JC Master Legal News Issue 863

Key Takeaways for This Issue

The China Securities Regulatory Commission and the German Federal Financial Supervisory Authority have signed an Annex to the Memorandum of Understanding on Cooperation and Information Exchange in Derivatives Regulation.

To implement the outcomes of the Second China–Germany High-Level Financial Dialogue held in January this year and to strengthen regulatory cooperation between the two countries’ supervisory authorities in the area of cross-border derivatives, as well as their coordinated response to extreme market conditions, the China Securities Regulatory Commission and the German Federal Financial Supervisory Authority signed, on March 18, 2019, in Frankfurt, an Additional Memorandum of Understanding on Regulatory Cooperation and Information Exchange in the Field of Derivatives.

Dae Yue Cheng Real Estate’s operating revenue fell by 30%, and post-restructuring earn-out targets are under pressure.

After more than a year of intensive restructuring, the process has finally come to a close. On the morning of March 27, the listing ceremony marking the rebranding of COFCO Property as Joy City was held at the Shenzhen Stock Exchange. With this milestone, COFCO Property (Group) Co., Ltd., the sole real estate platform under the COFCO Group, has been renamed Joy City Holdings Group Co., Ltd.; the stock’s abbreviated name has been changed from “COFCO Property” to “Joy City,” while its stock code remains unchanged. This marks the official establishment of the COFCO Group’s only specialized real estate company following the restructuring.

Wang Jun: Advance Party Building in Government Organs with Higher Standards and More Concrete Measures

General Secretary Xi Jinping has emphasized that the Party building within government organs is an essential component of the new great project of Party building. To do a good job in tax administration, we must strengthen Party building within the tax system; and to strengthen Party building in the tax system, we must first focus on Party building within the State Taxation Administration itself. As the “command center” of the tax system, the SAT headquarters can truly fulfill its role as a model and leader only when its own Party‑building efforts are officely in place. The SAT headquarters must advance Party building in its organs with higher standards and more concrete measures, setting benchmarks, serving as a model, and taking the lead for the national tax system, thus opening up a new chapter in Party building in the tax sector for the new era.

The Supreme People’s Court has issued two judicial interpretations to optimize the business environment.

On the morning of March 28, the Supreme People’s Court held a press conference to release the “Provisions of the Supreme People’s Court on Several Issues Concerning the Application of the Enterprise Bankruptcy Law of the People’s Republic of China (III)” (hereinafter referred to as the “Provisions of the Supreme People’s Court on Several Issues Concerning the Application (III)”) and the “Decision of the Supreme People’s Court on Amending the ‘Regulations on Strictly Standardizing the Extension of Trial Periods and Adjournment of Hearings in Civil and Commercial Cases’” (hereinafter referred to as the “Decision on Amendment”).

More than 40 universities have launched independent admissions, with several institutions canceling their humanities enrollment quotas.

Since the beginning of March, universities have been launching their independent enrollment programs one after another. More than 40 institutions, including Peking University and Tsinghua University, have released their 2019 independent enrollment prospectuses. Examining these documents, several trends deserve applicants’ attention: a marked reduction in enrollment quotas, the elimination of humanities programs at some schools, increasingly stringent application requirements, smaller score-based admission benefits, and the mandatory inclusion of physical fitness tests.

Table of Contents

Table of Contents

Finance & Capital Markets

The China Securities Regulatory Commission and the German Federal Financial Supervisory Authority have signed an Annex to the Memorandum of Understanding on Cooperation and Information Exchange in Derivatives Regulation.

The China Securities Regulatory Commission has approved the establishment of J.P. Morgan Securities (China) Co., Ltd. and Nomura Orient International Securities Co., Ltd.

The China Securities Regulatory Commission has announced the findings and disciplinary measures resulting from its 2018 inspections of auditing and valuation offices.

The China Securities Regulatory Commission has established a Leading Group for Investor Protection.

Chairman Yi Huiman met with Singapore’s Deputy Prime Minister and Chairman of the Board of Directors of the Monetary Authority of Singapore, Tharman Shanmugaratnam.

The China Securities Regulatory Commission has imposed administrative penalties, in accordance with the law, on two insider trading cases.

Beijing has established a city sub-center investment fund with assets under management totaling hundreds of billions of yuan, with the first phase oversubscribed by 44%.

Corporate & Commercial

Dae Yue Cheng Real Estate’s operating revenue fell by 30%, and post-restructuring earn-out targets are under pressure.

Olympic torchbearer becomes a prisoner; China’s “Duck King” went from building a business over 20 years to bankruptcy in just three days.

Tencent has established a FinTech laboratory.

Chi Jingdong: International steel capacity cooperation is at a critical juncture of opportunity.

Taxation

Wang Jun: Advance Party Building in Government Organs with Higher Standards and More Concrete Measures

Tax authorities at all levels across the country are working intensively to prepare for the implementation of the deepened VAT reform.

Sun Ruibiao, Deputy Director of the State Taxation Administration, stated: Tax inspections will never allow inspectors to approach enterprises with pre‑determined “targets.”

Litigation & Arbitration

The Supreme People’s Court has issued two judicial interpretations to optimize the business environment.

Ministry of Commerce: Promote legislation on traceability for key products to ensure consumer safety.

Measures for the Administration of Licensed Pharmacist Qualifications Issued; Last Year’s Exam Results Remain Valid

The Ministry of Finance and the State Administration for Market Regulation conducted a survey on revising the Measures for the Administration of Funds for National Cotton Notarized Inspection.

The person held responsible for the Xi’an Metro cable incident has been sentenced to life imprisonment, and Okai Cable was fined 30.5 million yuan.

Boeing continues to face mounting troubles: it has been sued by families of victims of air disasters, who allege the company received illegal subsidies.

Fu Wanhui, former director of the Water Resources Department of the Inner Mongolia Autonomous Region, has been prosecuted on suspicion of official misconduct.

Other

More than 40 universities have launched independent admissions, with several institutions canceling their humanities enrollment quotas.

State Administration for Market Regulation: Health food labels will feature a dedicated warning section.

Ministry of Ecology and Environment: Classified Treatment of Four Types of Wastewater Generated by the Xiangshui Explosion Accident

Finance & Capital Markets

The China Securities Regulatory Commission and the German Federal Financial Supervisory Authority have signed an Annex to the Memorandum of Understanding on Cooperation and Information Exchange in Derivatives Regulation.

To implement the outcomes of the Second China–Germany High-Level Financial Dialogue held in January this year and to strengthen regulatory cooperation between the two countries’ supervisory authorities in the area of cross-border derivatives as well as their coordinated response to extreme market conditions, the China Securities Regulatory Commission and the German Federal Financial Supervisory Authority signed, on March 18, 2019, in Frankfurt, an Additional Memorandum to the Memorandum of Understanding on Regulatory Cooperation and Information Exchange in the Field of Derivatives. This supplementary agreement constitutes an integral part and a significant enhancement of the bilateral Memorandum of Understanding on Securities and Futures Regulatory Cooperation between China and Germany. It will provide a robust framework for advancing pragmatic cooperation between the two countries’ capital markets, fostering the sound development of the China–Europe International Exchange—a Sino‑German joint venture platform—and thereby marking a new stage in the collaboration between the securities and futures regulators of China and Germany.

The China Securities Regulatory Commission has approved the establishment of J.P. Morgan Securities (China) Co., Ltd. and Nomura Orient International Securities Co., Ltd.

In accordance with the CPC Central Committee and the State Council’s overarching plan to further open up the securities industry, the China Securities Regulatory Commission recently approved, in compliance with the law, the establishment of J.P. Morgan Securities (China) Co., Ltd. and Nomura Orient International Securities Co., Ltd. Going forward, the CSRC will remain steadfast in implementing China’s overall strategy for opening up, vigorously advance the process of opening up the capital market, and ensure that every specific measure related to opening-up is carried out effectively and in a solid manner. It will also continue to conduct, in a lawful, compliant, and efficient manner, the review and approval procedures for the establishment of joint‑venture securities offices and for changes in their actual controllers.

The China Securities Regulatory Commission has announced the findings and disciplinary measures resulting from its 2018 inspections of auditing and valuation offices.

