Taihe Legal News, Issue 1222

Key Takeaways for This Issue

The People’s Bank of China, the National Administration of Financial Regulation, and the China Securities Regulatory Commission have jointly rolled out a series of new policies on real estate finance.

On August 28, the People’s Bank of China and the National Administration of Financial Regulation jointly issued guidelines to reform and improve real estate credit management, extending the maximum term for individual housing loans to 40 years. On the same day, the National Administration of Financial Regulation released five measures on real estate finance, including regulations on commercial housing development loans, while the China Securities Regulatory Commission issued opinions on supporting the establishment of a new model for real estate development through the capital market.

The Standing Committee of the National People’s Congress has adopted the Law on Farmland Protection and Quality Enhancement and the Law on Medical Security.

On August 28, the 24th session of the Standing Committee of the 14th National People’s Congress concluded, adopting by vote the Law of the People’s Republic of China on Farmland Protection and Quality Enhancement and the Law of the People’s Republic of China on Medical Security, both of which will take effect on January 1, 2027. Meanwhile, a draft amendment to the Road Traffic Safety Law was submitted to this session for its first reading on August 25.

The Ministry of Finance and the State Taxation Administration have clarified the VAT credit rules for non-taxable transactions and other cases.

On August 27, the Ministry of Finance and the State Taxation Administration issued Announcement No. 25 of 2026, clarifying that the input VAT attributable to six categories of non‑taxable transactions may be deducted in accordance with the relevant regulations, while four categories are not eligible for deduction, effective September 1.

Finance and Capital Markets

FINANCE & CAPITAL MARKETS

The People’s Bank of China and the National Administration of Financial Regulation have optimized the real estate credit management system.

On August 28, the People’s Bank of China and the National Administration of Financial Regulation jointly issued the “Opinions on Reforming and Improving Real Estate Credit Management to Accelerate the Establishment of a New Model for Real Estate Development.” The document focuses on optimizing two core mechanisms—development loans and individual housing loans—and, together with specific management measures for commercial housing development loans, individual housing loans, commercial real estate loans, and other areas, forms a comprehensive real estate credit framework under the new model. The Opinions explicitly establish a lead‑bank system for development loans, align loan tenors with project construction and sales cycles—with pre‑sale projects eligible for terms of up to five years and completed‑property sales projects for up to seven years—and strengthen the linkage between individual housing loans and development financing, requiring that individual housing loans be disbursed via entrusted payment. In addition, the maximum term for individual housing loans is extended from 30 to 40 years. The Opinions also reinforce closed‑account management and earmarked use of funds, mandating that pre‑sale escrow accounts and deposit accounts be opened at the lead bank in accordance with regulations, and that all project‑related funds during the project’s lifecycle be managed through the project company’s bank‑opened account at the lead bank. Furthermore, the timing of individual housing loan disbursement is deferred: for newly built homes sold as completed properties, loans are to be granted only after sales registration; for pre‑sale projects, disbursements must strictly follow completion registration, ensuring that homebuyers can take possession of their homes before repaying their mortgages. Overall, the Opinions, grounded in the need for the real estate sector’s transformation and the establishment of a new development model, lay out a macro‑level foundational framework for real estate credit, better addressing legitimate credit demands and safeguarding the lawful rights and interests of homebuyers.

The National Administration of Financial Regulation has issued five measures for the administration of real estate finance.

On August 28, the National Administration of Financial Regulation issued five measures: the Measures for the Administration of Commodity Housing Development Loans (Trial), the Measures for the Administration of Individual Housing Loans (Trial), the Measures for the Administration of Commercial Real Estate Loans (Trial), the Measures for the Administration of Urban Renewal Project Loans (Trial), and the Measures for the Administration of Trust Companies Engaging in Real Estate‑Related Trust Business (Trial). These measures comprehensively implement the requirements of the new model for real estate development, adhering to a project‑centric approach, a lead‑bank system, and closed‑loop fund management. They guide banking and financial institutions to provide real estate financial services in accordance with market‑based and rule‑of‑law principles, thereby ensuring full‑cycle financial support across the entire lifecycle of real estate development, construction, sales, and operations. Specifically, the Measures for the Administration of Commodity Housing Development Loans draw extensively on the experience of the “whitelist” mechanism, treating projects of all ownership types equally. The Measures for the Administration of Individual Housing Loans appropriately adjust the timing of loan disbursement, moderately optimize the upper limit of the income‑to‑debt ratio, and extend the maximum loan term. The Measures for the Administration of Commercial Real Estate Loans clearly define lending requirements for each stage—development, acquisition, and operation—of commercial real estate. The Measures for the Administration of Urban Renewal Project Loans enhance the precision, relevance, and effectiveness of financial services supporting urban renewal. Meanwhile, the Measures for the Administration of Real Estate‑Related Trust Business uphold principles such as serving the real economy, maintaining controllable risks, and ensuring appropriate investor suitability; they set out clear rules for conducting real estate trust business, require trust companies to strengthen due diligence, prohibit circumventing investor‑number limits or effectively lowering investment thresholds through methods like splitting and transferring trust beneficiary rights, and strictly forbid incorporating trust‑property returns into proprietary assets or misappropriating other trust property to advance principal or returns on trust transactions. Together with the Opinions on Real Estate Credit Management jointly issued by the People’s Bank of China and the National Administration of Financial Regulation, these measures form the institutional framework for real estate finance under the new model.

