JC Master Legal News Issue 864

Key Takeaways for This Issue

The China Securities Regulatory Commission convened the 2019 Institutional Supervision Work Training Conference.

Recently, the 2019 Institutional Supervision Work Training Conference of the China Securities Regulatory Commission was held at the Shenzhen Capital Market Institute. Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, the conference studied and implemented the spirit of General Secretary Xi Jinping’s important speeches on financial work, carried out the decisions and arrangements of the Central Economic Work Conference and the CPC Committee of the CSRC, summarized the institutional supervision work of 2018, assessed the current regulatory landscape, and outlined the key tasks for institutional supervision in 2019. Li Chao, Member of the CPC Committee and Vice Chairman of the CSRC, attended the meeting and delivered a speech.

A new addition to the ranks of central state-owned enterprises: China Aneng has been placed on the SASAC’s list of supervised entities.

On the 4th, the website of the State-owned Assets Supervision and Administration Commission of the State Council issued an announcement adding China Aneng Construction Group Co., Ltd. to the list of enterprises over which the Commission exercises investor responsibilities.

A comprehensive plan to reduce social insurance contribution rates has been unveiled.

On April 4, the General Office of the State Council issued a comprehensive plan to reduce social insurance contribution rates, outlining a series of measures to lower these rates.

Ministry of Justice: Striving to resolve the issue of unpaid wages for rural migrant workers; an administrative regulation will be promulgated within the year.

The Ministry of Justice recently issued guidelines on effectively addressing the issue of unpaid wages to rural migrant workers. The guidelines emphasize the need to accelerate legislation to ensure timely wage payments and aim to promulgate, within this year, an administrative regulation designed to resolve the problem of wage arrears faced by rural migrant workers.

China has fully launched the development of medical consortiums.

At present, the development of medical consortia in China has been fully rolled out, with all tertiary public hospitals participating. Patient referral patterns have become more rational, two-way referrals are beginning to yield tangible results, regional healthcare resources are being shared, and the capacity of medical services has improved markedly.

Table of Contents

Table of Contents

Finance & Capital Markets

The China Securities Regulatory Commission convened the 2019 Institutional Supervision Work Training Conference.

The Shanghai Stock Exchange has appointed members to the first-term STAR Market Listing Committee, the Science and Technology Innovation Advisory Committee, and the Public Offering Self-Regulatory Committee.

The General Office of the CPC Central Committee and the General Office of the State Council have issued the “Guiding Opinions on Promoting the Healthy Development of Small and Medium-sized Enterprises.”

The China Securities Regulatory Commission and the French Financial Markets Authority have signed a Memorandum of Understanding on Innovation Cooperation in the Financial Sector.

With 900 billion yuan in debt weighing heavily on its shoulders, Greenland Holding has pressed ahead with a spree of acquisitions, completing four M&A deals in just three months.

Plunged into losses for four consecutive years, post-80s executive Zhu Yuan takes the helm—can Yurun Food turn things around?

Corporate & Commercial

A new addition to the ranks of central state-owned enterprises: China Aneng has been placed on the SASAC’s list of supervised entities.

A total of 85 drug approval numbers nationwide have been revoked, with Changchun Bio having 18 vaccine approvals canceled.

New Energy Vehicles: The Sharp Reduction in Subsidies Signals Three Key Trends

Boeing’s president said the company will temporarily cut production of the 737 MAX aircraft.

Taxation

A comprehensive plan to reduce social insurance contribution rates has been unveiled.

As the legislative term draws to a close, tax legislation is accelerating across the board in a concerted effort.

State Taxation Administration: Will Adjust Matters Related to the Issuance of Certificates of Chinese Tax Residency

Litigation & Arbitration

Ministry of Justice: Striving to resolve the issue of unpaid wages for rural migrant workers; an administrative regulation will be promulgated within the year.

China Banking and Insurance Regulatory Commission: Accelerate the promulgation of regulations on the handling of illegal fundraising.

Measures for the Administration of Road Freight Transport Operations on Online Platforms Are Open to Public Comment

Two departments have issued the “Measures for the Implementation of Building Industry–Education Integrated Enterprises (Trial)”

The Ministry of Emergency Management has promulgated the Measures for the Administration of Safety Evaluation, Testing, and Inspection Agencies.

Xu Fei, a suspect in an official-duty-related crime who had been on the run for 16 years, has been apprehended on suspicion of embezzlement.

Other

China has fully launched the development of medical consortiums.

The ninth round of high-level China-U.S. economic and trade consultations concluded successfully.

Finance & Capital Markets

The China Securities Regulatory Commission convened the 2019 Institutional Supervision Work Training Conference.

Recently, the 2019 Institutional Supervision Work Training Conference of the China Securities Regulatory Commission was held at the Shenzhen Capital Market Institute. Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, the conference studied and implemented the spirit of General Secretary Xi Jinping’s important speeches on financial work, carried out the decisions and arrangements of the Central Economic Work Conference and the CPC Committee of the CSRC, summarized the institutional supervision work of 2018, assessed the current regulatory landscape, and outlined the key tasks for institutional supervision in 2019. Li Chao, Member of the CPC Committee and Vice Chairman of the CSRC, attended the meeting and delivered a speech.

The meeting concluded that General Secretary Xi Jinping, in his recent important speeches on financial work, has laid out a well‑grounded plan for preventing and defusing financial risks, deepening supply‑side structural reform in the financial sector, promoting high‑quality development of the financial industry, and enhancing the ability of financial services to support the real economy. These directives serve as the fundamental guiding principles for advancing capital market reform and development, and also provide an action roadmap for strengthening institutional supervision and fostering high‑quality growth in the securities and fund industries. At present, as the real economy undergoes transformation and upgrading, with vigorous efforts to expand direct financing and the launch of the STAR Market along with the pilot registration‑based reform, higher standards are being set for intermediary institutions to fulfill their responsibilities and enhance their professional service capabilities—while at the same time creating significant opportunities for the development of the securities and fund sectors.

The meeting emphasized the need to resolutely implement the decisions and arrangements of the CPC Central Committee and the requirements of the Party Committee of the China Securities Regulatory Commission, demonstrating respect for the market, the rule of law, risks, and professional expertise; strengthening synergy; and advancing institutional supervision in a solid and steady manner. First, we must wage a tough battle to prevent and defuse major risks, focusing on identifying and addressing key risk factors, strictly preventing risk spillovers, and officely safeguarding the bottom line of systemic risk. Second, we will further refine the internal checks-and-balances mechanisms of industry institutions, intensify regulatory enforcement, and foster an industry ecosystem characterized by proactive compliance and self‑discipline. Third, we will strengthen the responsibilities of intermediary institutions across all stages—cultivating issuers, conducting bookbuilding and pricing, ensuring trading integrity, managing risks, and overseeing investor suitability—to ensure the smooth launch of the STAR Market and the pilot registration‑based reform. Fourth, we will deepen supply‑side structural reform in the financial sector, enhance policy guidance, bolster the comprehensive service capabilities of industry institutions, and adopt a multi‑pronged approach to channel and support medium- and long-term capital into the market, while supporting differentiated development among institutions and comprehensively enhancing the industry’s capacity to serve capital market reform and development as well as the transformation and upgrading of the real economy. Fifth, we will prioritize strengthening regulatory capacity and further improve the effectiveness of oversight.

Relevant leading officials from the Resident Discipline Inspection and Supervision Group, relevant departments of the CSRC headquarters, all dispatched agencies, and certain system-affiliated units attended the meeting.

The Shanghai Stock Exchange has appointed members to the first-term STAR Market Listing Committee, the Science and Technology Innovation Advisory Committee, and the Public Offering Self-Regulatory Committee.

Recently, in accordance with the overall plan for establishing the STAR Market and piloting the registration-based IPO system, and under the guidance and support of the China Securities Regulatory Commission, the Shanghai Stock Exchange has promptly established the STAR Market Listing Committee (hereinafter referred to as the Listing Committee), the Science and Technology Innovation Advisory Committee (hereinafter referred to as the Advisory Committee), and the Public Offering Self‑Regulatory Committee (hereinafter referred to as the Self‑Regulatory Committee). To ensure that the establishment of these three committees is open, fair, and impartial, and to enable them to effectively fulfill their critical roles in advancing the development of the STAR Market and the pilot registration‑based system, the Exchange has formulated work plans in line with relevant rules and regulations. Following due procedures, it has finalized the lists of members for the first terms of the Listing Committee, the Advisory Committee, and the Self‑Regulatory Committee, which are hereby made public today.

The first Listing Committee comprises 38 members drawn from accounting offices, law offices, universities, market institutions, and relevant bodies within the China Securities Regulatory Commission system. The majority serve on a part-time basis, with a broad and representative mix of backgrounds, and all possess the requisite qualifications to fulfill their duties. Listing Committee members will, in accordance with established procedures, undertake the Committee’s functions, providing oversight and scrutiny over the Exchange’s issuance and listing review processes, thereby enhancing the professionalism, authority, and public trust of the review work.

The first Advisory Committee comprises 48 members drawn from high-tech enterprises, investment institutions, research institutes, and other organizations. With a broad and representative composition, the committee brings together experts in science and technology innovation-related fields. All members serve on a part-time basis, fulfilling their duties in their individual capacities as independent experts. In accordance with established procedures, the Advisory Committee will undertake its advisory functions, providing expert advice on the advancement and cutting-edge nature of technologies or industrial applications relevant to the STAR Market, as well as offering technical support for the review process.

