensure that these policies are effectively put into practice, meticulously implemented, and fully enforced.

The meeting called on tax authorities at all levels to ensure the successful fulfillment of the revenue targets for taxes and fees as set in the budget, actively participate in the preparation and adjustment of tax and fee budgets, and meticulously carry out tasks such as estimating the scale of tax and fee reductions. It is essential to further strengthen a office sense of responsibility for revenue targets: once the tax and fee revenue budget is finalized, it must be implemented rigorously and without compromise, thereby safeguarding national tax and fee revenues. At the same time, measures must be taken to resolutely prevent and rectify the collection of excessive taxes and fees, ensuring that tax and fee collection is conducted in strict compliance with the law and in a standardized manner.

Wang Jun stated that in 2019, the tax authorities will, under the theme of “New Taxation, New Services,” launch the sixth consecutive year of the “Spring Breeze Action for Convenient Tax Services,” introducing a series of additional measures to make tax administration more convenient for taxpayers. Tax authorities at all levels must continuously refine their tax enforcement approaches, resolutely preventing crude and heavy-handed enforcement and avoiding one-size-fits-all measures that disregard actual circumstances. They should further strengthen tax risk management, enhancing the precision of risk prevention while minimizing unnecessary disruptions to taxpayers. In addition, they will continue to collaborate with relevant departments to carry out a two-year special campaign targeting “fake enterprises” and “fake exports,” cracking down rigorously on tax-related illegal activities.

Seizing the New Situation and Demonstrating New Achievements — The National Tax Work Conference Held in Beijing