To continuously strengthen the functions of accounting supervision and inspection, effectively urge auditing and valuation offices to adhere to professional standards, and steadily enhance the quality of accounting information in the capital market, in 2018 the China Securities Regulatory Commission conducted comprehensive inspections of four auditing offices and three valuation offices, randomly reviewing a total of 49 audit engagements and 32 valuation projects. Additionally, it carried out targeted inspections of nine practice‑related projects involving five auditing offices and three valuation offices.

The review found that audit and valuation offices have continuously improved their internal management and quality‑control systems, leading to enhanced quality in their engagements. The usefulness of audit and valuation reports to the capital markets has become increasingly evident; however, certain issues still remain.

First, in terms of institutional management, some audit and assurance offices exhibit inadequate internal controls, with headquarters and branch offices still failing to achieve full alignment across personnel, finance, operations, technical standards, and information management. Certain offices also have insufficient quality‑control systems, resulting in lax implementation of procedures related to engagement acceptance and retention, project‑level quality reviews and oversight, and ongoing monitoring. Independence management requires further strengthening; in particular, instances of practitioners engaging in illegal stock trading continue to occur, and in a few cases, non‑assurance services provided by audit offices have undermined audit independence.

Second, with respect to audit engagement projects, certain fundamental procedures—such as conofficeation, physical inventory observation, analytical procedures, audit sampling, and cut‑off testing—were not adequately performed. In some engagements, the assessment of revenue recognition criteria and timing lacked sufficient rigor, resulting in the failure to obtain sufficient appropriate audit evidence. Furthermore, in areas such as significant equity or asset transfers, impairment testing of long-lived assets like fixed assets and goodwill, related‑party transactions, and the use of expert work, key audit procedures were inadequately executed, and the underlying professional judgments were insufficiently supported. Additionally, for non‑traditional industries—including media, film and television, and gaming—only standard audit procedures were applied, without tailoring risk‑response measures to the specific characteristics of these businesses.

Third, with respect to the evaluation of engagement projects, some appraisal offices conducted inadequate on-site investigations, collected insufficient documentation, and performed incomplete verification and validation, thereby failing to exercise adequate professional skepticism. In the valuation and estimation phase, they did not effectively analyze, synthesize, or organize the appraisal materials; in the income approach, the selection of key parameters—such as revenue and its growth rate, gross profit margin, related costs and expenses, the income period, and the discount rate—lacked a sound rationale, and the choice of relevant comparable companies was inappropriate. Furthermore, certain projects exhibited obvious computational errors. At the information disclosure stage, some appraisal reports failed to adequately disclose material information pertinent to the appraisal conclusions, and in some cases, the disclosed content even diverged from the actual circumstances.

Based on the findings of its review, the China Securities Regulatory Commission plans to impose administrative regulatory measures—such as regulatory talks and issuance of warning letters—and record these actions in the integrity files of eight auditing offices and 30 certified public accountants, seven valuation offices and 22 asset appraisers, as well as six practicing professionals who engaged in illegal stock trading. (Details are provided in the attached document.) In addition, certain projects suspected of violating laws or regulations will be referred to the inspection authorities for further investigation and handling.

In addition, in 2018, the respective branch institutions, based on the inspection results of their independently scheduled projects, imposed administrative regulatory measures—such as conducting regulatory interviews and issuing warning letters—on a total of 63 audit offices and 93 certified public accountants, as well as on 9 valuation offices and 12 asset appraisers, and recorded these actions in their integrity files.

Accounting information is among the most fundamental and critical types of information in capital markets, and auditing and valuation offices serve as key guarantors of high‑quality accounting information and major participants in these markets. The China Securities Regulatory Commission will continue to strengthen its oversight of accounting practices, using inspection and supervision as a cornerstone to ensure that auditing and valuation offices exercise due diligence and accountability, steadily enhance their professional standards, promote the sound development of the auditing and valuation sectors, and effectively improve the quality of accounting information in capital markets, thereby safeguarding the legitimate rights and interests of investors.

The China Securities Regulatory Commission has established a Leading Group for Investor Protection.

To further strengthen organizational leadership over investor protection in the capital market, and building on its accumulated experience in this area, the China Securities Regulatory Commission (CSRC) has established a Leading Group for Investor Protection (hereinafter referred to as the “Leading Group”). This initiative represents an important institutional arrangement through which the CSRC is implementing the development philosophy of putting the people at the center. The establishment of the Leading Group aims to enhance the CSRC Party Committee’s overall coordination and oversight of investor protection efforts, reinforce the comprehensiveness and synergy of investor protection across all business lines, products, and stages of the capital market, and foster concerted action, thereby laying a solid foundation for building a capital market that is standardized, transparent, open, dynamic, and resilient.

China Securities Regulatory Commission Chairman Yi Huiman serves as the head of the leading group, with Vice Chairman Yan Qingmin as the deputy head. The principal heads of all relevant business departments and affiliated units within the CSRC comprise the group’s members. Going forward, under the leadership of the CSRC Party Committee, the leading group will deliberate and deploy key initiatives and major policies in the field of investor protection, coordinate investor‑protection efforts across all business areas, and ensure that all departments and units within the system implement the requirements for investor protection.

Chairman Yi Huiman met with Singapore’s Deputy Prime Minister and Chairman of the Board of Directors of the Monetary Authority of Singapore, Tharman Shanmugaratnam.

On the morning of March 25, 2019, Yi Huiman, Chairman of the China Securities Regulatory Commission, met with a delegation led by Tharman Shanmugaratnam, Singapore’s Deputy Prime Minister and Chairman of the Board of the Monetary Authority of Singapore (MAS). The two sides exchanged views on capital market regulatory philosophies and practices, the opening-up of China’s capital markets, and ways to deepen pragmatic cooperation between regulatory authorities and in the securities and futures sectors.

The China Securities Regulatory Commission has imposed administrative penalties, in accordance with the law, on two insider trading cases.

Recently, the China Securities Regulatory Commission imposed administrative penalties in accordance with the law on Wu Xuejun, Cheng Ling, and Yu Sheng for their insider trading of “Sun Paper.” Specifically, Wu Xuejun, Cheng Ling, and Yu Sheng had their illegal gains of RMB 11,041,926.93, RMB 365,361.60, and RMB 6,126,657.45, respectively, confiscated, and each was fined an amount equal to the value of the illegal gains. In addition, Wu Xuejun was fined RMB 600,000 for soliciting others to trade “Sun Paper.” Furthermore, the Commission imposed an administrative penalty of RMB 600,000 on Zhou Defen for his insider trading of “Jinyi Culture.” (For details of the administrative penalty decisions, please refer to the CSRC website.)

In the aforementioned cases, Wu Xuejun, Cheng Ling, and Yu Sheng, after contacting insiders during the sensitive period for non‑public issuance of shares at Sun Paper, commenced substantial purchases of “Sun Paper” shares, with trading patterns clearly abnormal. Meanwhile, Zhou Defen, President of Yuehao Jewelry, maintained frequent communications with insiders during the sensitive period for material asset restructuring at Jin Yi Culture, and, through actual control over the securities accounts of four individuals including Yang Mouhong, executed all‑in purchases of “Jin Yi Culture” shares.

The field of major asset restructurings by listed companies is a hotbed for insider trading and a key focus of the CSRC’s oversight and enforcement efforts to curb such illegal activities. The CSRC will maintain unwavering, sustained vigilance in cracking down on all forms of insider trading, thereby effectively upholding a fair and impartial market order and safeguarding the legitimate rights and interests of the broad base of small and medium-sized investors.

Beijing has established a city sub-center investment fund with assets under management totaling hundreds of billions of yuan, with the first phase oversubscribed by 44%.

The Beijing Municipal Sub-Center Investment Fund, with a total scale of over 100 billion yuan, was established in Beijing on March 29, marking the entry of social capital into the development of the city’s sub-center.

According to Beijing Urban Subcenter Investment and Construction Group Co., Ltd., in line with the strategic plans and overarching requirements of the Beijing Municipal Party Committee and Municipal Government, the Beijing Urban Subcenter Investment Fund has been raised with a total scale of no less than RMB 100 billion. To date, the first-phase fund has secured RMB 14.41 billion, achieving oversubscription of 44% and laying a solid foundation for the group to deliver a strong start to the year across its major investment and construction projects.