The first Self‑Regulatory Committee comprises 35 members, including 34 market‑institution members and 1 member from this exchange. The market‑institution members consist of 17 buy‑side offices and 17 sell‑side offices, all of which are major participants in the primary equity‑issuance market. The establishment of the Self‑Regulatory Committee is primarily intended to implement the requirement set forth in the “Implementation Opinions on Establishing the STAR Market at the Shanghai Stock Exchange and Piloting the Registration System” to “establish a market‑based issuance and underwriting mechanism for STAR‑Market stocks,” thereby ensuring the smooth and orderly conduct of STAR‑Market stock issuances and underwriting activities, leveraging industry self‑regulation, and fostering sound, stable market expectations. Following extensive consultation with the industry and voluntary applications from market institutions, and after a comprehensive assessment of factors such as industry influence, market reputation, and professional performance, a preliminary list of market‑institution members for the inaugural Self‑Regulatory Committee was drawn up. This list was subsequently approved by the exchange’s Board of Directors, officially finalizing the composition of the first Self‑Regulatory Committee. Recently, the inaugural committee convened its first working meeting, elected one chairperson and four vice‑chairpersons, and adopted its rules of procedure. The Self‑Regulatory Committee will discharge its duties through working meetings, providing advisory input on the formulation of policies related to STAR‑Market stock issuances and putting forward industry‑wide recommendations on matters such as stock issuance and underwriting.

Going forward, the SSE will strengthen disciplinary requirements for committee members’ performance of duties, standardize their working procedures, and ensure the orderly and efficient operation of the Listing Committee, the Advisory Committee, and the Self-Regulatory Committee, thereby playing a constructive role in the establishment of the STAR Market and the implementation of the registration-based IPO system.

The General Office of the CPC Central Committee and the General Office of the State Council have issued the “Guiding Opinions on Promoting the Healthy Development of Small and Medium-sized Enterprises.”

Recently, the General Office of the CPC Central Committee and the General Office of the State Council issued the “Guiding Opinions on Promoting the Healthy Development of Small and Medium-sized Enterprises” and circulated a notice requiring all regions and departments to conscientiously implement these guidelines in light of their specific circumstances.

The full text of the “Guiding Opinions on Promoting the Healthy Development of Small and Medium-sized Enterprises” is as follows.

Small and medium-sized enterprises (SMEs) are a vital driving force for national economic and social development, playing a key role in expanding employment, improving people’s livelihoods, and fostering entrepreneurship and innovation. They also contribute significantly to maintaining stable growth, advancing reform, optimizing the economic structure, enhancing public welfare, and mitigating risks. The CPC Central Committee and the State Council attach great importance to SME development, having introduced a series of policies and measures in areas such as fiscal and tax policies, financial support, the business environment, and public services, which have yielded positive results. At the same time, amid changes in both international and domestic market conditions, SMEs are increasingly confronted with pressing challenges, including rising production costs, difficulties and high expenses in accessing financing, and insufficient capacity for innovative development—issues that demand urgent attention. To promote the sound and sustainable development of SMEs, the following recommendations are hereby put forward.

I. Guiding Principles

Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, we will comprehensively implement the spirit of the 19th National Congress of the Communist Party of China and the Second and Third Plenary Sessions of the 19th CPC Central Committee. We will uphold and improve China’s basic socialist economic system, adhere to the “two unwavering commitments,” maintain the overarching principle of seeking progress while ensuring stability, and follow the new development philosophy. With supply-side structural reform as the main thread and improving the quality and efficiency of development as the central focus, and in accordance with the principle of competitive neutrality, we will foster a fair and convenient business environment, further stimulating the vitality and growth momentum of small and medium-sized enterprises (SMEs). We will earnestly implement the Law on the Promotion of Small and Medium-sized Enterprises, address the difficulties faced by SMEs, stabilize and bolster business confidence and expectations, strengthen support for innovation, enhance the specialized development capabilities of SMEs, and raise the level of integrated development among large, medium, and small enterprises, thereby promoting the sound and sustainable development of SMEs.

II. Fostering a Favorable Development Environment

(1) Further relax market access. Resolutely eliminate all unreasonable barriers and restrictions, fostering a fair competitive environment in areas such as market entry, administrative approvals, tendering and bidding, and military‑civilian integration, while ensuring ample market space. Continuously shorten the negative list for market access, promote the widespread implementation of the “anything not prohibited is permitted” principle, and maximize facilitation of market entry.

(II) Proactively serve small and medium-sized enterprises. Further deepen the “delegation, regulation, and service” reform for SMEs. Continue to advance commercial system reforms, making business registration and deregistration more convenient. Reform the environmental impact assessment (EIA) system, implement the filing‑based management of environmental impact registration forms, and reduce the EIA approval timeframe for projects to half the statutory limit. Fully enforce the fair competition review system, foster a market environment that is fair, open, and transparent, and eliminate all regulations and practices that impede the establishment of a unified market and fair competition. Actively provide services to enterprises, offering tailored support—“one policy for each enterprise”—to address the challenges they face in their development.

(3) Implement a fair and unified market regulation system. Innovate regulatory approaches by integrating oversight into the provision of services. Avoid adopting simplistic and heavy-handed measures against small and medium-sized enterprises in areas such as work safety supervision, environmental protection, and financial deleveraging. Deepen enforcement of antitrust and anti-unfair competition laws to ensure that SMEs can participate equitably in market competition. Officely safeguard the property rights and other legitimate rights and interests of enterprises and their investors; no organization or individual may infringe upon the property of SMEs or their lawful earnings. Strictly prohibit any practices that hinder or restrict the development of SMEs, and hold those who violate these provisions accountable.

III. Addressing the Challenges of Difficult and Expensive Financing

(1) Enhance financing policies for small and medium-sized enterprises. Further implement the targeted reserve requirement ratio reduction policy for inclusive finance. Increase the use of rediscounting to support micro and small businesses, with a particular focus on discounting small-value bills of exchange up to RMB 5 million. Expand the scope of the re-lending policy for supporting small businesses to include eligible small and medium-sized banks, including new‑type internet banks. Include loans to micro and small enterprises with outstanding credit lines of RMB 10 million or less in the eligible collateral pool for the Medium‑Term Lending Facility.

(II) Actively broaden financing channels. Further refine the bond issuance mechanism, implement bond‑financing support tools for private enterprises, and adopt a variety of measures—such as issuing credit risk mitigation certificates and providing credit enhancement services—to meet the reasonable bond‑financing needs of well‑managed private offices facing temporary liquidity constraints. Explore the introduction of equity‑financing support tools for private enterprises, and encourage the establishment of market‑oriented special funds to undertake mergers and acquisitions or make strategic investments in private companies. Vigorously develop high‑yield bonds, private placement bonds, special debt‑financing instruments for mass entrepreneurship and innovation, bonds linked to venture capital funds, and special bonds targeting innovative and entrepreneurial enterprises. Conduct research to facilitate financing for small and medium‑sized enterprises through receivables, supply‑chain finance, franchise rights, and other mechanisms. Improve the risk‑sharing and compensation mechanism for intellectual‑property‑pledge financing, thereby enhancing the role of intellectual property in boosting creditworthiness and expanding lending. Guide financial institutions to extend medium‑ and long‑term loans to micro and small enterprises and to develop loan‑renewal products.

(3) Support the use of capital markets for direct financing. Accelerate the initial public offering process for small and medium-sized enterprises, and provide facilitation for those with a clear core business and sound corporate governance. Deepen reforms in areas such as issuance, trading, and information disclosure, and support SMEs in raising funds through listings on the New Third Board. Advance pilot programs for bonds issued by innovative and entrepreneurial companies, and refine mechanisms for converting convertible bonds into equity. Study the possibility of allowing listed companies to issue convertible corporate bonds. Implement a system that links the share‑reduction ratio of venture capital funds inversely to their investment holding period, thereby encouraging and supporting early‑stage innovation and entrepreneurship. Encourage local intellectual property operation funds and other specialized funds to provide services that foster the innovative development of SMEs. For enterprises facing risks associated with pledged shares, develop appropriate transitional arrangements in accordance with market‑based and rule‑of‑law principles, and adopt risk‑prevention and mitigation measures tailored to each enterprise’s specific circumstances.

(4) Alleviate the financing burden on enterprises. Encourage financial institutions to expand policy‑based financing backed by export credit insurance and pledge‑based financing using export tax rebate accounts, thereby meeting the financial service needs of import and export enterprises. Accelerate the effective utilization of the National Financing Guarantee Fund, guide guarantee institutions to gradually eliminate counter‑guarantees, and reduce guarantee fees. Streamline and standardize mandatory requirements—such as guarantees, insurance, appraisals, and notarization—imposed in SME financing, thereby cutting ancillary costs and lowering overall financing expenses. Where such fees cannot be waived or reduced, local governments shall, based on actual conditions, formulate incentive and subsidy measures to encourage the reduction of fee standards.

(5) Establish a categorized regulatory and performance‑assessment mechanism. Study the possibility of relaxing the single‑borrower limit on the preferential risk‑weighting treatment for small and micro enterprise loans, thereby further freeing up commercial banks’ economic capital for extending such loans. Revise the performance‑evaluation measures for financial institutions, appropriately easing the requirements for assessment indicators to encourage greater credit allocation to small and micro enterprises. Guide banking and financial institutions to strengthen internal incentive‑alignment mechanisms for their small‑and‑micro‑business operations, optimize the allocation of credit resources, refine performance‑assessment frameworks, moderately reduce the weight of profit‑related metrics, and earmark dedicated incentive funds. Encourage the implementation of preferential internal fund‑transfer pricing for small‑and‑micro‑business activities; refine the management of non‑performing loan tolerance levels for small and micro enterprises, improve provisions on due diligence and liability exemption in credit granting, and intensify incentives for grassroots institutions to extend loans to private enterprises and small and micro businesses, thereby increasing the share of such lending. Enhance credit‑risk management capabilities and ensure the effective implementation of policies governing standardized service fees.

IV. Improving Fiscal and Tax Support Policies

(1) Enhance fiscal and tax support for financing of small and micro enterprises. Implement policies to reduce fees and provide subsidies for financing guarantees for small and micro enterprises, with the central government allocating incentive funds to encourage local governments to expand the scale of guarantee services in the real economy, thereby lowering financing guarantee costs. Further lower the eligibility thresholds for interest subsidies on entrepreneurial guarantee loans; the central government will allocate funds to support local governments in providing such subsidies and incentives, while also advancing related statistical monitoring and analytical work. Additionally, implement policies exempting from VAT the interest income earned by financial institutions on loans of RMB 10 million or less extended to small and micro enterprises and individual business households, as well as the policy allowing pre‑tax deduction of loan loss reserves.