On January 17, the National Tax Work Conference was held in Beijing. Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, the conference thoroughly studied and implemented the spirit of the 19th National Congress of the Communist Party of China, the Second and Third Plenary Sessions of the 19th CPC Central Committee, and the Central Economic Work Conference. It reviewed tax work in 2018, analyzed the new circumstances facing the sector now and in the period ahead, and outlined tasks for 2019. Wang Jun, Secretary of the Party Leadership Group and Director of the State Taxation Administration, delivered the work report.
The meeting noted that in 2018, under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core, the national tax system thoroughly implemented the decisions and arrangements of the CPC Central Committee and the State Council, strengthened the “Four Consciousnesses,” officely upheld the “Four Confidences,” and resolutely safeguarded the “Two Upholds.” Amidst the overlapping challenges of numerous reforms and the confluence of major, difficult, and high‑risk tasks, all levels of the tax system worked in concert, joined forces to overcome obstacles, and made vigorous progress in strengthening Party building within the tax system and in exercising full and rigorous governance over the Party. The system successfully won the tough battle of reforming the national and local tax collection and administration systems, fulfilled its tax revenue targets and tax reduction goals, further optimized the tax‑related business environment, advanced the improvement of the tax system, elevated the rule of law in taxation, expanded China’s international influence in the tax field, and bolstered the cohesion and combat effectiveness of the tax workforce, thereby making a positive contribution to advancing the modernization of national governance.
— Successfully fulfilled the 2018 tax revenue targets and tax‑reduction objectives. In 2018, the tax authorities adhered to law‑based collection and prudent overall planning, raising tax revenues (after deducting export tax rebates) to RMB 13.7967 trillion, up 9.5% year on year. Nationwide, export tax rebates totaled RMB 1.5014 trillion, an increase of 9.7%. At the same time, the national tax system rigorously and fully implemented the tax‑cut policies issued by the CPC Central Committee and the State Council, surpassing the annual tax‑reduction target, thereby effectively easing the operational and production difficulties faced by enterprises and providing strong support for advancing the “Six Stabilities” initiatives. The three‑part VAT reform, launched on May 1, 2018, was carried out smoothly and in an orderly manner. From May to December, the reduction in VAT rates resulted in tax cuts of approximately RMB 270 billion, with manufacturing accounting for 35% of this amount. The unified standard for small‑scale taxpayers benefited 500,000 taxpayers, yielding tax reductions of about RMB 8 billion; refundable input VAT credits were processed totaling RMB 114.8 billion. Starting October 1, the first phase of the personal income tax reform was implemented for three months, delivering tax cuts of roughly RMB 100 billion, leaving over 70 million salaried taxpayers exempt from further tax payments. Additionally, newly introduced tax incentives supporting innovation and entrepreneurship generated tax reductions of approximately RMB 50 billion. The diligent and efficient implementation of these tax‑cut measures is reflected in a pattern of “two declines and one rise”: the growth rate of tax revenues gradually decelerated, falling from 16.8% in the first four months to 5.2% in the final eight months; the effects of tax reductions continued to materialize; taxpayer complaints decreased by 11%; and taxpayers’ sense of gain was further enhanced.
— Continuously advancing the “delegation, regulation, and service” reform to optimize the tax‑related business environment. In 2018, tax authorities nationwide launched the fifth consecutive “Spring Breeze Action for Convenient Tax Services,” formulating a five‑year action plan to further improve the tax‑related business environment and a five‑year work plan to deepen the “delegation, regulation, and service” reform, introducing a total of 120 specific measures. Tax authorities at all levels made concerted efforts to address the challenge of corporate deregistration, with over 880,000 taxpayers benefiting from “exemption‑from‑application” and “instant‑processing” services for tax deregistration between October and December. The dual expansion of the pilot program allowing small‑scale taxpayers to issue their own invoices and the removal of invoice‑verification requirements benefited 11 million taxpayers. For the first time, the number of electronic invoices issued surpassed that of paper invoices, enhancing convenience for both taxpayers and consumers. An initiative titled “New Institutions, New Services, New Image” was rolled out, accompanied by 26 measures to further support and serve the development of the private sector. In addition, policies raising export tax rebate rates were implemented twice, with improvements in rebate‑processing services; the average processing time for routine tax rebates was shortened from 13 days to 9.7 days. Results of taxpayer satisfaction surveys conducted by third‑party agencies showed that in 2018, the taxpayer satisfaction score reached 84.82, up 1.21 points from the previous survey. Meanwhile, the World Bank’s Doing Business 2019 report indicated that China’s ranking on the tax‑payment indicator improved by 16 places compared with the previous year.
— Securing a decisive victory in the reform of the national and local tax collection and administration system. The scale, scope, and depth of this reform are unprecedented, touching on interests across all levels. Tax authorities at every level have established reform task forces and dedicated offices, deploying 3,477 liaison (supervision) teams at various tiers. The State Taxation Administration has issued 36 liaison‑supervision checklists, detailing the implementation of 350 specific tasks, and has uniformly produced 420 sets of guiding opinions, fundamental principles, and even operational templates. A comprehensive master ledger covering nearly 700 concrete reform items has been compiled, enabling visualized management and progress tracking against clear timelines to ensure the reform proceeds smoothly and in an orderly manner. Across the country, nearly 23,000 new tax bureaus (sub‑bureaus and sub‑offices) at the provincial, city, county, and township levels have been officially inaugurated in a coordinated, step‑by‑step rollout. Tax bureaus at all levels, along with their internal departments, branch institutions, and public service units, have undergone substantial streamlining, resulting in optimized organizational structures and clearer delineations of functions and responsibilities. This has laid the groundwork for an improved, efficient, and unified tax collection and administration system, significantly enhancing taxpayers’ and payers’ sense of gain.
The meeting noted that the Central Economic Work Conference conducted a thorough analysis of the current domestic and international situation and laid out a comprehensive plan for this year’s economic work. As a result, the role of taxation in national governance has become even more prominent, and the foundation for tax‑related social co‑governance has grown ever stronger, presenting the new tax administration with unprecedented opportunities. At the same time, the new tax administration also faces unprecedented challenges: the tasks of tax system reform are becoming increasingly demanding; the need to optimize tax collection and administration services is urgent; and the responsibility of leading and managing the workforce continues to grow.