According to reports, the Beijing Sub-center Investment Fund has attracted Beijing Investment Group and the Tongzhou District Government as cornerstone investors. State-owned enterprises under municipal jurisdiction, including Beijing Construction Group and Beijing Construction Engineering Group, as well as numerous central state-owned enterprises such as China Railway Group, China Railway Construction Corporation, and China Metallurgical Group Corporation, along with Hong Kong‑based offices like the New China Group, have joined as limited partners of the fund.

Li Changli, Chairman of Beitou Group, stated that the next step will be to vigorously advance the pipeline and implementation of fund‑backed projects, making investments in areas such as urban comprehensive development in the city’s sub-center, ecological and environmental protection, smart city initiatives, the development and utilization of underground space, infrastructure construction, and high‑end, cutting‑edge industries, thereby ensuring that the fund begins generating returns at an early stage.

A relevant official from the Beijing Municipal Bureau of Finance stated that establishing government‑backed investment funds is an important measure to help enterprises broaden their financing channels and reduce financing costs. This initiative will support the capital needs of the city’s sub-center, serve its development—particularly industrial growth—and contribute to achieving a balance between work and residence as well as the integration of industry and finance in the sub-center.

Commercial & Corporate

Dae Yue Cheng Real Estate’s operating revenue fell by 30%, and post-restructuring earn-out targets are under pressure.

After more than a year of intensive restructuring, the process has finally come to a close. On the morning of March 27, the listing ceremony marking the rebranding of COFCO Property as Joy City was held at the Shenzhen Stock Exchange. With this milestone, COFCO Property (Group) Co., Ltd., the sole real estate platform under the COFCO Group, has been renamed Joy City Holdings Group Co., Ltd.; the stock’s abbreviated name has been changed from “COFCO Property” to “Joy City,” while its stock code remains unchanged. This marks the official establishment of the COFCO Group’s only specialized real estate company following the restructuring.

Behind the restructuring and rebranding, Joy City Property’s 2018 results were a mixed bag. While net profit grew, several key metrics—including revenue—saw significant declines. On March 12, Joy City Property released its 2018 annual report, which showed that the company posted a net profit of RMB 3.11 billion, up 20.9% year over year, and attributable profit to equity holders of approximately RMB 2.10 billion, a year-on-year increase of 82.4%. However, despite the rise in net profit, multiple indicators deteriorated. During the reporting period, the company’s operating revenue totaled RMB 8.13 billion, down 30.3% from the previous year. The report attributed the revenue decline primarily to a reduction in the area of properties delivered for sale and a shift in the mix of delivered projects, both of which led to lower average selling prices and, consequently, a drop in property sales revenue.

Dae Yue Cheng Real Estate’s liabilities have also been steadily rising. In 2018, the company’s bank and other interest‑bearing borrowings totaled approximately RMB 27.59 billion, up 27.3% year over year. Its net debt-to-equity ratio stood at 45.3%, an increase of 17.1 percentage points from the previous year. At the same time, its funding costs rose, with the average financing cost reaching 4.39%, up 0.11 percentage points from the prior year. Most of Dae Yue Cheng Real Estate’s properties are located in first- and second-tier cities; however, from 2017 through 2018, sales in these markets were sluggish, offering limited market opportunities. Moreover, the company does not typically follow a fast‑turnover development model. Under unfavorable market conditions, it was inevitable that its performance would be adversely affected.

On March 27, following COFCO Property’s rebranding as Joy City Property, the company officially established itself as the sole real estate‑focused subsidiary under the COFCO Group. This move also underscores Joy City Holdings’ determination and strategic vision to enter the capital markets with a fresh brand identity, core values, and positioning. The name change, which came at the conclusion of a restructuring process that spanned more than a year, marks the formal end of that transformation. At the earnings conference, Zhou Zheng, Chairman of Joy City Property, emphasized that the decision to rename COFCO Property as “Joy City Holdings” was not a temporary label adopted after the merger, but rather the result of extensive deliberation and research conducted well in advance. He noted that Joy City’s brand value reached RMB 13.6 billion last year, making it a household name—widely recognized as a provider of high‑quality urban living.

In November 2018, COFCO Property entered into an earn-out agreement with the counterparty, Mingyi Company, under which the target asset—Dayoutong City—was committed to generating cumulative net profits of RMB 1.891 billion from 2018 to 2020. If this transaction had been completed in 2019, the commitment period would have been adjusted to 2019–2021, with a total promised net profit of RMB 1.894 billion. Nevertheless, meeting these performance targets remains challenging for Dayoutong Property. At the earnings call, Cao Ronggen, Executive Director of Dayoutong Property, stated that the company faces significant pressure in fulfilling its three-year commitments but remains confident in its team and is determined to deliver on its promises regardless.

Industry insiders say that COFCO Property’s restructuring will help integrate its residential and commercial‑property segments, laying a solid foundation for its real‑estate business and boosting investor confidence. Following the consolidation of resources, the A‑share and H‑share listings should generate stronger synergies, facilitating the expansion of both businesses. As for whether the performance commitments can be met, that will depend on future market conditions and the company’s financing capabilities; in an era focused on scale, access to capital remains a decisive factor in determining corporate success or failure.

Olympic torchbearer becomes a prisoner; China’s “Duck King” went from building a business over 20 years to bankruptcy in just three days.

Since his detention on June 4, 2017, Zhang Hongbo has remained in custody for 22 months. The China–Australia Group, which he founded, is a leading enterprise in the national meat‑duck industry and a pillar company in Qingyun County, Dezhou City, Shandong Province. In 2008, Zhang Hongbo was selected as a torchbearer for the Beijing Olympics; in 2010, he was recognized as a National Model Worker; and in 2014, he accompanied President Xi Jinping on an official visit to Europe. He also topped a certain ranking as the wealthiest individual in Dezhou, with assets exceeding ten billion yuan.

The Zhong’ao Group traces its origins to a family‑run business founded by Zhang Hongbo’s grandmother. After numerous trials, Zhang ultimately established the livestock‑farming sector as its core industry. Leveraging his early capital, he acquired land, built production facilities, and laid the groundwork for what would become the Zhong’ao Group. Public records indicate that the group was incorporated in April 1998 with a registered capital of RMB 135 million, with Zhang Hongbo personally holding 99.98% of both the investment and the equity. The company specializes in the breeding, propagation, raising, and deep processing of meat ducks, operating an integrated, end‑to‑end industrial system. Its overall production capacity ranks among the top three in China’s industry. Its flagship product line is the “Zhong’ao” brand range of duck‑meat products. From the very outset, Zhang Hongbo identified and capitalized on the overseas market for roasted duck.

To ensure product quality at the source, Zhang Hongbo established a production model that spans the entire industry chain. Back in the late 1990s, when this vision was first conceived, Zhong’ao Group was limited to aquaculture and small-scale hatchery operations. Subsequently, the group invested heavily in building state-of-the-art facilities. In aligning itself with EU standards, Zhong’ao Group successfully navigated a challenging transformation—from a township enterprise to an internationally competitive company.

In the second half of 2014, the most critical segment of Zhong’ao Group’s full‑industry‑chain—its 24,000‑ton cooked‑duck project—was officially put into production. By that time, all of Zhong’ao Group’s dozens of production facilities and farmers’ breeding farms had passed EU inspection and registration, securing their EU approval numbers. As Zhang Hongbo had envisioned, Zhong’ao’s roasted ducks were successfully sold worldwide—yet signs of an impending crisis had already begun to emerge. In 2013, an avian influenza outbreak dealt a devastating blow to the poultry‑raising sector. Subsequently, major banks, citing risk concerns, gradually tightened credit lines for the industry. Just as the 24,000‑ton cooked‑duck project entered trial production and urgently needed working capital to scale up, Zhong’ao Group encountered a sudden withdrawal of bank loans. On May 17, 2017, the Qingyun County Local Taxation Bureau filed for bankruptcy reorganization of Zhong’ao Group with the county court. On June 4, Zhang Hongbo was arrested in the elevator of the county Party Committee and government building. The Zhong’ao Group, which Zhang Hongbo had built over two decades, entered bankruptcy reorganization within three days of his arrest. However, the restructuring ultimately failed, and in June 2018, the company was placed into bankruptcy liquidation.