(2) Alleviate the tax and fee burden on small and medium-sized enterprises. Streamline and standardize enterprise-related charges, and accelerate efforts to achieve zero administrative and public‑service fees at the local level. Implement substantive tax reductions, including value‑added tax cuts, and extend universal tax relief measures to micro and small enterprises as well as technology‑based start-ups. Based on actual conditions, reduce social insurance contribution rates to support SMEs in creating employment.

(3) Improve policies to support small and medium-sized enterprises (SMEs) in government procurement. Governments at all levels shall facilitate SMEs’ access to financing under government procurement contracts and, in accordance with the law, promptly disclose information such as government procurement contracts. Study and revise the Provisional Measures for Promoting the Development of SMEs through Government Procurement, adopting measures such as budgetary reservations, the removal of barriers, and preferential evaluation criteria to implement policies that foster SME development via government procurement. In government procurement activities, give priority to specialized, refined, distinctive, and innovative SMEs.

(4) Fully leverage the guiding and catalytic roles of various funds. Promote the National Fund for the Development of Small and Medium-sized Enterprises to adopt market‑oriented, corporate‑style governance and professional management, enabling it to support the growth of seed‑stage and early‑stage high‑growth SMEs and play an even greater role in facilitating the transformation and upgrading of SMEs and achieving high‑quality development. Vigorously advance the implementation and operation of the National Emerging Industry Development Fund and the Military‑Civilian Integration Industry Investment Fund, providing financing support to high‑quality enterprises in strategic emerging industries and military‑civilian integration sectors.

V. Enhancing Innovation and Development Capabilities

(1) Enhancing the innovation and entrepreneurship ecosystem. Strengthen central government financial support for technological innovation by small and medium-sized enterprises (SMEs). Increase support for SMEs’ scientific and technological innovation through national science and technology programs, while refining the mechanisms for project approval, task assignment, and organizational management, thereby substantially raising the proportion of R&D tasks undertaken by SMEs. Encourage large enterprises to open up and share resources with SMEs, fostering innovation networks that promote collaborative development among large, medium, and small enterprises along the innovation and industrial value chains. Promote specialized maker spaces to enhance their service capabilities, providing targeted support for innovation and entrepreneurship. Improve mechanisms for the open sharing of scientific and technological resources, encouraging research institutions and universities to establish online management platforms and efficient matchmaking systems, and facilitating access to major research instruments and experimental facilities for SMEs. Encourage SMEs to participate in the joint construction of national major scientific research infrastructures. The central government will allocate funds to support a number of national- and provincial-level development zones in developing distinctive platforms—such as those integrating large, medium, and small enterprises, attracting specialized capital, leveraging scientific and technological resources, or led by high-end talent.

(2) Effectively protect intellectual property. Leveraging the internet, big data, and other tools, strengthen IP protection through measures such as source‑level traceability, real-time monitoring, and online identification; accelerate the establishment of a punitive damages regime for infringement to raise the cost of illegal conduct and safeguard the innovative R&D achievements of small and medium-sized enterprises. Implement the SME Intellectual Property Strategy Promotion Project, conduct patent‑based strategic guidance to support SMEs’ technology R&D planning, and promote services such as IP counseling, early‑warning analysis, agency representation, and IP asset management.

(3) Guiding the specialized, refined, distinctive, and innovative development of small and medium-sized enterprises. Supporting SMEs in their transformation and upgrading, encouraging them to focus on their core businesses, strengthen their core competencies, and continuously improve the quality and level of their development, thus pursuing a path of specialized, refined, distinctive, and innovative growth. Conducting research to develop an evaluation system for such enterprises and establishing a dynamic enterprise database. Building on these specialized, refined, distinctive, and innovative SMEs, fostering a cohort of “little giant” enterprises—characterized by prominent core businesses, strong competitiveness, and robust growth potential—in key areas such as core basic components (devices), critical basic materials, advanced basic processes, and industrial technology foundations. Implementing a special project to promote integrated development among large, medium, and small enterprises, and creating a number of exemplary models and new business formats for such integration. Furthermore, cultivating pilot demonstration projects for manufacturing‑related mass entrepreneurship and innovation platforms in areas including resource aggregation, capability openness, model innovation, and regional cooperation, thereby elevating integrated manufacturing development to a new stage.

(4) Provide information technology services to small and medium-sized enterprises (SMEs). Promote the development of “Internet Plus SMEs,” encourage large enterprises and specialized service providers to build cloud‑manufacturing and cloud‑service platforms tailored for SMEs, develop products, solutions, and toolkits that meet SMEs’ needs for intelligent manufacturing, and enhance the support system for SMEs’ adoption of intelligent manufacturing. Facilitate the cloud‑based deployment of SME business systems, guide SMEs with the necessary foundations and capabilities to upgrade their production lines with smart technologies, and promote the deployment and application of low‑cost, modular intelligent manufacturing equipment and systems in SMEs. Vigorously work to reduce broadband dedicated‑line access fees for SMEs in central and western regions.

VI. Improving Service and Support Work

(1) Improve the public service system. Standardize the conduct of intermediary agencies and enhance the quality of services in accounting, legal, asset appraisal, information, and other fields. Prioritize providing small and medium-sized enterprises (SMEs) with high-quality, efficient services, including information consulting, business incubation, technical support, investment and financing, intellectual property management, financial and tax advisory, and legal counsel. Strengthen the development and nurturing of demonstration platforms for public services to SMEs. Establish an inter‑departmental online platform for disseminating policy information relevant to SMEs, promptly compiling laws and regulations, innovation and entrepreneurship initiatives, fiscal, tax, and financial policies, as well as measures for protecting SME rights and interests, thereby offering one‑stop access to comprehensive policy information. Put in place a robust system for statistical surveys, monitoring, analysis, and regular publication of data on SMEs.

(2) Promote the sharing of credit information. Further refine the directory of small and micro enterprises and actively advance bank–business cooperation. Leveraging the National Enterprise Credit Information Publicity System and the Small and Micro Enterprise Directory, establish and improve a comprehensive database for such enterprises. Relying on the National Public Credit Information Sharing Platform, build a nationwide integrated credit service platform for SME financing, develop the “Xinyidai” initiative, and share with commercial banks information on registration and filing, administrative licenses, administrative penalties, blacklists, as well as tax payments, social security contributions, utility bills, and warehousing and logistics data. This will help address information asymmetry between banks and enterprises, enhance the credit scores of well‑rated SMEs, and improve their access to loans.

(3) Attach great importance to cultivating the ranks of entrepreneurs. Continue to provide high‑level training for leading management personnel in small and medium-sized enterprises, thereby enhancing their managerial capabilities. Establish and improve an effective mechanism that tolerates failure, creating a favorable environment for entrepreneurs’ growth. Refine policies that ensure competitive remuneration and benefits, and refine the system of categorized performance evaluation. Foster a relationship between government and business that is both close and clean, encourage entrepreneurs to participate in the formulation of enterprise‑related policies, and give full consideration to their views and suggestions. Highlight exemplary entrepreneurs and vigorously promote the entrepreneurial spirit.

(4) Support international cooperation and exchanges. Optimize customs procedures, streamline administrative formalities, and reduce enterprises’ trade‑clearance costs. Deepen bilateral and multilateral cooperation, and strengthen exchanges and collaboration among SMEs in areas such as policy coordination, trade and investment, and scientific and technological innovation. Support eligible localities in establishing China–foreign SME cooperation zones. Encourage SME service institutions and industry associations to explore the establishment of “SME Centers” in countries and regions where conditions are ripe. Continue to successfully organize the China International SME Fair, and support SMEs in participating in domestic and international exhibitions and trade fairs.

VII. Strengthening Organizational Leadership and Coordinated Planning

(1) Strengthen support and coordinated guidance. Party committees and governments at all levels must earnestly implement the decisions and arrangements of the CPC Central Committee and the State Council on supporting the development of small and medium-sized enterprises (SMEs), proactively adopt targeted measures, and take initiative to help SMEs overcome practical difficulties in areas such as policy, financing, and the business environment. Relevant departments should intensify research into the problems confronting SMEs, promptly formulate solutions in accordance with their respective responsibilities, and actively promote effective practices. Furthermore, efforts should be made to strengthen the organizational structure and working mechanisms for promoting SME development, fully leveraging their roles in leadership, policy coordination, and guidance and oversight; clearly define departmental responsibilities and divisions of labor; enhance supervision and inspection; and ensure the effective implementation of policies.

(II) Strengthen oversight and evaluation of work. The Office of the State Council Leading Group for Promoting the Development of Small and Medium-sized Enterprises shall intensify its supervision of efforts to foster the sound development of SMEs, commission third-party institutions to conduct regular assessments of the business environment for SMEs, and publicly release the results. Local governments, based on their specific circumstances, shall organize and carry out assessments of the business environment for SMEs.

(3) Foster a favorable public opinion environment. Vigorously publicize the policies, laws, and regulations that promote the development of small and medium-sized enterprises (SMEs), underscore their vital role in the national economy and social development, and recognize exemplary models that have emerged in SME development and in efforts to support SMEs. By doing so, enterprises will gain a stronger sense of fulfillment and pride, thereby cultivating a positive social climate conducive to the healthy growth of SMEs.

The China Securities Regulatory Commission and the French Financial Markets Authority have signed a Memorandum of Understanding on Innovation Cooperation in the Financial Sector.