The year 2019 marks the 70th anniversary of the founding of the People’s Republic of China and is a pivotal year for completing the building of a moderately prosperous society in all respects and achieving the first centenary goal, making sound tax administration of paramount importance. The meeting called on the national tax system to take Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as its guiding principle, fully implement the spirit of the 19th National Congress of the Communist Party of China, the Second and Third Plenary Sessions of the 19th CPC Central Committee, and the Central Economic Work Conference, strengthen the “Four Consciousnesses,” officely uphold the “Four Confidences,” and resolutely safeguard the “Two Upholds.” It emphasized reinforcing the Party’s overall leadership over tax work, highlighting the theme of ensuring that policies and measures for tax and fee reductions are effectively implemented and take root, focusing on the primary task of successfully fulfilling the budget‑defined revenue targets for taxes and fees, keeping officely to the central thread of coordinating and advancing the optimization of tax enforcement methods with the improvement of the tax supervision system, consolidating and expanding the achievements of the reform of the national and local tax collection and administration systems, building a high‑quality, professional contingent of tax officials, embarking on a new journey toward high‑quality modernization of taxation in the new era, and better leveraging the foundational, pillar‑building, and safeguarding roles of taxation in national governance, thereby playing an even greater role in promoting high‑quality economic development and celebrating the 70th anniversary of the founding of the People’s Republic of China with outstanding results.
The meeting emphasized that, in 2019, the national tax system should prioritize the following tasks: First, thoroughly study and implement Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, and resolutely uphold the “Two Upholds”; second, ensure the effective implementation of tax and fee reduction policies and measures, thereby promoting high-quality economic development; third, successfully fulfill the budget‑approved revenue targets for taxes and fees, providing robust fiscal support for economic and social development; fourth, optimize tax enforcement practices and improve the tax supervision system; fifth, persist in refining, upgrading, and further consolidating the achievements of the reform of the national and local tax collection and administration systems; sixth, strengthen international tax cooperation and advance all‑round opening-up; seventh, invigorate the workforce and enhance professional competence, effectively bolstering the ranks of tax officials; and eighth, unrelentingly advance comprehensive and strict Party self‑governance within the tax system, striving to foster a clean and upright political environment.
The meeting called on tax authorities at all levels to thoroughly study and deeply understand Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, regularly benchmark against it, promptly correct any deviations, and make greater efforts to ensure that the ideas are truly internalized and embraced. In accordance with the CPC Central Committee’s unified deployment, they are to carry out the thematic education campaign “Remain True to Our Original Aspiration and Keep Our Mission Officely in Mind” to a high standard. Greater efforts must be made to translate learning into concrete actions and tangible results, turning the fruits of study into a powerful driving force for broadening perspectives, overcoming difficulties, promoting development, and advancing our undertakings. With respect to the decisions and arrangements of the CPC Central Committee and the State Council, unwavering resolve and resolute implementation are required, without the slightest compromise; obstacles must be surmounted and every possible measure taken to ensure effective execution; implementation should be tailored to actual conditions and carried out in a creative manner; and continuous summarization, refinement, and enhancement are essential to further deepen and consolidate progress.
The meeting emphasized that tax authorities at all levels should make the effective implementation and institutionalization of tax and fee reduction policies the central theme of this year’s tax work, placing it prominently on their agendas to further alleviate the burden on enterprises, invigorate market entities, and boost economic growth. It is imperative to officely uphold the principle that implementing these policies is a critical task, intensify efforts to publicize and explain the measures, adopt more effective service initiatives to facilitate taxpayers’ access to benefits, and expand such measures as shifting from filing requirements to record‑keeping for supporting documentation and enabling immediate application of preferential treatments upon filing. Procedures that can be streamlined should be simplified, and materials that can be condensed should be reduced, striving to ensure that every taxpayer and payer eligible for relief can conveniently avail themselves of the corresponding incentives. The State Taxation Administration has already established a leading group for implementing tax and fee reductions; local authorities are likewise required to set up similar groups, adopting a tiered accountability system to oversee the execution of these policies, thereby ensuring their thorough, meticulous, and effective implementation.
The meeting called on tax authorities at all levels to ensure the successful fulfillment of the revenue targets for taxes and fees as set in the budget, actively participate in the preparation and adjustment of tax and fee budgets, and meticulously carry out tasks such as estimating the scale of tax and fee reductions. It is essential to further strengthen a office sense of responsibility for revenue targets: once the tax and fee revenue budget is finalized, it must be implemented rigorously and without compromise, thereby safeguarding national tax and fee revenues. At the same time, measures must be taken to resolutely prevent and rectify the collection of excessive taxes and fees, ensuring that tax and fee collection is conducted in strict compliance with the law and in a standardized manner.
The meeting noted that in 2019, the tax authorities will, under the theme “New Taxation, New Services,” launch the sixth consecutive “Spring Breeze Action for Convenient Tax Services,” introducing a series of additional measures to further facilitate taxpayers. Tax authorities at all levels are required to continuously refine their tax enforcement practices, resolutely preventing crude and heavy-handed enforcement and avoiding one-size-fits-all approaches that disregard actual circumstances. They must also strengthen tax risk management, enhancing the precision of risk prevention while minimizing unnecessary disruptions to taxpayers. Furthermore, they will continue to collaborate with relevant departments to carry out a two-year special campaign targeting “fake enterprises” and “fake exports,” rigorously cracking down on tax-related illegal activities.
The meeting emphasized that the new tax administration shoulders a mission of great significance and honor, as well as arduous and demanding tasks. The national tax system must rally even more closely around the Party Central Committee with Comrade Xi Jinping at its core, advance Party building within the tax system under the overarching leadership of political development, earnestly implement responsibilities for Party governance, strengthen conduct‑building and oversight and management, effectively reinforce disciplinary inspection work, further enhance performance management, comprehensively roll out the digital personnel system, and conduct multi‑level, large‑scale training for tax officials. In doing so, it will better serve the grassroots, strive to build a high‑quality, professional tax workforce, unite as one, and embark on a new journey toward high‑quality advancement of tax modernization in the new era, thereby making fresh and greater contributions to laying a decisive foundation for the successful conclusion of the battle to secure a moderately prosperous society in all respects.