Tencent has established a FinTech laboratory.

On March 29, Tencent Cloud and WeBank held a joint press conference in Beijing, announcing the establishment of a FinTech Innovation Lab to jointly develop financial technology applications tailored for “open banking” scenarios, helping financial institutions deliver ubiquitous financial services and advancing the cause of inclusive finance.

According to the announcement, the “Tencent Cloud–WeBank Fintech Innovation Lab” will, guided by the open banking philosophy, conduct joint research and technological innovation across three dimensions: infrastructure, financial applications, and user experience. Ma Zhitao, Vice President and Chief Information Officer of WeBank, stated that open banking should embody a “3O” framework—Open Platform, Open Innovation, and Open Collaboration. By partnering with Tencent Cloud to co‑establish this fintech lab, WeBank will actively embrace the “3O” model, serving as an innovator behind “finance + lifestyle” ecosystems, a catalyst for the tech community, and a co‑builder of a distributed commercial ecosystem.

In fact, WeBank itself serves as a benchmark for innovation on Tencent Cloud. As China’s first internet bank born in the cloud, WeBank delivers financial services primarily through mobile‑internet‑based scenarios to individual consumers and small and micro enterprises. According to reports, WeBank’s per‑account IT operations cost is just RMB 3.6, less than one‑tenth of that of traditional banks. Notably, by leveraging Tencent Cloud’s distributed database, the bank has cut database‑related expenses by more than 50% compared with conventional banking models. In 2018, a research project undertaken by WeBank on its distributed banking architecture was awarded a Class I prize by the China Banking and Insurance Regulatory Commission for outstanding achievements in annual technology‑risk management. Addressing the longstanding pain point in traditional financial workflows—where user biometric verification required offline in‑person checks—the two parties collaborated to deploy Tencent YouTu’s proprietary liveness‑detection technology, which integrates lip‑reading analysis with facial recognition, to revolutionize financial processes. This innovation moves offline verification steps—such as customer registration, legal‑representative changes, identity verification, and account opening—online, significantly boosting the efficiency of financial services. Backed by robust technical infrastructure, WeBank’s facial‑recognition system achieves a pass rate of 98.6% and an error rate of one in ten thousand, fully meeting the stringent security requirements of financial operations.

Chi Jingdong: International steel capacity cooperation is at a critical juncture of opportunity.

On the afternoon of March 27, the expanded executive council meeting of the China Iron and Steel Industry International Capacity Cooperation Enterprise Alliance (hereinafter referred to as the “Alliance”) was held in Nanjing, Jiangsu Province. Chi Jingdong, Vice President of the China Iron and Steel Association and Chairman of the Alliance, pointed out at the meeting that demand for international capacity cooperation in the steel sector is steadily emerging, placing the industry at a critical juncture of opportunity. This year, the Alliance will continue to advance work across multiple fronts to further facilitate the global expansion of the steel industry.

Chi Jingdong stated that the significance of international steel capacity cooperation should be understood from at least three levels and dimensions.

First, international capacity cooperation is an inevitable requirement for the steel industry in the new era as China builds a higher‑level open economy. Promoting such cooperation is a key measure for the steel sector to implement the calls of the Party and the state, to advance the Belt and Road Initiative, to drive the development of the Belt and Road, and to foster an open world economy and a community with a shared future for mankind. Second, international capacity cooperation represents an important strategy and pathway for the transformation, upgrading, and high‑quality development of China’s steel industry. It is an indispensable stage in the evolution of China’s leading steel enterprises; without internationally oriented, globally integrated steel companies, it will be impossible to realize the vision of a Chinese steel industry that is both large and competitive on the global stage and influential worldwide. International capacity cooperation is a crucial step toward making China’s steel industry both big and strong, a vital means of ensuring the seamless integration of China’s steel industry’s supply chains, market networks, and resource links across the globe, and a powerful tool for the sector to participate in global steel governance and lead the evolution of the world steel industry. Third, international capacity cooperation is a pragmatic choice and an effective response for China’s steel industry to address global challenges and safeguard its share of the international market. Through this cooperation, robust steel enterprises—particularly those heavily reliant on exports—can better meet local market demand by establishing steel plants or processing facilities overseas, thereby mitigating trade barriers to some extent. At the same time, by investing in and fostering the development of local steel industries, they can stimulate economic growth and create jobs, helping to ease trade tensions and maintain China’s stable position in the global steel market.

Chi Jingdong believes that, as China’s economic standing on the global stage continues to strengthen, its hallmark of steady and balanced growth becomes increasingly evident, and domestic demands for high‑quality development rise, steel enterprises with the requisite capabilities and resources are placing greater emphasis on advancing their transformation and upgrading through a global perspective and an internationalized framework. Consequently, more and more steel offices are prioritizing the coordinated utilization of both domestic and international resources and markets to achieve shared, win‑win development, while also focusing on enhancing their international competitiveness by ensuring smooth integration across industrial, market, and resource chains.

Chi Jingdong also pointed out that China’s international steel capacity cooperation has a long history, marked by both successes and setbacks. While it has experienced robust growth and significant progress since the launch of the Belt and Road Initiative, various challenges remain. Moving forward, the Alliance will continue to strengthen coordination with government bodies, financial institutions, and relevant overseas entities, establishing smooth and efficient working mechanisms; gather project and policy information, and continually refine the “International Steel Capacity Cooperation” database to provide enterprises with advice and guidance as they expand abroad; coordinate and standardize companies’ overseas operations, encouraging and supporting leading enterprises in exporting their competitive capacities; undertake the translation and adaptation of Chinese steel standards, aligning them with international norms and benchmarks to advance the internationalization of Chinese steel standards; build a pool of experts, organize professional training programs, and vigorously promote the industry abroad, thereby fostering a favorable environment for international steel capacity cooperation.

In addition, the Alliance will continue to monitor and advance key international capacity‑cooperation projects, conduct surveys of leading domestic enterprises and steel‑industry capacity‑cooperation initiatives in priority countries and regions, and organize advanced training workshops and a series of capacity‑building programs on “Strategies and Governance for International Steel Capacity Cooperation.” Furthermore, leveraging the Metallurgical Information and Standards Research Institute, the Alliance will develop an “Action Plan for the Internationalization of Steel Industry Standards,” formulate a roadmap for an English‑language version of national standards, and systematically promote mutual recognition of standards and regional standardization efforts. Relying on media platforms such as the China Metallurgical News, the Alliance will also launch a series of publicity campaigns on “International Steel Capacity Cooperation” and explore the joint development of a “Brand‑Image Promotion Initiative for the Steel Industry on the Global Stage.”

Taxation TAXATATION

Wang Jun: Advance Party Building in Government Organs with Higher Standards and More Concrete Measures

General Secretary Xi Jinping has emphasized that the Party building within government organs is an essential component of the new great project of Party building. To do a good job in tax administration, we must strengthen Party building within the tax system; and to strengthen Party building in the tax system, we must first focus on Party building within the State Taxation Administration itself. As the “command center” of the tax system, the SAT headquarters can truly fulfill its role as a model and leader only when its own Party‑building efforts are officely in place. The SAT headquarters must advance Party building in its organs with higher standards and more concrete measures, setting benchmarks, serving as a model, and taking the lead for the national tax system, thus opening up a new chapter in Party building in the tax sector for the new era.

I. Diligently study and implement the important instructions of General Secretary Xi Jinping on advancing the Party’s political development within central and state organs, and steadily advance the political development of the Party within the State Taxation Administration. Political development is the fundamental task of the Party. To strengthen Party building, we must first strengthen political development. We must thoroughly study and apply the spirit of General Secretary Xi Jinping’s important instructions, officely establish the “Four Consciousnesses,” take the lead in upholding the “Two Safeguards,” and ensure that the requirements for strengthening the Party’s political development are integrated into every aspect and stage of tax work. Members of the Party Committee of the State Taxation Administration, members of the Organs Party Committee, and members of the Organs Commission for Discipline Inspection must bear in mind that the Administration’s organs are, above all, political bodies, and earnestly fulfill their political responsibility to strengthen Party building within the organs. Secretaries of Party branches, members of Party branches, and leaders of Party groups must always remember that their primary identity is as leaders of grassroots Party organizations and that their primary post is an intra‑Party position. All Party members must keep in mind that their primary identity is as Communists and that their foremost duty is to serve the Party. Only in this way can we resolutely implement the decisions and arrangements of the CPC Central Committee, embody political awareness in everything we do, at all times and in all matters, and reflect it in every facet of our work and daily life.