Recently, during Chinese President Xi Jinping’s state visit to France, the China Securities Regulatory Commission and the French Autorité des Marchés Financiers signed a Memorandum of Understanding on Innovative Cooperation in the Financial Sector. The two sides agreed to share information on developments in financial technology and related regulatory policies, and to strengthen their cooperation. In recent years, the rapid growth of financial technology has opened up vast opportunities for diversifying financial service models, promoting inclusive finance, and meeting investors’ financial needs, while also posing new demands and challenges for financial regulators worldwide. The signing of this memorandum is of great significance for China and France to promptly exchange information on fintech development and regulatory issues and to enhance regulatory collaboration. Furthermore, during President Xi Jinping’s visit to France, the securities regulators of both countries reached consensus on strengthening practical cooperation in the field of green finance and exploring ways to advance the interconnection of the two countries’ capital markets.

With 900 billion yuan in debt weighing heavily on its shoulders, Greenland Holding has pressed ahead with a spree of acquisitions, completing four M&A deals in just three months.

On March 19, Greenland Holding announced that it had won a bid of RMB 251 million to acquire a 65% stake in Shanghai Airlines Travel, a subsidiary of China Eastern Airlines. This marks the fourth M&A deal launched by Greenland Holding in less than four months. In January this year, the company acquired a 70% equity interest in Henan Provincial Highway Engineering Bureau Group for approximately RMB 800 million; on February 14, it spent RMB 12.1 billion to purchase a 50% stake and related creditor’s rights in Zhongmin Bund Real Estate Development Co., Ltd.; and on March 15, it secured a 50% equity interest in Shanghai Kaitai Real Estate from Ronsin China for RMB 1.005 billion.

However, Greenland Group, which has been making frequent large‑scale acquisitions, may face a less-than-optimistic financial outlook. According to data from Tianyancha, on the very day Greenland Holding announced its acquisition of the Dongjiadu project from China Minsheng Investment, its wholly owned subsidiary, Greenland Real Estate Group Co., Ltd., pledged its shares in Zhongmin Bund Real Estate Development Co., Ltd. to the Shibei Branch of the Bank of Shanghai, with the pledged equity valued at RMB 5 billion. At the same time, 79.72% of the shares held by Shanghai Greenland Lan Investment Enterprise, Greenland Holding’s largest shareholder, have also been pledged. Since 2019, Greenland Holding has further raised capital through its subsidiaries: on January 25, it issued US$300 million of fixed‑rate bonds with a coupon rate of 7.875%; and on March 14, it issued US$350 million of fixed‑rate bonds with a coupon rate of 7.25%.

In addition to financial pressures, Greeland Holding failed to meet its 2018 sales targets. According to data, the company recorded contracted sales of RMB 387.493 billion for the full year, up 26.4% year over year, ranking sixth on CRIC’s 2018 list of China’s top real estate developers—unchanged from its 2017 position. Notably, at the 2017 annual shareholders’ meeting, Chairman Zhang Yuliang stated that the company’s 2018 property sales target was RMB 400 billion. As of now, Greeland Holding has yet to formally release its 2018 financial results, but its liquidity situation can be gleaned from its third-quarter report.

As of the end of September 2018, Greeland Holding Group reported total assets of RMB 951.482 billion, up 23.4% year over year; total liabilities stood at RMB 849.735 billion, a 24% increase compared with the same period in 2017, resulting in an asset‑to‑liability ratio of 89.3%, the fifth highest among 119 A‑share‑listed real estate companies. Notably, non‑current liabilities due within one year and short-term borrowings combined to RMB 88.625 billion, while the company’s cash and cash equivalents totaled only RMB 72.668 billion during the same period. Consequently, it remains unclear where the funds for Greeland Holding’s four acquisitions this year originated, or whether its current aggressive acquisition strategy will further strain its liquidity.

However, some analysts note that Greenland Holding’s acquisition underscores the company’s strong capabilities in resource acquisition, financial reserves, industrial synergy, and project development as a major state-owned enterprise, while its low‑cost acquisition also provides solid assurance for expanding investment returns.

Plunged into losses for four consecutive years, post-80s executive Zhu Yuan takes the helm—can Yurun Food turn things around?

Amid the turmoil at Yurun Foods, Zhu Yuan, the daughter of Yurun Group President Zhu Yicai, has been thrust into the spotlight. The company has posted consecutive losses, with outstanding loans totaling HK$7 billion—this is the stark backdrop against which Zhu Yuan has taken over leadership of Yurun Foods. Although the post‑80s generation of female successors—including Liu Chang, Zong Fuli, and Xu Yangyang—has long been making waves in the food and beverage sector, each carving out a thriving career in her own field, the question now is whether Zhu Yuan, called upon to steer the company through crisis, can single-handedly turn the tide and pull Yurun back from the brink, drawing even greater attention from the outside world.

In 2018, Yurun Food’s average purchase price for live pigs fell by 18.0% compared with the previous year. Following a decline in mid-January, hog prices continued to drop for five consecutive months before registering a modest rebound in June. In early August, amid the impact of the African swine fever outbreak, pork prices plummeted, resulting in a substantial year-on-year decline across the country. At the same time, Yurun noted that, in response to industry volatility and the pandemic’s effects, consumers have become increasingly cautious about the safety of pork products. As a leading company in the sector, Yurun strengthened its epidemic‑prevention measures during this period, ensuring product safety and delivering safe, reliable offerings to consumers.

In addition, it is worth noting that Yurun Food’s net current liabilities amount to as much as HK$7.264 billion. According to official records, Yurun Holdings Group is a diversified conglomerate spanning seven major sectors: food, real estate, commerce, logistics, tourism, finance, and construction. Industry insiders point out that the group’s current predicament is closely linked to its reckless expansion strategy.

In fact, on March 27, in addition to the release of Yurun’s 2018 financial results, the market also took note of a major reshuffle of the company’s management. On the same day, Yurun Group issued an announcement regarding changes in the positions of the chairman of the board, chief executive officer, directors, and representatives on various board committees. The announcement stated that Yu Zhangli had resigned, for personal reasons, from his roles as an executive director, chairman of the board, member of the Nomination Committee, member of the Remuneration Committee, and authorized representative. At the same time, he also stepped down from his positions as legal representative, chairman, and/or director of the Group’s mainland China subsidiaries. In addition to Yu Zhangli, Li Shibao likewise resigned, for personal reasons, from his posts as an executive director and chief executive officer, while also relinquishing his roles as legal representative, chairman, and/or director of the Group’s mainland China subsidiaries.

Notably, following the resignations of Yu Zhangli and Li Shibao, Zhu Yuan—daughter of Zhu Yicai—has assumed the position. According to available information, Zhu Yuan holds a Bachelor of Commerce degree in Business Economics and Finance from the University of New South Wales, as well as a Master of Business Administration from the University of Technology Sydney. Prior to joining the Yurun Group, she accumulated more than six years of experience in human resources, financial analysis, and investment. Her appointment came just over two months after her father, Zhu Yicai, was released from residential surveillance on January 22.

In addition to management turmoil, Yurun Food’s financial performance has been highly disappointing in recent years. According to the data, the company reported losses of approximately HK$2.977 billion, HK$2.342 billion, and HK$1.915 billion in 2015, 2016, and 2017, respectively. In 2018, its losses widened further to HK$4.759 billion.

Now, having taken over the hot‑potato Yurun Group, can Zhu Yuan once again steer Yurun Foods back on track and pull off a successful transformation? Only time will tell.

Commercial & Corporate

A new addition to the ranks of central state-owned enterprises: China Aneng has been placed on the SASAC’s list of supervised entities.

On the 4th, the website of the State-owned Assets Supervision and Administration Commission of the State Council issued an announcement adding China Aneng Construction Group Co., Ltd. to the list of enterprises over which the Commission exercises investor responsibilities.

The announcement stated that, with the approval of the CPC Central Committee and the State Council, following its transformation into a state-owned enterprise, the Armed Police Hydropower Corps has adopted the name “China Aneng Construction Corporation.” At present, the enterprise has completed its corporate restructuring and has been renamed “China Aneng Construction Group Co., Ltd.,” and has been included on the list of enterprises for which the State-owned Assets Supervision and Administration Commission of the State Council exercises the duties of an investor on behalf of the State Council.

Including China Aneng, there are currently 97 central enterprises under the supervision of the State-owned Assets Supervision and Administration Commission of the State Council.

A total of 85 drug approval numbers nationwide have been revoked, with Changchun Bio having 18 vaccine approvals canceled.

On April 4, the National Medical Products Administration issued an announcement revoking the drug registration approvals for 85 pharmaceutical products, including ferritin radioimmunoassay kits. Of these, 19 approvals were revoked because the manufacturers had their Drug Production Licenses lawfully revoked; 53 were withdrawn at the manufacturers’ own initiative; and 13 were canceled due to the withdrawal of the relevant drug approval documents.

All 19 approval numbers revoked this time—on the grounds that “the Drug Production License has been lawfully revoked”—belong to Changchun Changsheng Bio‑Technology Co., Ltd. According to the announcement, 18 of these 19 revoked approval numbers pertain to vaccines, including the quadrivalent inactivated influenza vaccine, the live attenuated varicella vaccine, the adsorbed acellular pertussis–diphtheria–tetanus combined vaccine, the group A and C meningococcal polysaccharide vaccine, the freeze‑dried live attenuated hepatitis A vaccine, the whole‑virus inactivated influenza vaccine, the split‑virion influenza vaccine, the split‑virion H1N1 influenza vaccine, the freeze‑dried human rabies vaccine (Vero cell), the ACYW135 meningococcal polysaccharide vaccine, and the purified human rabies vaccine (hamster kidney cells). The remaining one is thymosin injection.

According to reports, among the drug approval numbers revoked in this announcement, 53 were voluntarily withdrawn at the request of the companies. Specifically, Chongqing Hanhua Pharmaceutical Co., Ltd. applied to cancel 34 approval numbers covering active pharmaceutical ingredients, tablets, and capsules. In addition, four foreign‑owned pharmaceutical companies submitted applications to revoke multiple dosage forms: mecobalamin injection manufactured by Eisai Co., Ltd. and its Misato Plant; meropenem for injection produced by Sumitomo Dainippon Pharma Co., Ltd.; darunavir tablets made by Janssen‑Cilag International NV; and gadofosveset injection from Liebel‑Flarsheim Company LLC.