LITIGATION & ARBITRATION

The Supreme People’s Court has issued a document to supplement and add new categories of causes of action in civil cases.

Recently, the Supreme People’s Court issued the “Notice on Supplementing and Adding Causes of Action in Civil Cases” (hereinafter referred to as the “Notice”), which shall take effect as of January 1, 2019.

The Notice clarifies that, under the secondary cause of action “XIV. Disputes over Intellectual Property Ownership and Infringement,” specifically within item “153. Disputes over Conofficeation of Non-Infringement of Intellectual Property Rights,” three new fourth‑level causes of action are added: “(4) Disputes over Conofficeation of Non‑Infringement of Plant Variety Rights; (5) Disputes over Conofficeation of Non‑Infringement of Integrated Circuit Layout‑Design Exclusive Rights; (6) Disputes over Conofficeation of Non‑Infringement of Computer Software Copyright.” Furthermore, under the same secondary cause of action, in item “154. Disputes over Liability for Damages Arising from Applications for Provisional Measures in Intellectual Property Matters,” two additional fourth‑level causes of action are introduced: “(6) Disputes over Liability for Damages Arising from Applications for Pre‑litigation Orders to Cease Infringement of Computer Software Copyright; (7) Disputes over Liability for Damages Arising from Applications for Pre‑litigation Orders to Cease Infringement of Integrated Circuit Layout‑Design Exclusive Rights,” and so forth.

The Supreme People’s Procuratorate has released the first batch of typical cases involving judicial protection for private enterprises.

On the 17th, the Supreme People’s Procuratorate released the first batch of typical cases involving judicial protection for private enterprises, providing reference and guidance to procuratorial organs at all levels in safeguarding the legitimate rights and interests of private enterprises and in serving and ensuring the sound development of the non-public sector of the economy. This batch of typical cases includes the embezzlement case involving Huang and Duan; the case of Shanghai A International Trading Co., Ltd. and Liu refusing to pay wages; the case of Wu, Huang, and Liao issuing false special value-added tax invoices; and a series of cases involving Jiangsu A Construction Co., Ltd. and six other companies, along with their operators, for issuing false invoices.