II. Fully leverage the roles of all stakeholders and integrate service to the central tasks into every aspect of Party building within government organs. Serving and safeguarding the central work is a key responsibility of Party building in government organs. The “Reform Plan for the Tax Collection and Administration System of National and Local Taxes,” issued by the General Office of the CPC Central Committee and the General Office of the State Council, clearly assigns the State Taxation Administration the primary responsibility for Party building across the tax system and for upholding strict Party self‑discipline in all respects. Consequently, Party building within the tax system and the drive for comprehensive, rigorous Party governance now face new requirements. We must proactively adapt to these institutional changes, using the new achievements of Party building at the State Taxation Administration to elevate Party building throughout the entire system to a higher level, thereby better serving the central task of tax administration.

III. Regard the building of the Party membership as a foundational undertaking, continuously enhancing overall quality and competence. Upholding the principle of combining strict management with compassionate care, and giving equal weight to incentives and constraints, we will strive to forge a contingent of high-caliber Party members and cadres in government organs—steadfast in their convictions, dedicated to serving the people, diligent and pragmatic, courageous in shouldering responsibilities, upright and incorruptible, and loyal to the Party and the country—thereby providing robust organizational guarantees for the successful completion of the tasks entrusted to us by the Party.

IV. Innovate and explore the mechanisms, tools, and approaches for Party building within government organs, continuously enhancing the quality of Party‑building work. In accordance with the requirements of the Party‑building mechanism—“primary responsibility at the sectoral level, dual responsibility at the regional level, vertical synergy and horizontal connectivity, concerted efforts, and Party‑building-driven development”—we will place a strong emphasis on innovating mechanisms, tools, and methods.

V. Continuously strengthen the self‑building of the Party Committee and the Discipline Inspection Commission of the organ, and cultivate a highly competent team of Party affairs cadres. Arrange, in an organized and planned manner, exchanges between Party affairs cadres and administrative and professional cadres; give priority to the training and deployment of outstanding talents who have achieved remarkable results in Party building; and fully mobilize the enthusiasm and creativity of Party affairs cadres. Enhance their political literacy, fortify their political capabilities, and show genuine concern for their growth.

The Party’s development in the new era has entrusted us with new tasks and responsibilities, making the mission of Party building within the tax system both more glorious and more arduous. Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, we must rally even more closely around the Party Central Committee with Comrade Xi Jinping at its core, forge ahead in the new era, deliver new achievements, and ensure that the Party-building work of the State Taxation Administration sets a leading example, serves as a model, and builds a benchmark institution, thereby providing strong guarantees for advancing the modernization of taxation in the new era with high quality.

Tax authorities at all levels across the country are working intensively to prepare for the implementation of the deepened VAT reform.

At present, tax authorities at all levels across the country have braced themselves and stood ready to act, meticulously calculating and fighting tough battles to serve as the principal force in implementing policies. They are pressing ahead with urgency and at every level, adhering to the “four realities and four strengths” criteria, and ensuring that all preparatory work for the rollout of reforms is carried out swiftly, pragmatically, and with meticulous attention to detail.

Ensuring effective implementation begins with aligning thinking. Tax authorities at all levels across the country promptly organized study and dissemination of General Secretary Xi Jinping’s instructions on tax and fee reductions, the spirit of the Two Sessions, and Premier Li Keqiang’s important remarks during his inspection of the State Taxation Administration. They have deeply recognized the profound significance and long-term implications of this work, swiftly achieved consensus, clarified objectives and tasks, shouldered the heavy responsibility of reform, and treated the tax and fee reduction reform as a major political task, ensuring its thorough and rigorous execution.

The focus of tax and fee reductions lies at the grassroots level, with the frontline as the main battleground. In recent days, grassroots tax authorities, in accordance with unified arrangements and deployments from higher-level authorities, have demonstrated proactive initiative and implemented practical, feasible measures to prepare for the effective implementation of the reform.

“Effective publicity” is a crucial preparatory step prior to the implementation of reform. Tax authorities at all levels nationwide have organized tiered publicity campaigns and conducted comprehensive training for all staff, ensuring that tax officials fully understand and master the spirit of the reforms and the specifics of the policies, while also providing robust external outreach and guidance to ensure that taxpayers are fully informed about and can fully benefit from the tax‑reduction and fee‑cutting measures.

Tax sub‑bureaus and tax service centers across the country are leveraging their close proximity to taxpayers to implement a multi‑pronged approach to publicity and guidance. The First Tax Service Center of the Dongdaihe New Area Tax Bureau in Liaoning Province has adopted a “centralized instruction, on‑the‑job self‑study, and peer Q&A” model to strengthen internal training, while employing a “comprehensive training, individualized tutoring, and online consultation” approach to enhance external guidance, thereby achieving full coverage of publicity and advisory services.

Sun Ruibiao, Deputy Director of the State Taxation Administration, stated: Tax inspections will never allow inspectors to approach enterprises with pre‑determined “targets.”

On March 29, at the Boao Forum for Asia 2019 Annual Conference, Sun Ruibiao, Deputy Director of the State Taxation Administration, stated that regardless of whether a company perceives itself to be in compliance or not, it may still be subject to tax inspections under three possible scenarios.

Sun Ruibiao stated that, in accordance with the law, tax inspections should have no other objectives. Once an inspection is conducted, any issues identified will be addressed as they are—no more, no less. It is absolutely impermissible to conduct tax inspections while simultaneously pursuing the task of collecting taxes.

Second, the tax authorities now conduct random inspections. This doesn’t mean that companies will stop cooperating just because they believe they have nothing to hide; random inspections are essentially like a lottery—whomever is selected gets inspected.

The second approach is to file a report. If your company is reported, you are responsible for the whistleblower, and an investigation will be launched. However, the outcome will not simply reflect whatever the whistleblower claims; it will be based on the facts, and the findings will align with the evidence. This helps prevent false accusations.

Third, during the tax collection and administration process, if data analysis reveals any red flags or issues, we may initiate an audit.

LITIGATION & ARBITRATION

The Supreme People’s Court has issued two judicial interpretations to optimize the business environment.

On the morning of March 28, the Supreme People’s Court held a press conference to release the “Provisions of the Supreme People’s Court on Several Issues Concerning the Application of the Enterprise Bankruptcy Law of the People’s Republic of China (III)” (hereinafter referred to as the “Provisions of the Supreme People’s Court on Several Issues Concerning the Application (III)”) and the “Decision of the Supreme People’s Court on Amending the ‘Regulations on Strictly Standardizing the Extension of Trial Periods and Adjournment of Hearings in Civil and Commercial Cases’” (hereinafter referred to as the “Decision on Amendment”). Liu Guixiang, a full-time member of the Judicial Committee of the Supreme People’s Court, stated that by issuing judicial interpretations and policies, strengthening bankruptcy adjudication and enforcement, and deepening judicial system reform, the judiciary has fully leveraged its functions to provide robust judicial services and safeguards for fostering a business environment that is stable, fair, transparent, and predictable.