On February 15 this year, the National Medical Products Administration (NMPA) issued an announcement stating that, following a re-evaluation conducted by the NMPA, compound formulations containing furazolidone have been found to be associated with serious adverse reactions, and that the risks of their use in China outweigh the benefits. Accordingly, the NMPA has decided to immediately suspend the production, sale, and clinical use of such formulations nationwide and revoke their drug approval certificates. At present, there are four approved compound formulations containing furazolidone available on the Chinese market: Compound Xue Dan Furazolidone Capsules, Furazolidone–Sophora Flavescens–Berberine Tablets, Two‑Dimensional Furazolidone Tablets, and Guhaisheng Tablets. A total of 12 pharmaceutical companies and manufacturers across the country produce these products. The recently released announcement covers all four categories of such formulations, resulting in the cancellation of 13 drug approval numbers due to the revocation of their approval certificates. The affected enterprises include Harbin Pharmaceutical Group Sanjing Mingshui Pharmaceutical Co., Ltd., CR Sanjiu (Ya’an) Pharmaceutical Co., Ltd., Henan Dingfukang Pharmaceutical Co., Ltd., Guizhou Shenqi Pharmaceutical Co., Ltd., Shanxi Jinxin Shuanghe Pharmaceutical Co., Ltd., Hainan Pharmaceutical Factory No. 1, and several other pharmaceutical offices.

New Energy Vehicles: The Sharp Reduction in Subsidies Signals Three Key Trends

Starting this year, China’s subsidies for new-energy vehicles will be significantly scaled back, with the subsidy for pure‑electric passenger cars declining by an average of 50%. This information was announced in the “Notice on Further Improving the Fiscal Subsidy Policy for the Promotion and Application of New‑Energy Vehicles,” recently issued by the Ministry of Finance and three other ministries.

According to reports, since 2009, the central government has vigorously supported the promotion and application of new‑energy vehicles, leading to a rapid expansion in China’s production and sales volumes. However, this growth has also given rise to several new challenges: the prolonged implementation of subsidy policies has fostered “subsidy dependency” among some enterprises, weakening their overall competitiveness; local protectionism persists, undermining the development of a unified and fair competitive environment and hindering efforts to scale up and strengthen the industry; and, as the number of vehicles in use continues to grow rapidly and their utilization rates increase, the operational safety risks associated with new‑energy vehicles are mounting, making it imperative to reinforce safety oversight to ensure the sector’s secure and sustainable development.

Since 2016, the Ministry of Finance and three other ministries have established a dynamic adjustment mechanism for new‑energy vehicle subsidy policies. To ensure a smooth transition for the industry, they have adopted a phased approach to gradually ease the pressure of policy adjustments: in 2019, subsidy levels were reduced by an average of 50% compared with 2018, with the full phase‑out scheduled to be completed by the end of 2020. Just as a newborn requires a cradle and a toddler needs support, fiscal subsidies have played a crucial role in guiding and catalyzing innovation and development in the new‑energy vehicle sector. However, both the cradle and the support will eventually give way as the industry matures; once fully grown, the sector will rely entirely on its own momentum to forge ahead. In recent years, China has steadily raised the technological thresholds for these subsidies while accelerating their gradual reduction, with the ultimate goal of phasing out all subsidies by 2020.

In 2018, China’s automotive market experienced an overall decline, yet new‑energy vehicles posted robust growth. Alongside this rapid expansion, the domestic new‑energy vehicle industry saw marked improvements in the technological capabilities of both complete vehicles and key components, significantly enhancing its overall competitiveness. The sector has transitioned from its nascent stage into a period of growth, with evident economies of scale and substantial reductions in the costs of power batteries and finished vehicles. According to reports, relevant government departments conducted comprehensive, in‑depth research and analysis on the product technologies and cost structures of leading domestic and international new‑energy vehicle manufacturers, while also forecasting future development trends. They concluded that the rationale for lowering new‑energy subsidies is rooted in technological progress, changes in costs, economies of scale, and the broader dynamics of both domestic and global industry development.

At present, China’s new‑energy vehicle market share has already reached half of the global total. However, the consumer‑use environment still requires improvement: in some regions, insufficient investment in the usage phase and inadequate charging and other ancillary infrastructure have become key constraints on industry development. Accordingly, the Notice calls on local authorities to refine their policies: after the transition period, purchase subsidies will no longer be provided for new‑energy vehicles—except for new‑energy buses and fuel‑cell vehicles—and will instead be redirected to support the development of “weak‑link” charging (and hydrogen‑refueling) infrastructure as well as related operational services. With subsidies being significantly scaled back, the industry is poised to move to the next stage of growth. The overarching goal of national policy is to promote healthy competition and survival of the fittest while preventing sharp market fluctuations. Industry insiders predict that 2019 will mark a pivotal moment for China’s new‑energy vehicle sector, with long‑awaited solutions to consumers’ key pain points—such as range—expected to materialize.

Boeing’s president said the company will temporarily cut production of the 737 MAX aircraft.

On the 5th, Dennis Muilenburg, CEO of Boeing, issued a statement saying that the company will temporarily reduce production of the 737 MAX series and plans to establish a dedicated committee to review its aircraft design and development policies and procedures.

Muilenburg said that, starting in mid-April, Boeing will temporarily reduce its monthly production rate of the 737 MAX family from 52 aircraft to 42, in response to the suspension of deliveries, and will focus resources on updating and certifying the relevant software and other related tasks.

He emphasized that the company is working closely with its customers and plans to collaborate with suppliers to develop production schedules, aiming to minimize the financial impact of the 737 MAX fleet grounding and changes in production rates.

Muilenburg reiterated that the two recent crashes involving Boeing 737-8 aircraft—part of the 737 MAX family—were triggered by a chain of events, with the erroneous activation of the Maneuvering Characteristics Augmentation System (MCAS), an automated system designed to prevent stall, serving as a common factor. “Eliminating this risk is our responsibility,” he said, adding that the company is making progress on software updates for the 737 MAX series to prevent such accidents from recurring.

Muilenburg also announced that he has asked Boeing’s board of directors to establish a committee to review the company’s aircraft design and development policies and processes, ensuring the safety of the 737 MAX series as well as other models. The committee will be chaired by Edmund Giambastiani, former Vice Chairman of the U.S. Joint Chiefs of Staff.

Taxation TAXATATION

A comprehensive plan to reduce social insurance contribution rates has been unveiled.

On April 4, the General Office of the State Council issued the Comprehensive Plan for Reducing Social Insurance Contribution Rates (hereinafter referred to as the “Plan”), which sets out a series of measures to lower these rates.

In line with earlier measures to reduce social security contribution rates, effective May 1, 2019, local authorities may lower the employer contribution rate for urban employees’ basic pension insurance from the previously mandated 20% to 16%. The current plan also stipulates that for regions where the current contribution rate is already below 16%, transitional arrangements must be studied and proposed.

With regard to the continued phased reduction of unemployment insurance and work‑injury insurance contribution rates, the plan stipulates that, effective May 1, 2019, provinces currently applying a total unemployment insurance rate of 1% will extend the period of this temporary rate reduction until April 30, 2020. Furthermore, also effective May 1, 2019, the temporary reduction in work‑injury insurance rates will be extended through April 30, 2020: for pooled areas where the accumulated surplus of the work‑injury insurance fund can cover 18 to 23 months of benefits, the current rate may be reduced by 20%; for pooled areas with a surplus sufficient to cover 24 or more months of benefits, the current rate may be reduced by 50%.

With regard to the adjustment of social security contribution‑base policies, the plan proposes revising the methodology for calculating the average wage of employed persons. Each province shall determine the upper and lower limits of individual social security contribution bases by using a comprehensive measure of the average wage of urban employees, weighted from the average wages of employees in non‑private urban units and those in private urban units. This approach will help reasonably reduce the contribution bases for certain insured individuals and enterprises. Following the revision of the average‑wage calculation methodology, all provinces are required to formulate transitional measures for the basic pension calculation and payment rules, ensuring a smooth and stable transition in benefit levels for retirees.

Meanwhile, the plan proposes to refine the policies governing the contribution base for individual business households and flexibly employed persons. When participating in the basic enterprise employee pension insurance, these groups may choose a contribution base ranging from 60% to 300% of the province’s average wage of urban employees across all sectors.

With regard to advancing provincial-level pooling of pension insurance, the plan stipulates that each province should, in conjunction with measures such as reducing the employer contribution rate and adjusting social security contribution base policies, accelerate the implementation of provincial-level pooling for basic pension insurance for enterprise employees. It also calls for the gradual standardization of policies related to enrollment and premium contributions, as well as the methods for determining contribution bases for both employers and individuals, with the goal of achieving province-wide unified collection and disbursement of basic pension insurance funds for enterprise employees by the end of 2020.

Meanwhile, with regard to increasing the central pooling ratio of the pension insurance fund, the plan proposes raising it to 3.5% in 2019, further balancing the financial burden of pension insurance across provinces and ensuring that basic pensions for enterprise retirees are paid on time and in full.

With regard to steadily advancing the reform of the social security premium collection system, the plan stipulates that, in principle, contributions for enterprise employees’ basic old-age insurance and other types of enterprise employee insurance will continue to be collected under the existing framework, ensuring stability in payment methods and implementing a “transfer one province as it matures” approach. Meanwhile, responsibilities for collecting and administering social security premiums for government agencies and public institutions, as well as for urban and rural residents, will be transferred on schedule. The departments of human resources and social security, taxation, finance, and medical insurance are required to promptly push forward the development of information-sharing platforms and related initiatives, strengthen information sharing, and ensure the orderly transition of collection operations. Furthermore, historical arrears owed by enterprises must be handled appropriately; during the course of the collection system reform, no unilateral, centralized clearance of such arrears shall be undertaken, nor shall any measures be adopted that would increase the actual contribution burden on small and micro‑enterprises, so as to prevent adverse impacts on their production and operations. At the same time, the 2019 budget for social security fund revenues should be adjusted in a reasonable manner.