In recent years, the Supreme People’s Procuratorate has attached great importance to serving and safeguarding the development of private enterprises, successively formulating and implementing documents such as the Opinions on Fully Leveraging the Functions of the Procuratorial Organs to Legally Protect and Promote the Healthy Development of the Non-Public Sector of the Economy, and the Opinions on Fully Performing Procuratorial Functions to Strengthen Judicial Protection of Property Rights. In November 2018, the Supreme People’s Procuratorate further issued the Answers to Legal and Policy Questions Concerning the Handling by Procuratorial Organs of Cases Involving Private Enterprises, aimed at fully leveraging the procuratorial functions to provide judicial safeguards for the development of private enterprises, thereby further standardizing and unifying law enforcement and judicial standards in cases involving private enterprises and strengthening judicial protection for them.

Sun Qian, Deputy Procurator-General of the Supreme People’s Procuratorate, stated that the release of these typical cases involving judicial protection for private enterprises aims to highlight, from diverse perspectives, the judicial principle of treating all economic entities equally and providing them with equal protection; to use case-based guidance to steer private enterprises toward lawful operations and sound development; to distill key principles and clarify the legal and policy boundaries in handling cases involving private enterprises; to leverage the role of procuratorial recommendations in enhancing the social impact of legal supervision; and, grounded in the procuratorial functions, to foster a favorable rule-of-law environment that promotes the healthy growth of private enterprises.

Sun Qian stated that, going forward, the Supreme People’s Procuratorate will continue to compile and release a diverse array of judicial protection cases involving private enterprises, addressing new circumstances and emerging issues encountered in judicial practice. These efforts will provide guidance to procuratorial organs at all levels, effectively enhance their case-handling capabilities and standards, and offer robust judicial safeguards and services to support the sound development of private enterprises.

The Mainland and Hong Kong have signed an arrangement on the mutual recognition and enforcement of civil and commercial judgments.

On January 18, the Supreme People’s Court and the Department of Justice of the Government of the Hong Kong Special Administrative Region signed in Beijing the “Arrangement on Mutual Recognition and Enforcement of Civil and Commercial Judgments between the Courts of the Mainland and the Hong Kong Special Administrative Region” (hereinafter referred to as the “Arrangement”).

The Arrangement comprises 31 articles, setting out the scope and content of judgments in civil and commercial cases that are mutually recognized and enforced between the two places, as well as the procedures and methods for applying for such recognition and enforcement. The Arrangement seeks to broaden, to the greatest extent possible, the scope of mutual recognition and enforcement of civil and commercial judgments, extending it to non-monetary awards and to judgments in certain intellectual property cases. This fully reflects the spirit of minimizing redundant litigation, enhancing the well-being of the people on both sides, strengthening judicial mutual trust, and upholding the principle of “One Country, Two Systems.”

Other

The General Office of the State Council: Mobilize private enterprises and other social forces to participate in consumption-driven poverty alleviation.

On January 14, the General Office of the State Council issued the “Guiding Opinions on Deepening Consumption‑Driven Poverty Alleviation to Help Win the Battle Against Poverty” (hereinafter referred to as the “Opinions”).

The “Opinions” state that consumption‑based poverty alleviation is a poverty‑reduction approach in which all sectors of society purchase products and services from impoverished areas and populations, thereby helping to increase incomes and lift people out of poverty. It also serves as an important channel for mobilizing social resources to support the battle against poverty. Vigorously implementing consumption‑based poverty alleviation will help rally all segments of society to expand demand for products and services from impoverished regions, thus contributing to the successful completion of the poverty‑eradication campaign.