According to the introduction, the newly issued “Provisions of the Supreme People’s Court on Several Issues Concerning the Application of Law (III)” further safeguards the legitimate rights and interests of creditors and other stakeholders in bankruptcy proceedings by clarifying issues such as the priority of repayment for post‑filing loans, the right of individual creditors to access information, the voting mechanisms at creditors’ meetings, and the powers and procedures governing a trustee’s disposition of the debtor’s significant assets. It also encourages financial support for the continued operation of indebted enterprises and promotes the preservation and enhancement of the debtor’s estate value. Article 2 constitutes a key provision of this judicial interpretation. Following the commencement of bankruptcy proceedings, the continued operation of the debtor enterprise is essential for reorganization and, in liquidation proceedings, critical for selling the enterprise as a going concern. However, such continued operation hinges on the ability to obtain new financing to cover routine operating expenses and related costs. If the priority of repayment for these newly incurred loans remains unclear, lenders will be unable to assess the risk of recovering their claims and thus may hesitate to extend credit to distressed enterprises. To encourage financial support for the debtor’s ongoing operations and to facilitate the optimal allocation of market resources, Article 2 expressly provides that, after a bankruptcy petition is accepted, any loan obtained by the trustee or by a self‑managed debtor for the purpose of maintaining the debtor’s business, provided it complies with statutory procedures, shall enjoy priority over ordinary bankruptcy claims. At the same time, in order to uphold normal commercial transactional order and minimize adverse impacts on pre‑existing security interests, the interpretation further stipulates that such new loans may not take precedence over previously established security rights. Should the debtor seek to secure this new loan with collateral that has already been encumbered in favor of other creditors, the respective secured creditors must enforce their rights in accordance with the order of priority set forth in Article 199 of the Property Law. The right to information is one of the fundamental procedural rights that creditors are entitled to in bankruptcy proceedings, aimed at addressing information asymmetry. While the Enterprise Bankruptcy Law primarily regulates the collective exercise of creditors’ rights and the duties of the trustee—requiring the trustee to report relevant matters to creditors’ meetings, attend such meetings, and respond to inquiries—it does not address the specific exercise of individual creditors’ right to information. Yet this right is of paramount importance for individual creditors, serving as the prerequisite for making informed decisions and exercising voting rights, and as an essential safeguard ensuring the openness and transparency of bankruptcy proceedings. Judicial Interpretation No. 3 explicitly grants each creditor the right to inspect all financial and operational documents necessary for participation in the bankruptcy process, while also specifying remedies available when the trustee unreasonably refuses to provide such information, thereby fully protecting the exercise of individual creditors’ right to know. It should be noted, however, that the exercise of this right must be balanced against the need to protect the debtor’s trade secrets and state secrets. If the information accessed by a creditor involves trade secrets, the creditor bears a duty of confidentiality; if it pertains to state secrets, the provisions of the State Secrets Law and other relevant statutes impose prohibitions that the creditor must observe.

The “Decision of the Supreme People’s Court on Amendments” clarifies the number of permissible adjournments and establishes a catch-all provision for limiting circumstances, thereby providing institutional safeguards to shorten trial durations and better protect the public’s rights to information, participation, and oversight. At the same time, it appropriately expands the scope of application of summary procedures, fully leveraging their inherent advantages of simplicity and speed in filing, service of process, trial, and judgment, thus achieving streamlined proceedings and expedited adjudication. According to the introduction, the Decision introduces new provisions aimed at enhancing the quality and efficiency of trials. First, it strictly limits the number of adjournments: to continuously improve the efficiency of civil litigation, the Decision stipulates that, for civil and commercial cases tried under ordinary procedures, the number of adjournments shall not exceed two; for cases tried under summary procedures or small-claims fast-track procedures, the number of adjournments shall not exceed one. This provision underscores the Supreme People’s Court’s office commitment to improving judicial quality and efficiency. Second, it specifies a catch-all clause for adjournments, clarifying the phrase “other circumstances requiring adjournment” in Article 146 of the Civil Procedure Law as referring specifically to situations where court proceedings cannot proceed normally due to force majeure or unforeseen events. This clarification enhances the stability and predictability of the rules governing adjournments. Third, it appropriately broadens the scope of summary procedures and sets forth relevant procedural rules. To further harness the significant role of summary procedures in elevating judicial efficiency, the Decision provides that basic-level people’s courts and their branch tribunals, when hearing civil and commercial cases involving clearly established facts, well-defined rights and obligations, minimal disputes, and claims not exceeding twice the previous year’s average annual wage of employed persons in the respective province, autonomous region, or municipality directly under the central government, shall apply summary procedures. Moreover, for civil and commercial cases tried under summary procedures, pre-trial preparatory steps such as evidence exchange and pre-trial conferences shall be conducted concurrently with the trial itself, without separate scheduling. Cases subject to summary procedures are also exempt from service by public notice. These provisions effectively shorten the time span from case filing to service of process, from pre-trial preparation to trial, and from trial to judgment, thereby substantially improving judicial efficiency.

Ministry of Commerce: Promote legislation on traceability for key products to ensure consumer safety.

On March 28, the Ministry of Commerce held its regular press conference. During the session, a reporter asked: The construction of an important-product traceability system has been piloted in four regions—what are the results of these pilot programs? And what is the ultimate goal for the next phase of building this traceability system? On March 29, Ministry of Commerce spokesperson Gao Feng stated that the ministry will work with relevant departments to explore and advance legislation on traceability for key products and to refine the traceability standards framework.

Gao Feng stated that since 2016, the Ministry of Commerce and the Ministry of Finance have supported Shandong, Shanghai, Ningxia, and Xiamen in vigorously carrying out pilot initiatives, yielding positive results in the development of traceability systems. He noted that these localities, tailored to their specific circumstances, have actively advanced the establishment of traceability frameworks for key products—covering areas such as platform development, standard-setting, management and evaluation mechanisms, and integration with market supervision—and have accumulated a number of replicable and scalable best practices. The ultimate goal of building these traceability systems is to ensure that the quality and safety of traded goods operate transparently and under public scrutiny. Building on the groundwork laid by earlier pilot projects, the Ministry of Commerce will focus on advancing related efforts in institutional design, platform development, and regulatory oversight.

Regarding the next steps in building the traceability system, Gao Feng outlined four measures: First, strengthen institutional development by working with relevant departments to explore and advance legislation on traceability for key products and to refine the traceability standards framework. Second, accelerate platform development to achieve seamless interconnection among traceability systems across all departments and regions, thereby establishing a nationwide, state-of-the-art, and practical information-based traceability network for critical products. Third, innovate technological approaches by encouraging the adoption of advanced technologies such as big data and blockchain, continuously enhancing the intelligence and accuracy of traceability. Fourth, reinforce the integration of traceability with regulatory oversight, ensuring that the outcomes of the traceability system—enabling verifiable origins, trackable destinations, and assignable accountability—serve as robust evidence for market supervision, effectively upholding a healthy competitive order, safeguarding consumer safety, and meeting the public’s aspirations for a better quality of life.

Measures for the Administration of Licensed Pharmacist Qualifications Issued; Last Year’s Exam Results Remain Valid

Going forward, licensed pharmacists will be required to maintain integrity records. The National Medical Products Administration and the Ministry of Human Resources and Social Security recently issued a notice promulgating the Regulations on the Professional Qualification System for Licensed Pharmacists and the Measures for Implementing the Examination for the Professional Qualification of Licensed Pharmacists. These measures aim to strengthen the management of professional access for pharmaceutical personnel, further clarify the rights and responsibilities of licensed pharmacists, promote the development and enhancement of the licensed pharmacist workforce, and better safeguard the rights and interests of consumers.

The notice clarifies that, in accordance with the Drug Administration Law of the People’s Republic of China, the National Catalogue of Professional Qualifications, and other relevant provisions, the National Medical Products Administration and the Ministry of Human Resources and Social Security have, on the basis of the existing practicing pharmacist qualification system, formulated the Regulations on the Practicing Pharmacist Professional Qualification System and the Measures for the Implementation of the Practicing Pharmacist Professional Qualification Examination. To ensure a smooth transition of the system, candidates who took the 2018 practicing pharmacist qualification examination, registered for all subjects, and passed some of them, and who hold a college degree or higher, will have their 2018 passing scores remain valid and be carried forward in four-year cycles through 2021.

Individuals holding a secondary vocational school diploma who meet the requirements set forth in the “Notice on Revising and Issuing the Provisional Regulations on the Qualification System for Practicing Pharmacists and the Measures for Implementing the Examination for Practicing Pharmacists” (Document No. 34 [1999] issued by the former Ministry of Personnel and the former State Drug Administration; hereinafter referred to as the “Original Regulations”)—including traditional Chinese medicine apprentices exempted from certain examination subjects—may register for the examination before December 31, 2020. The validity period of examination scores shall be governed by the Original Regulations, with the latest expiration date for all subject scores being December 31, 2020.

The Ministry of Finance and the State Administration for Market Regulation conducted a survey on revising the Measures for the Administration of Funds for National Cotton Notarized Inspection.