As the legislative term draws to a close, tax legislation is accelerating across the board in a concerted effort.

The implementation of the principle of tax legality in China has entered a fast track, with multiple tax‑related legislative initiatives now entering a phase of intensive, all‑out efforts. To date, eight existing tax categories have been codified into law. In line with the goal of achieving tax legality by 2020, substantive legislation for another eight taxes, along with a procedural statute—the Law on the Administration of Tax Collection—remains pending. Relevant authorities are currently working at full speed to advance preparatory work and finalize the legislative timetable. Industry experts anticipate that the Resource Tax, the Urban Maintenance and Construction Tax, and the Stamp Duty could be enacted within the year, while the Law on the Administration of Tax Collection is likely to be submitted for deliberation this year. Meanwhile, for laws such as the Value‑Added Tax Law—whose content involves major tax‑system reforms—substantial progress in drafting and related matters is expected to be made within the year as well.

During this year’s Two Sessions, Wu Ritu, Vice Chairman of the Financial and Economic Affairs Committee of the National People’s Congress, stated that, to date, the NPC Standing Committee has enacted the Environmental Protection Tax Law, the Tobacco Leaf Tax Law, the Ship Tonnage Tax Law, the Vehicle and Vessel Tax Law, the Cultivated Land Occupation Tax Law, and the Vehicle Acquisition Tax Law; amended the Corporate Income Tax Law and the Individual Income Tax Law; and conducted a first reading of the draft Resource Tax Law. Moving forward, the Financial and Economic Affairs Committee will urge relevant departments to expedite the drafting of laws including the Value-Added Tax Law, the Consumption Tax Law, the Real Estate Tax Law, the Customs Tariff Law, the Urban Maintenance and Construction Tax Law, the Deed Tax Law, the Stamp Tax Law, and the revised Tax Collection and Administration Law, while ensuring thorough preliminary reviews of these drafts to guarantee the timely completion of legislative tasks aimed at implementing the principle of tax legality. Meanwhile, the Ministry of Finance’s recently released 2019 legislative plan indicates that this year it will strive to finalize, within the year, the internal drafting of the Value-Added Tax Law, the Consumption Tax Law, the Stamp Tax Law, the Urban Maintenance and Construction Tax Law, the Land Appreciation Tax Law, and the Customs Tariff Law, and to submit them promptly to the State Council.

An official from the Ministry of Finance pointed out that, in recent years, China has vigorously advanced tax reform, worked to establish a modern tax system, and introduced a series of comprehensive reform measures, achieving significant progress. These efforts include the full-scale rollout of the pilot program to replace business tax with value-added tax and the deepening of VAT reforms; the refinement of the consumption tax system, with adjustments to the scope of taxation and the stages at which taxes are levied, as well as an optimized tax rate structure; and the advancement of reforms to the resource tax and the environmental protection tax, with the Environmental Protection Tax Law officially coming into effect on January 1, 2018.

An official from the Ministry of Finance also emphasized the need to strike a balance between tax legislation and tax‑system reform, ensuring that reforms are carried out within the framework of the rule of law and based on sound legal grounds. For tax legislation involving major reforms, pilot programs can be used to test and refine policies and accumulate practical experience. Legislation serves to better guide and regulate reform, safeguard its outcomes, and at the same time leave room for future adjustments. The principle of tax legality should be leveraged to consolidate and advance tax‑system reform; the ultimate result of such reform will primarily take the form of the establishment, amendment, and statutory codification of individual taxes—namely, the enactment of substantive tax laws. Tax‑system reform and tax‑law development constitute the twin engines and integrated pillars for implementing tax legality. Tax legality and reform must be closely coordinated: major reforms should be grounded in law, with their outcomes enshrined through legislative measures; meanwhile, the implementation of tax legislation should provide guidance for advancing tax‑system reform, and the fruits of that reform should be solidified by law. Reform and legislation must not be set in opposition to one another; reform should proceed within the bounds of the rule of law, while at the same time using reform to further the realization of tax legality. The implementation of tax legality is an ongoing process of building consensus—a complex and arduous undertaking whose impact extends far beyond any single measure. It must not be pursued merely for the sake of compliance; each step should be advanced prudently, officely rooted in China’s actual conditions, addressing both the current stage and the long term.

State Taxation Administration: Will Adjust Matters Related to the Issuance of Certificates of Chinese Tax Residency

The State Taxation Administration recently issued the “Announcement on Adjusting Matters Related to the Certificate of Chinese Tax Residency” (hereinafter referred to as the “Announcement”). The Announcement states that, effective May 1, adjustments will be made to the procedures for issuing certificates of Chinese tax residency. In accordance with the newly revised Individual Income Tax Law and its implementing regulations, the threshold for an individual to be considered a tax resident in China has been adjusted from one year to 183 days.

The Notice clarifies that applicants seeking to obtain a Certificate of Tax Residency shall submit the following documents to the competent tax authority:

(1) Application Form for the Certificate of Chinese Tax Residency;

(2) Supporting documents related to the income for which tax treaty benefits are sought, including contracts, agreements, board or shareholders’ resolutions, and relevant payment vouchers;

(3) If the applicant is an individual and has a domicile within China, they shall submit supporting documentation demonstrating habitual residence in China due to household registration, family ties, or economic interests, including the applicant’s identity information and a description of their residential status, among other relevant materials.

(4) If the applicant is an individual without a domicile in China but has resided in China for a cumulative period of at least 183 days within a tax year, they shall provide documentation substantiating their actual residence in China, including entry and exit records and other relevant materials.

(5) When domestic and overseas branches submit applications through their head office, they must also provide information on the registration status of both the head office and the branch.

(6) When a Chinese resident partner of a partnership enterprise submits an application as the applicant, it must also provide information on the partnership’s registration and incorporation.

The aforementioned information submitted or provided shall be in Chinese. If the original documents are in a foreign language, a Chinese translation thereof shall be submitted concurrently. When an applicant submits photocopies of the aforementioned materials to the competent tax authority, such copies shall bear the applicant’s seal or signature. Upon verification of the originals, the competent tax authority shall retain the photocopies.

In light of the reform of the tax collection and administration system for both national and local taxes, as well as the provisions of the new Individual Income Tax Law, the following key adjustments have been made on the basis of the existing regulations:

Adjustment of the accepting and issuing authority. In accordance with the requirements of the reform of the national and local tax administration system, following the official launch of the new tax authorities, they will assume the administrative and collection responsibilities previously performed by the former national and local tax authorities. Accordingly, the accepting and issuing authority for the Certificate of Tax Residency has been changed to the name of the new county-level tax authority; however, the procedures for acceptance and application remain unchanged.

Adjustments have been made to certain issuance requirements. In accordance with the newly revised Individual Income Tax Law and its implementing regulations, the threshold for determining tax residency in China has been adjusted from one year to 183 days; accordingly, the documentation required for applying for a Certificate of Tax Residency has been revised and clarified.

Streamline certain tax-related documentation. In accordance with the newly revised Individual Income Tax Law and its implementing regulations, as well as the requirement to simplify tax‑related materials, we have streamlined the documents required for submission, making the supporting documentation clearer and more concise.

Revise and adjust the form formats. In light of the relevant adjustments outlined in the Announcement and the institutional reform, and in alignment with international practices, the application forms and the format of the Certificate of Tax Residency have been updated accordingly.

LITIGATION & ARBITRATION

Ministry of Justice: Striving to resolve the issue of unpaid wages for rural migrant workers; an administrative regulation will be promulgated within the year.

The opinion states that, at present and for the foreseeable future, implementing measures to eradicate wage arrears is a key task for judicial administrative organs in deepening their practice of serving the people. Judicial administrative organs at all levels should approach this work with profound concern for migrant workers and all laborers, place the eradication of wage arrears high on their agenda, and devote themselves wholeheartedly to its effective execution.

The opinion proposes accelerating the legislative process to ensure timely wage payments. The Ministry of Justice will actively collaborate with the human resources and social security authorities in conducting research on wage‑payment legislation, proactively engaging at an early stage and assigning dedicated personnel to closely monitor developments. Focusing on such issues as market irregularities in the construction sector and the low legal costs associated with wage arrears, the draft will prioritize targeted analysis and tailored policy measures. It will further clarify responsibilities for wage payment, strengthen penalties for violations involving wage defaults, and strike a balance between enterprise development and the protection of individual rights, thereby enhancing the relevance, scientific basis, and timeliness of the legislation. Legislative work will be expedited, with prompt review and revision underway, and the draft will be submitted without delay to the State Council Executive Meeting for deliberation, with the aim of enacting an administrative regulation this year to address the problem of unpaid wages for rural migrant workers.

In addition, the guidelines propose a range of measures to effectively eradicate wage arrears, including: strengthening coordination and oversight of labor inspection and administrative law enforcement; conducting comprehensive surveys and health assessments of migrant workers’ employment contracts; shifting the resolution of wage‑arrears disputes from centralized mediation to timely, on‑site settlement; carrying out targeted public legal education and law‑based governance in the field of wage‑arrears eradication; providing robust legal aid to safeguard workers’ rights; innovating notarial services to support efforts to eliminate wage arrears; and coordinating all legal services related to protecting workers’ rights in cases of wage arrears.

The opinions also call on judicial authorities at all levels to proactively coordinate with departments such as finance, human resources and social security, and banks, thereby pooling efforts to eradicate wage arrears, enhance work efficiency, and improve outcomes. It is essential to establish a long-term mechanism, conduct in-depth field investigations to identify key and difficult issues, and formulate targeted solutions. Emphasis should be placed on leveraging credit-based measures, strengthening the management of the “blacklist” for wage arrears, implementing joint punitive measures against those who失信 (lose trust), and improving the institutional framework for the prevention and resolution of wage‑arrear problems.

China Banking and Insurance Regulatory Commission: Accelerate the promulgation of regulations on the handling of illegal fundraising.