The Opinions emphasize that we must be guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, fully implement the spirit of the 19th National Congress of the CPC and the Second and Third Plenary Sessions of the 19th CPC Central Committee, and, with a focus on coordinating the overall layout of the Five-sphere Integrated Plan and the Four-pronged Comprehensive Strategy, thoroughly put into practice General Secretary Xi Jinping’s important expositions on poverty alleviation. In accordance with the decisions and arrangements of the CPC Central Committee and the State Council, we will uphold the new development philosophy, adhere to the fundamental strategy of targeted poverty alleviation and targeted poverty reduction, and, with the aim of promoting stable poverty eradication among impoverished populations and the long-term development of poverty-stricken areas, adopt a model characterized by government guidance, social participation, market‑driven operations, and innovative mechanisms. We will strive to stimulate the enthusiasm of all sectors of society to engage in consumption‑based poverty alleviation, expand sales channels for agricultural products from poverty‑stricken areas, enhance the supply capacity and quality of such products, and accelerate the development of leisure agriculture and rural tourism in these regions. By addressing bottlenecks, pain points, and impediments at every stage—production, distribution, and consumption—we will facilitate the integration of products and services from poverty‑stricken areas into the national market.

The Opinions clearly state that all sectors of society should be mobilized to expand consumption of products and services from poverty-stricken areas; government agencies at all levels, state-owned enterprises, and public institutions should take the lead in participating in consumption‑driven poverty alleviation; mechanisms for collaborative consumption‑based poverty reduction should be established between eastern and western regions; and private enterprises and other social forces should be encouraged to join in this effort. Efforts must be intensified to broaden distribution and sales channels for agricultural products from impoverished areas, streamline supply chains, diversify marketing avenues, and accelerate the development of distribution and service outlets. The overall supply capacity and quality of agricultural products in these regions should be comprehensively enhanced by expediting the establishment of a standardized production system, scaling up large‑scale supply, and building regionally distinctive agricultural brands. Furthermore, leisure agriculture and rural tourism in poverty‑stricken areas should be vigorously promoted and upgraded through strengthened infrastructure development, improved service capabilities, sound planning and design, and robust marketing and promotion.

The “Opinions” call on relevant departments and local authorities to strengthen organizational leadership, refine and concretize related policies and measures, and foster a favorable environment that encourages broad participation in poverty‑alleviation through consumption. It is necessary to improve incentive mechanisms and enhance the involvement of impoverished populations in agricultural product sales, as well as in leisure agriculture and rural tourism. Policy incentives should be stepped up, with appropriate rewards and recognition extended to enterprises, social organizations, and individuals that have made outstanding contributions to poverty‑alleviation through consumption. Furthermore, oversight and implementation must be reinforced, with the progress of poverty‑alleviation through consumption incorporated as a key component in the assessment of central government units’ designated poverty‑alleviation efforts, East–West cooperation on poverty reduction, and paired assistance programs.

Key priorities of the National Healthcare Security Administration: Adding more emergency medicines to the national medical insurance coverage.

At the recently held National Medical Security Work Conference, the National Healthcare Security Administration unveiled six key priorities for 2019, including: consolidating a strong crackdown on fraud and abuse of medical insurance; establishing a unified urban–rural resident medical insurance system to provide a safety net in targeted poverty alleviation and eradication; instituting a dynamic adjustment mechanism for the national medical insurance drug list to leverage the strategic purchasing power of medical insurance and include more life‑saving and emergency‑care medications; further deepening reforms of medical insurance payment methods; advancing reforms of the pharmaceutical procurement system, continuing pilot programs for nationally organized centralized drug procurement and use, strengthening oversight of the circulation and utilization of high‑value medical consumables, and promoting reforms of medical service pricing; and enhancing the quality of administrative services, ensuring seamless direct settlement for out-of‑area medical care, and elevating the legal framework governing medical insurance.

In 2018, the National Healthcare Security Administration implemented measures such as price negotiations and out-of-province settlement to make medicines more affordable and access to care more convenient for patients. Seventeen anti-cancer drugs were added to the Class B catalog of the national medical insurance scheme at reduced prices, with an average price cut of 56.7%. According to the National Health Commission, to date, over 600,000 boxes of these negotiated anti-cancer medications have been dispensed nationwide, and the number of patients who have benefited from direct out-of-province settlement exceeded one million for the year.

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