From March 12 to 15, a research team comprising Zuo Gang, Researcher at the Second Division of Central Administration, Administrative and Political Affairs Department of the Ministry of Finance; Xu Shuibo, Director of the China Fiber Quality Monitoring Center under the State Administration for Market Regulation; Zheng Ying, Director of the Second Financial Division of the Science and Finance Department; Lu Zheng, Director of the Cotton Division of the Quality Supervision Department; and Feng Ping, Director of the Second Public Inspection Division of the China Fiber Quality Monitoring Center, traveled to Inner Mongolia and Shandong to conduct field research on revising the Measures for the Administration of Funds for National Cotton Notarized Inspection. Subsequently, a symposium on the revision of these Measures was held in Dezhou, attended by Lu Qiang, Director of the Second Division of Central Administration, Administrative and Political Affairs Department of the Ministry of Finance, and Ji Chao, Inspector of the Quality Supervision Department of the State Administration for Market Regulation, who both addressed the meeting.

The research team visited Ordos, Inner Mongolia, where they conducted an in-depth on-site inspection of the Fine‑Wool Sheep Storage and Logistics Trading Center, the Wushen Banner Field Laboratory of the Fiber Inspection Bureau of the Inner Mongolia Autonomous Region, and model households practicing standardized breeding. They gained a thorough understanding of wool and fleece sorting and grading, baling, sampling, on‑site inspection, and standardized farming practices. At the National Plush Comprehensive Inspection and R&D Laboratory in Hohhot, the team toured the raw wool and raw down pre‑processing room, the constant‑temperature and constant‑humidity laboratory, and the fiber‑inspection cultural experience hall, obtaining detailed insights into the end‑to‑end procedures for notarized inspection of wool and raw down, as well as combed down, along with the status of research and innovation efforts. In Dezhou, Shandong, the team visited the National Cotton Reserve Depot, the cotton instrumental public inspection laboratory of the Dezhou Fiber Inspection Institute, and the cotton standard sample development base, thoroughly examining the workflows and quality‑control measures across all stages of cotton production and processing, including official quantity verification and quality testing.

At the symposium, Director Lu Qiang pointed out that the revision of the “Administrative Measures for the Management of National Cotton Notarized Inspection Funds,” undertaken after a one-year interval, serves three key purposes: first, to align with the current national institutional reform and ensure the consistency and rigor of state regulations; second, to strengthen the standardized management of notarized inspection funds by incorporating such funds for raw cotton, wool, cocoons, silk, and hemp fibers into the fiscal transfer payment system; and third, to enhance performance‑based budget management. By further refining and standardizing the administration of notarized inspection funds, this measure will provide stronger support and safeguards for fiber inspection work.

At the meeting, market regulation authorities and fiber inspection agencies from Hebei, Inner Mongolia, Shandong, Hubei, Henan, Tianjin, and other regions reported on the implementation of notarized inspections for cashmere, wool, cotton, cocoons and silk, and bast fibers; the scope of use for inspection‑related funding; actual cost expenditures at each stage of the inspection process; and their views and recommendations regarding revisions to the management measures for such funds.

Director Xu Shuibo emphasized the following points: First, it is essential to fully recognize the importance of the notarized inspection system. Second, it is crucial to appreciate how the inclusion of funding for notarized inspections of wool, cashmere, silk, and hemp fibers in the fiscal transfer payment system represents a significant benefit for industrial development. Third, a deep understanding is needed of the practical role of notarized inspection in regulating market order, ensuring fiber quality, supporting macroeconomic regulation, and advancing supply-side structural reform in the industry. Fourth, the significance of the “Administrative Measures for the Management of National Cotton Notarized Inspection Funding” must be thoroughly appreciated, as it safeguards the implementation of notarized inspections, clarifies funding standards, defines management responsibilities, and promotes the continued development of this system. Fifth, particular attention should be paid to addressing the imbalance in the development of notarized inspection among cotton and other fibers—wool, cashmere, silk, and hemp—and the failure to meet current societal needs. National specialized fiber‑quality monitoring institutions must seize this opportunity, objectively assess the cost and expenditure associated with each fiber type, and fully cooperate in revising the funding management measures to ensure the smooth implementation of notarized inspections for cotton and other fibers in 2019.

Finally, in his concluding remarks at the symposium, Inspector Ji Chao emphasized that the market regulatory authorities are tasked with overseeing food safety, special equipment safety, and product safety; fiscal funding is essential, and cost‑estimation is of great importance. Inspector Ji also noted that notarized inspections of wool, down, cocoons, silk, and hemp fibers are highly complex, and that further in-depth research and consultations are needed. The Supervision Department will actively coordinate with the Ministry of Finance and the Science and Finance Department of the General Administration to advance the revision of the regulations governing the management of project funds.

The person held responsible for the Xi’an Metro cable incident has been sentenced to life imprisonment, and Okai Cable was fined 30 million yuan.

On March 29, 2019, the Xi’an Intermediate People’s Court rendered a first-instance verdict in accordance with the law, finding the defendant unit, Shaanxi Aokai Cable Co., Ltd., and eight defendants, including Wang Zhiwei, guilty of the crimes of producing and selling substandard and fake products, corporate bribery, and bribery. The defendant unit, Shaanxi Aokai Cable Co., Ltd., was convicted of producing and selling substandard and fake products and of corporate bribery; considering multiple offenses, it was sentenced to a fine of RMB 30.5 million. Defendant Wang Zhiwei was convicted of producing and selling substandard and fake products, corporate bribery, and bribery; taking into account multiple offenses, he was sentenced to life imprisonment, with deprivation of political rights for life, and a fine of RMB 21.5 million. The remaining seven defendants were convicted of producing and selling substandard and fake products and of corporate bribery, and were each sentenced to fixed-term imprisonment ranging from seven years to twelve years and three months, together with fines.

On the day of the sentencing, members of the public, journalists, and relatives of the defendant attended the proceedings as observers. The Xi’an Intermediate People’s Court broadcast the entire trial live.

Boeing continues to face mounting troubles: it has been sued by families of victims of air disasters, who allege the company received illegal subsidies.

U.S. aerospace giant Boeing has been mired in controversy lately: On the 29th, U.S. media, citing sources familiar with the matter, reported that after reviewing the flight data recorder from the Ethiopian Airlines crash, U.S. government investigators have preliminarily concluded that the aircraft’s stall‑prevention system was automatically activated prior to the accident. Earlier, the family of a victim of the Ethiopian Airlines disaster had already filed a lawsuit against Boeing. In addition, the World Trade Organization’s (WTO) Appellate Body recently ruled that the state of Washington in the United States violated WTO rulings by illegally granting subsidies to Boeing.

Boeing’s troubles do not stop there: Following the successive crashes involving the 737 MAX series, the World Trade Organization’s (WTO) Appellate Body recently ruled that the U.S. state of Washington violated WTO rulings by illegally subsidizing Boeing, thereby creating unfair competition for its main rival, France’s Airbus. However, the amount at issue represents only a small fraction of the total subsidies the U.S. government has provided to Boeing.

The ruling found that the State of Washington granted Boeing tax exemptions on business and occupancy taxes, with the total benefit amounting to US$325 million between 2013 and 2015 alone. As a result, during that period, Airbus’s sales of A320 and A320neo aircraft were adversely affected at five trade shows. Additionally, states such as South Carolina have also provided subsidies to Boeing, though it has not been established whether those subsidies influenced Airbus. The European Union stated that the ruling demonstrates the United States’ continued disregard for WTO rules in granting subsidies to Boeing. Airbus described the ruling as a victory for both the EU and itself, urging the U.S. to adopt policies consistent with fair‑trade principles; otherwise, the EU may take retaliatory measures.

Fu Wanhui, former director of the Water Resources Department of the Inner Mongolia Autonomous Region, has been prosecuted on suspicion of official misconduct.

The People’s Procuratorate of the Inner Mongolia Autonomous Region recently announced that the case involving Fu Wanhui, former Party Secretary and Director of the Water Resources Department of the Inner Mongolia Autonomous Region (at the department‑level rank), who is suspected of accepting bribes and abusing his official authority, has been assigned jurisdiction by the procuratorate. Accordingly, the Ulanqab Municipal People’s Procuratorate has instituted public prosecution before the Ulanqab Intermediate People’s Court.