The 2019 Inter-Ministerial Joint Conference on the Handling of Illegal Fund-Raising (Expanded Meeting) was held in Beijing yesterday. Guo Shuqing, Convenor of the Joint Conference, Secretary of the Party Committee of the People’s Bank of China, and Chairman of the China Banking and Insurance Regulatory Commission, attended the meeting and delivered a speech. The meeting comprehensively reviewed the work carried out in 2018 to prevent and address illegal fund-raising, analyzed and assessed the current situation, and formulated plans for the next phase of efforts.

The meeting called for accelerating the promulgation of the Regulations on the Handling of Illegal Fund-Raising. It emphasized the need to meticulously revise and refine these regulations and to expedite the legislative process. Furthermore, it urged the prudent and orderly crackdown on illegal fund-raising in the internet finance sector, while closely monitoring illicit fundraising activities disguised under such guises as “private equity funds,” “elderly care and poverty alleviation,” “military‑civilian integration,” and “film and cultural industries.”

The meeting noted that in 2018, all member units of the Joint Conference played an active role, and provincial-level people’s governments conscientiously fulfilled their responsibilities as primary persons in charge. As a result, efforts to address illegal fundraising achieved significant progress, making positive contributions to preventing and defusing financial risks and safeguarding overall social stability. First, local responsibility was progressively strengthened at every level. Localities incorporated the handling of illegal fundraising into their three-year campaigns to prevent and resolve major risks. Second, member agencies markedly intensified their efforts. The Central Political and Legal Commission further enhanced its comprehensive assessment of anti‑illegal‑fundraising work. The Ministry of Public Security launched special operations to crack down on illegal fundraising crimes for two consecutive years. Meanwhile, the Supreme People’s Procuratorate, together with the Supreme People’s Court and the Ministry of Public Security, promptly formulated guidelines for handling criminal cases involving illegal fundraising. Progress was also made in rectifying internet finance, identifying risks in private equity funds, and combating illegal commercial insurance activities. Third, major and high‑profile cases were handled prudently. The resolution of the three landmark cases—“e‑Zubao,” “Kunming Pan‑Asia,” and the “Qianbao Group”—advanced in an orderly manner. Local authorities adopted robust measures to address risks posed by online lending platforms, and public security organs initiated investigations into more than 380 such platforms suspected of illegal fundraising. Fourth, early‑warning and monitoring systems began to yield tangible results. Twenty-one provinces, autonomous regions, municipalities directly under the central government, and four cities separately listed in the national plan have developed big‑data monitoring platforms. Localities removed over 990,000 advertisements suspected of promoting illegal fundraising, identified 13,000 potential risk clues, urged more than 10,000 enterprises to make corrections, and filed cases against over 1,300 entities. Fifth, outreach and public education continued to expand their reach.

The meeting also noted that the current situation regarding illegal fundraising remains grave, with a surge in new cases occurring alongside a backlog of unresolved ones, concentrated risks across specific regions and sectors, pronounced cross‑border online activity, and a large and widespread base of participants. From the perspective of addressing illegal fundraising, challenges persist, including outdated laws and regulations, insufficient capacity at the grassroots level, and an external environment that urgently requires improvement. While squarely acknowledging the severity of the situation, it is equally important to maintain composure and uphold confidence.

The meeting outlined the following key priorities for this year: First, further refine working mechanisms. By year’s end, ensure full coverage at the provincial, municipal, and county levels of the leadership framework for addressing illegal fundraising. Incorporate prevention and response to illegal fundraising into the comprehensive performance assessments of leading teams and officials, as well as into annual target‑based performance evaluations. Second, accelerate the promulgation of the Regulations on the Handling of Illegal Fundraising. Diligently revise and improve these regulations, expediting the legislative process. Conduct research on common challenges—such as criteria for criminalizing illegal fundraising, application of relevant offenses, recovery of illicit proceeds and mitigation of losses, and disposition of assets involved—to further refine criminal law provisions. Third, manage case‑related risks in a prudent and orderly manner. Adopt a coordinated approach to steadily and systematically crack down on and resolve illegal fundraising activities in the internet finance sector. Pay close attention to schemes masquerading under such banners as “private equity funds,” “elderly care and poverty alleviation,” “military‑civilian integration,” and “film and cultural industries.” Continue to advance the three‑year campaign to address longstanding illegal fundraising cases, expediting the clearance of backlogged and unresolved matters. Fourth, vigorously strengthen the monitoring and early‑warning system. Speed up the development of a national risk‑prevention platform for illegal financial activities, and complete high‑quality drafting of the three‑year plan for a nationwide monitoring and early‑warning framework for illegal fundraising. Continuously promote reward programs for reporting, risk screening, and grassroots grid‑based governance. Fifth, innovate approaches to enhance public outreach. Leverage the roles of local governments, relevant departments, industry associations, and financial institutions to actively build multi‑tiered communication channels. Further increase the placement of public service advertisements in mainstream media, optimizing broadcast schedules. Strengthen cooperation with various new media platforms to effectively secure online publicity space. Sixth, advance whole‑chain governance. Ensure effective implementation of licensing and franchising principles in the financial sector, rigorously vetting enterprise entry. Intensify oversight of key areas such as online lending, private equity funds, and investment‑management products. Promptly formulate regulatory rules for financial advertising, resolutely investigating and removing advertisements and information suspected of promoting illegal fundraising. Enhance monitoring of fund‑flow anomalies and risk‑prevention measures within financial institutions. Coordinate anti‑illegal‑fundraising efforts with the development of a social credit system, ensuring that once an entity is flagged for illegal fundraising, it faces restrictions across all sectors. Strive to bolster public awareness and vigilance, embedding the principle that “high returns entail high risks” in the collective mindset.

Measures for the Administration of Road Freight Transport Operations on Online Platforms Are Open to Public Comment

Based on a comprehensive review and summary of the pilot program for non‑asset‑based freight forwarders, the Ministry of Transport has drafted the “Administrative Measures for the Operation of Road Freight Transportation via Online Platforms (Draft for Public Comment)” and is now soliciting public feedback. The deadline for submitting comments is May 1, 2019.

Under these Measures, a “network freight operator” refers to a road freight transport operator that leverages an internet platform to integrate and allocate transportation resources, enters into transportation service contracts with shippers in the capacity of a carrier, assumes carrier liability, and commissions an actual carrier to perform the transportation services. An “actual carrier” means a road freight transport operator that, upon being entrusted by the network freight operator, uses vehicles and drivers that meet the requisite qualifications to directly provide transportation services.

The draft for public comment explicitly encourages online freight operators to leverage technologies such as big data, cloud computing, satellite positioning, and artificial intelligence to integrate resources and adopt multimodal transport, drop-and-pull transportation, and collaborative delivery models, thereby achieving scaled and intensive transportation operations.

In August 2016, the Ministry of Transport launched a pilot program nationwide for freight‑forwarding without owning vehicles. According to the comprehensive monitoring and evaluation conducted in September 2018, the pilot program continued to face challenges, including low matching rates between waybills and financial transaction records, a high rate of abnormal vehicle positioning, and lax vehicle qualification reviews.

In response to issues identified during the pilot program, the draft for public comment stipulates that online freight operators’ internet platforms must connect to the provincial transportation authorities’ monitoring system and, in accordance with relevant technical specifications, upload waybill data, including basic information on the actual carrier, vehicle, and driver, as well as details on the origin and destination of the shipment, the time of pickup and delivery, the type and weight of the cargo, transportation charges, and invoice information for road and bridge tolls.

Two departments have issued the “Measures for the Implementation of Building Industry–Education Integrated Enterprises (Trial)”

On the 3rd, the National Development and Reform Commission and the Ministry of Education issued the “Measures for the Establishment of Industry–Education Integrated Enterprises (Trial),” which stipulates that such enterprises shall be established in accordance with the fundamental principles of government guidance, voluntary participation by enterprises, equal and merit-based selection, construction prior to certification, and dynamic implementation.

The Measures shall enter into force as of the date of their promulgation. Under these Measures, China will prioritize the development and cultivation of high‑quality enterprises that proactively drive the transformation and upgrading of the manufacturing sector, as well as enterprises in urgently needed industries such as modern agriculture, intelligent manufacturing, high‑end equipment, next‑generation information technology, biopharmaceuticals, and energy conservation and environmental protection. Additionally, leading enterprises in social sectors—including elderly care, domestic services, childcare, and health—will be given priority. Priority will be accorded to companies that closely support major national strategies, demonstrate strong demand for technical and skilled personnel, actively increase investment in human capital, possess significant growth potential, and make outstanding contributions to fulfilling their social responsibilities.

Deepening the integration of industry and education is a reform task explicitly outlined in the report of the 19th National Congress of the Communist Party of China. According to a responsible official from the National Development and Reform Commission, establishing industry–education‑integrated enterprises—while strengthening government guidance and reinforcing enterprise leadership—will transform the societal consensus that “talent is urgently needed” into concrete actions that “invest in people.” This approach not only meets the demands of vocational education reform and aligns with enterprises’ own development needs, but also represents a crucial strategy for advancing high‑quality economic growth.

According to the Measures, enterprises within provincial administrative regions shall carry out the development and implementation of industry–education integration enterprises following a procedure that includes voluntary application, review and conofficeation, capacity-building and cultivation, and certification and evaluation. Central enterprises and large-scale national private enterprises may submit a consolidated application to establish national industry–education integration enterprises, which will be deployed and implemented jointly by the National Development and Reform Commission and the Ministry of Education, in coordination with relevant departments.

The Measures stipulate that all localities shall implement the state’s preferential policies supporting enterprises’ participation in vocational education, and, in conjunction with pilot programs for industry–education integration, provide facilitative support services—covering project approval, service procurement, financial assistance, and land-use policies—to enterprises engaged in building and nurturing such initiatives. Enterprises included on the certification roster will receive a bundled package of incentives—financial, fiscal, land‑related, and credit‑based—and will have relevant tax policies applied in accordance with regulations. These incentive measures are linked to activities such as enterprises’ investment in establishing vocational education programs, hosting student internships and practical training, providing opportunities for teachers to gain hands-on experience, engaging in in-depth school–enterprise collaborations, and constructing industry–education integrated training bases. Enterprises listed on the certification roster must establish and implement an annual reporting system for advancing industry–education integration and make their performance publicly available to the general public.