During the review-and-prosecution stage, the procuratorial organ duly informed the defendant Fu Wanhui of his procedural rights and, in accordance with the law, interrogated him and heard the views of his defense counsel. The indictment filed by the Ulanqab Municipal People’s Procuratorate alleges that, while successively serving as Secretary of the Party Working Committee and Director of the Management Committee of the Kangbashi New District in Ordos City, Member of the Standing Committee of the Ordos Municipal Party Committee and Vice Mayor, and Member of the Xilingol League Party Committee, Vice League Governor, and then League Governor, the defendant Fu Wanhui, by taking advantage of his official position or the favorable conditions arising from his authority and status, sought benefits for others, and, either alone or in collusion with others, solicited and illegally accepted property from others in an especially large amount. As a state functionary, he also abused his power, causing substantial losses to national interests; accordingly, he should be held criminally liable for the crimes of bribery and abuse of power. In May 2018, Fu Wanhui was placed under disciplinary inspection and supervisory investigation on suspicion of serious violations of discipline and law; in August of the same year, the People’s Procuratorate of the Inner Mongolia Autonomous Region lawfully decided to arrest him on suspicion of the crimes of bribery and abuse of power.

Other

More than 40 universities have launched independent admissions, with several institutions canceling their humanities enrollment quotas.

Since the beginning of March, universities have been launching their independent enrollment programs one after another. More than 40 institutions, including Peking University and Tsinghua University, have released their 2019 independent enrollment prospectuses. Examining these documents, several trends deserve applicants’ attention: a marked reduction in enrollment quotas, the elimination of humanities programs at some schools, increasingly stringent application requirements, smaller score-based admission benefits, and the mandatory inclusion of physical fitness tests.

In 2019, a total of 90 pilot universities nationwide were authorized to conduct independent admissions, with 77 of them recruiting students from across the country. Meanwhile, 13 institutions—including Beijing University of Technology, Heilongjiang University, and Shanghai University—limited their independent admissions to applicants from their own provinces. Comparing this year’s admission guidelines with those of last year, many universities have reduced their independent‑admission quotas. In addition to significant year‑over‑year declines in enrollment numbers, several institutions—such as Tsinghua University, Shandong University, Jilin University, and Central South University—have eliminated recruitment plans for humanities programs in this year’s independent admissions process.

According to the schedule for independent admissions published on the Ministry of Education’s “Sunshine College Entrance Examination Platform,” June 10–22 is the period during which pilot universities will conduct their assessments. In terms of content and format, in addition to traditional written exams and interviews, physical fitness tests have also become a component of the evaluation process at many institutions. An examination of the admission prospectuses reveals that the specific test items and scoring criteria vary from school to school: some institutions use physical‑fitness test scores solely as a reference for admissions; others incorporate them into the overall score; and a significant number impose an outright rejection if a candidate fails the physical‑fitness assessment.

State Administration for Market Regulation: Health food labels will feature a dedicated warning section.

In recent years, false advertising of health supplements has persisted despite repeated crackdowns; some elderly individuals with hypertension or diabetes have even stopped taking their prescribed medications on their own, mistaking these supplements for drugs. At a regular press conference on March 29, Yu Jun, spokesperson for the State Administration for Market Regulation, stated that the next step will be to establish a special warning section on health‑food labels, explicitly reminding consumers that “health foods are not medicines and do not have disease‑treatment functions.”

Based on recent years’ random inspections of health foods, routine regulatory oversight, and case investigations, the pass rate of such inspections has been steadily increasing. Compared with international standards, China’s health food sector generally maintains a relatively high level of quality and safety. At present, the primary issues in the health‑food market include false and exaggerated advertising, and even the deceptive practice of touting products as miracle cures—problems that persist despite repeated prohibitions. Fraud and false advertising are deeply entrenched social ills, with broad implications and complex contributing factors; they are difficult to investigate and prove, necessitating comprehensive, multi‑stakeholder efforts to address them.

In response to the aforementioned issues, in July 2017, the State Council Food Safety Office and eight other departments jointly launched a special campaign to crack down on fraud and false advertising involving food and health products. In January 2019, the State Administration for Market Regulation, together with relevant authorities, initiated a 100-day campaign to address disorderly practices in the “health product” market. As of March 1, a total of 4,865 cases had been filed, with the total value of the cases reaching RMB 5.17 billion.

The special rectification campaign is not limited to a 100-day period; the key lies in establishing long-term mechanisms to consolidate its achievements. Going forward, market regulatory authorities will implement the following measures: First, introduce special warnings on health food labels to guide consumers toward informed and rational purchasing decisions. Second, standardize the functional claims made for health foods to prevent confusion with the disease‑prevention and treatment effects of pharmaceuticals. Third, conduct extensive public education and consumer‑awareness campaigns on health foods. Fourth, carry out targeted inspections and oversight to address false or misleading claims on health food labels and in product instructions.

Ministry of Ecology and Environment: Classified Treatment of Four Types of Wastewater Generated by the Xiangshui Explosion Accident

On March 21, an explosion occurred at Jiangsu Tianjiayi Chemical Co., Ltd., located in the Chenjiagang Chemical Industrial Park in Xiangshui County, Yancheng City, Jiangsu Province. The Ministry of Ecology and Environment attached great importance to the incident, with Minister Li Ganjie promptly issuing instructions calling for all-out assistance and support to local authorities in carrying out emergency environmental response measures, effectively preventing secondary environmental disasters, and dispatching personnel to the scene without delay. On March 26–27, Minister Li Ganjie traveled to the site to oversee the emergency response efforts.

To date, the highly acidic wastewater in the “large pit” at the core of the explosion site has been neutralized and transported via pipeline to the Jurong Chemical Wastewater Treatment Plant for temporary storage. The pipeline connecting the contaminated river (Xinfeng River) to the treatment plant has been completed, and a disposal plan has been finalized, laying the groundwork for subsequent compliant discharge. The top priority of this environmental emergency response is to treat the wastewater generated by the explosion, while closely monitoring surrounding rivers and waterways to ensure that not a single drop of untreated wastewater enters the external environment. The plan establishes a prioritized sequence of operations, with immediate focus on the accumulated water within the plant premises and the wastewater from the explosion‑induced pit, thereby facilitating on‑site cleanup and search‑and‑rescue efforts. In anticipation of possible rainfall over the next few days, the task force has simultaneously begun preparations to treat the water in the contaminated Xinfeng River, preventing further contamination from spreading beyond the affected area.

To date, the Ministry of Ecology and Environment has dispatched more than 50 experts from various sectors to the accident site to provide guidance, mobilized specialized emergency monitoring and response teams nationwide, and developed a corresponding emergency response plan. Following the incident, the Jiangsu Provincial Department of Ecology and Environment has deployed over 200 environmental monitoring personnel from across the province, along with staff from the Ministry’s Huai River Basin Water Environment Monitoring Center, to assist on the ground. Under the guidance of the working group, as of March 27, Jiangsu Province has deployed a total of 28 monitoring vehicles and more than 100 pieces of monitoring equipment, established six atmospheric monitoring stations around the blast site, and set up 14 additional water-quality monitoring cross‑sections along the Xinmin River, Xinong River, Xinfeng River, and Guan River. The authorities have promptly generated over 9,000 sets of monitoring data and, based on on‑site conditions, adjusted the monitoring strategy as needed, while also conducting timely soil and groundwater environmental monitoring at the explosion site.

JC Master Law Office

Address: 9th Floor, National Water Resources Building, No. 70 Qingjiang South Road, Nanjing City

Postal code: 210036

Phone: 025-84503333

Fax: 025-84505533

Website: www.jcmaster.com

This legal notice is provided solely for informational purposes and does not constitute legal advice or a legal analysis of any specific case. The transmission of this legal notice does not establish an attorney–client relationship between JC Master Law Office and the user or reader. JC Master Law Office assumes no responsibility for any third-party content accessible via the internet. If you do not wish to receive this legal notice, please notify us by email at jcm@jcmaster.com.

The copyright of this legal information is owned by JC Master Law Office ©. Without written permission, no organization or individual may reproduce, publish, or cite it in any form.