The Ministry of Emergency Management has promulgated the Measures for the Administration of Safety Evaluation, Testing, and Inspection Agencies.

Today, the Ministry of Emergency Management publicly released the Measures for the Administration of Safety Assessment, Testing, and Inspection Agencies, which stipulates that such agencies and their practitioners shall not engage in any of 11 prohibited practices when conducting safety assessments, testing, or inspections in violation of applicable laws and standards.

The Measures stipulate that safety assessment, testing, and inspection agencies and their practitioners shall, in accordance with laws, regulations, rules, and standards, adhere to the principles of scientific impartiality, independence and objectivity, safety and accuracy, and honesty and trustworthiness, as well as professional codes of conduct; they shall independently carry out safety assessments and testing and inspections, and shall be responsible for the results thereof.

The Measures stipulate that safety assessment, testing, and inspection agencies and their practitioners shall not engage in any of the following activities: (1) conducting safety assessments, tests, or inspections in violation of applicable laws and standards; (2) engaging in safety assessment, testing, or inspection without meeting the required qualification criteria or while holding an expired qualification; (3) undertaking legally mandated safety assessments, tests, or inspections beyond the scope of their accredited business; (4) renting out or lending their safety assessment, testing, or inspection qualification certificates; (5) issuing safety assessment or inspection reports that are false or contain material omissions; (6) altering or simplifying the procedures and relevant content of safety assessments or inspections in contravention of applicable laws and standards; (7) having full-time safety assessors or professional technical personnel concurrently employed by two or more safety assessment, testing, or inspection agencies; (8) failing to have the head of the safety assessment team and the personnel responsible for on-site inspections physically present at the actual site to carry out inspection-related work; (9) assigning personnel tasked with on-site testing and inspection to perform equipment testing and related tasks without being present at the actual site; (10) using another person’s name or permitting others to use one’s own name to sign safety assessment, testing, or inspection reports and original records; (11) refusing to submit to supervisory spot checks conducted by the accreditation authority and its subordinate departments.

The Measures stipulate that departments entrusted with safety production supervision and management, as well as their staff, shall not interfere with the normal operations of safety assessment, testing, and inspection agencies. Except for technical services procured through government procurement, production and business entities shall not be required to engage the technical services of designated safety assessment, testing, and inspection agencies. Unless otherwise provided by laws, regulations, or State Council provisions, no barriers—whether explicit or disguised—to the market access of such agencies may be established in the form of filing, registration, annual inspections, license renewals, or requirements to set up branch offices.

With respect to legal liability, the Measures stipulate that any organization undertaking safety assessments, testing, or inspection services that issues false certifications shall have its illegal gains confiscated; if the illegal gains exceed RMB 100,000, it shall also be subject to a fine of between twice and five times the amount of such gains. If there are no illegal gains or the illegal gains are less than RMB 100,000, the organization shall be imposed with a fine of not less than RMB 100,000 but not more than RMB 200,000, either alone or in addition to other penalties. The directly responsible principal officers and other persons directly liable shall be fined between RMB 20,000 and RMB 50,000. If damage is caused to others, such organization shall bear joint and several liability for compensation together with the production and business entity. Where the conduct constitutes a crime, criminal liability shall be pursued in accordance with the relevant provisions of the Criminal Law. With respect to organizations engaging in the unlawful acts specified in the preceding paragraph, the competent accreditation authority shall revoke their corresponding qualifications, publicly announce such revocation, impose industry-wide bans on the relevant organizations and their responsible personnel in accordance with applicable national regulations, include them in the “blacklist” of adverse records, and register them in the information inquiry system for safety assessment, testing, and inspection agencies.

Xu Fei, a suspect in an official-duty-related crime who had been on the run for 16 years, has been apprehended on suspicion of embezzlement.

Recently, under the unified coordination of the International Fugitive Pursuit and Asset Recovery Office of the Central Anti-Corruption Coordination Group, the Beijing Municipal Commission for Discipline Inspection and Supervision and the Beijing Fugitive Pursuit Office jointly directed a decisive operation. The Haidian District Supervisory Commission acted swiftly to apprehend Xi Fei, a suspect in an official‑duty crime who had been on the run for 16 years, in Beijing.

Xi Fei, male, born in October 1962, formerly the deputy manager of China Construction (Nanyang) Development Co., Ltd., is suspected of embezzlement. On April 8, 2003, the Haidian District People’s Procuratorate in Beijing initiated an investigation into the case. Following the incident, Xi Fei remained at large abroad. Recently, the Haidian District Supervisory Commission, during its investigation, discovered that Xi Fei had secretly returned to Beijing from overseas. With the support and cooperation of the public security authorities, the Haidian District Supervisory Commission promptly took action and successfully apprehended Xi Fei.

The head of the Central Task Force for Fugitive Pursuit stated that the apprehension and return of Xi Fei represents a concrete achievement in translating institutional strengths into effective governance since the deepening of the national supervision system reform, underscoring the enhanced capacity of disciplinary inspection and supervisory authorities to pursue fugitives and recover illicit proceeds. The “Sky Net” is vast and all‑encompassing; no one can escape its reach. Efforts to track down fugitives and recover stolen assets will adhere to rule-of-law thinking and approaches, comprehensively employing a range of legal measures to intensify efforts to bring overseas fugitives to justice, continuously strengthen deterrence, and maintain an unwavering high-pressure stance.

Other

China has fully launched the development of medical consortiums.

At present, the development of medical consortia in China has been fully rolled out, with all tertiary public hospitals participating. Patient referral patterns have become more rational, two-way referrals are beginning to yield tangible results, regional healthcare resources are being shared, and the capacity of medical services has improved markedly.

According to statistics from the National Health Commission, in 2018, medical institutions nationwide facilitated 19.38 million two-way referrals. Among these, the number of patients referred upward decreased by 15% compared with the same period of the previous year, while the number of patients referred downward increased by 83%. Furthermore, 75% of medical institutions have implemented mutual recognition of examination and test results within their medical consortiums. A telemedicine collaboration network now covers all prefecture-level cities and more than 1,800 counties. By the end of 2018, 62% of county-level hospitals nationwide had reached the standards of a secondary hospital, and 22% had attained the standards of a tertiary hospital.

At present, China has established four types of medical consortium models: urban medical groups, county-level medical communities, cross-regional specialty alliances, and remote‑medical collaboration networks. Urban medical groups and county-level medical communities primarily leverage the leading roles of city‑level and county hospitals, while specialty alliances and remote‑medical collaboration networks capitalize on the specialized strengths of national and provincial hospitals to enhance primary‑care service capacity and promote uniformity in the quality of medical care. This year, China will launch pilot projects to build urban medical groups in 100 cities, establishing within these groups information‑technology‑enabled systems for telemedicine, remote consultations, distance education, and two‑way referrals. Healthcare institutions at all levels will achieve interconnectedness, interoperability, and data sharing, thereby providing patients with continuous, integrated diagnostic and treatment services. Meanwhile, efforts will focus on developing county-level medical communities in 500 counties to elevate the level of primary‑care services.

The National Health Commission has mandated the establishment of urban medical groups and county-level medical consortia through a grid-based organizational framework. These medical groups and consortia will provide residents within their respective grids with integrated, continuous healthcare services encompassing disease prevention, diagnosis, treatment, rehabilitation, and nursing. The two-way referral system will be refined, with particular emphasis on streamlining downward referrals by clearly defining referral criteria and procedures, ensuring that patients in the recovery phase of acute illnesses, postoperative convalescents, and those in the stable phase of critical conditions are promptly referred to lower-level medical institutions. Furthermore, innovative service models will be explored that integrate primary healthcare facilities with geriatric care, hospital‑at‑home services, and home‑based nursing.

Promote the establishment of specialized alliances for major diseases and for addressing shortages in critical medical resources. Leverage the strengths of national- and provincial-level hospitals’ key clinical specialties, mobilize stakeholders, and prioritize the development of specialized alliances in areas such as oncology, cardiovascular and cerebrovascular diseases, respiratory conditions, infectious diseases, and major communicable diseases, as well as in fields where medical resources are scarce, including pediatrics, anesthesiology, pathology, and psychiatry. By using inter‑specialty collaboration as a driving force, strengthen weak areas and address existing gaps, thereby enhancing the overall capabilities of these specialties and gradually reducing the cross‑provincial movement of patients seeking care.

Accelerate the development of a telemedicine collaboration network, refine the five-tier telemedicine service system spanning provincial, prefectural, county, township, and village levels, and extend telemedicine services to cover all medical consortiums. Within these consortia, expedite the seamless integration of medical resources across different administrative levels, ensure interoperable information sharing, and foster efficient inter‑departmental coordination, thereby facilitating convenient access to appointment‑based consultations, two‑way referrals, and telemedicine services. Promote the “primary‑level screening, higher‑level diagnosis” model and establish an orderly tiered healthcare delivery system.

Ma Xiaowei, Director of the National Health Commission, stated that all Grade III Class A hospitals nationwide now provide telemedicine services, which have already reached every impoverished county and are expanding further to townships and villages.

The ninth round of high-level China-U.S. economic and trade consultations concluded successfully.

From April 3 to 5, Liu He, Member of the Political Bureau of the CPC Central Committee, Vice Premier of the State Council, and China’s chief representative in the China–U.S. Comprehensive Economic Dialogue, co-chaired the ninth round of high-level economic and trade consultations with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin in Washington, D.C. The two sides discussed draft texts on issues including technology transfer, intellectual property protection, non-tariff measures, the services sector, agriculture, trade balance, and implementation mechanisms, and made further progress. They agreed to continue consultations through various effective channels on outstanding issues.

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