The China Securities Regulatory Commission has issued Opinions on Supporting the Establishment of a New Model for Real Estate Development in the Capital Market.

On August 28, the China Securities Regulatory Commission issued the “Opinions on Supporting the Establishment of a New Model for Real Estate Development through the Capital Market.” As a guiding document for all capital-market‑related financing activities in the real estate sector, it sets forth 12 measures aimed at shifting real estate developers’ financing away from reliance on corporate credit toward project‑based underwriting, while ensuring equal treatment and meeting the reasonable financing needs of real estate developers across different ownership structures. The Opinions explicitly support refinancing by listed real estate developers and encourage them to comprehensively utilize equity issuance, targeted convertible bonds, cash, and other instruments to acquire real estate‑related assets; equity issuances and targeted convertible bonds used for asset acquisitions may also raise accompanying funds. They further strengthen bond‑financing support by allowing real estate developers to issue corporate bonds to fund real estate projects that comply with policy requirements, permitting the rollover of existing corporate bonds, and encouraging the issuance of commercial mortgage‑backed securities (CMBS) and real estate asset‑backed securities (ABS). In addition, the Opinions support the issuance of real estate investment trusts (REITs) backed by eligible rental housing and urban renewal projects, or the inclusion of such assets as additional offerings into already‑listed REITs, while prudently advancing the development of commercial‑real‑estate REITs. The pilot program for private real estate investment funds will continue to be promoted, with qualified private fund managers encouraged to establish such funds. The Opinions also call for optimizing regulatory oversight of securities‑issuance access, rigorously scrutinizing the entry threshold for real estate developers seeking to issue securities, emphasizing the project‑based nature of financing, and enforcing stringent ongoing monitoring of raised funds as well as comprehensive, transparent supervision to prevent and crack down on illegal and non‑compliant practices such as fraudulent issuances, falsification of disclosure information, and misappropriation of raised capital. Finally, the Opinions stipulate that delisting oversight for listed real estate developers should be carried out in a steady and orderly manner, ensuring diversified exit channels and coordinating with local governments to facilitate the orderly resolution and clearance of defaulted real estate bonds.

Business and Corporations

COMMERCIAL & CORPORATE

The Law on the Protection and Enhancement of Cultivated Land Has Been Adopted.

On August 28, the 24th session of the Standing Committee of the 14th National People’s Congress adopted the Law of the People’s Republic of China on the Protection and Enhancement of Cultivated Land, which comprises eight chapters and 72 articles and will take effect on January 1, 2027. The law was enacted to strengthen cultivated land protection, improve soil quality, ensure national food security and an adequate supply of key agricultural products, and promote all-round rural revitalization. Its main provisions include: clarifying overarching requirements for cultivated land protection, implementing the strictest possible system for safeguarding cultivated land, and assigning joint responsibility for cultivated land protection to both Party and government bodies; reinforcing target‑based constraints by setting specific goals for maintaining the area of cultivated land and protecting permanent basic farmland; refining the spatial planning framework by delineating three control lines—cultivated land and permanent basic farmland, ecological conservation redlines, and urban development boundaries; tightening controls over the conversion of cultivated land, enforcing the balance between occupation and replenishment as well as the balance between entry and exit of land use, and strictly limiting the conversion of cultivated land into forests, orchards, or other types of agricultural land; making every effort to enhance cultivated land quality through the construction of high‑standard farmland, the remediation of acidified and salinized soils, and the protection of black soils; and imposing rigorous accountability, prescribing corresponding legal liabilities for illegal occupation of cultivated land and for actions that degrade its quality. As the first foundational law in China specifically regulating cultivated land protection and quality enhancement, this legislation marks a new stage of rule‑of‑law‑based, standardized management of cultivated land. It has significant implications for all types of agricultural operators, land users, and investors in projects involving the occupation of cultivated land; relevant stakeholders should closely monitor changes in the approval procedures for land occupation and in compensation and resettlement requirements.

The Medical Security Law Has Been Adopted

On August 28, the 24th session of the Standing Committee of the 14th National People’s Congress adopted the Medical Security Law of the People’s Republic of China, which will take effect on January 1, 2027. The law comprises seven chapters—General Provisions, Medical Security System, Medical Security Fund, Medical Security Services, Supervision and Administration, Legal Liability, and Supplementary Provisions—aimed at safeguarding citizens’ legitimate rights and interests in medical security, regulating medical security relationships, optimizing medical security services, and improving a multi-tiered, universal medical security system. Key provisions include: affirming that medical security work shall adhere to the principles of universal coverage, integrated urban–rural planning, fairness and uniformity, safety and standardization, multi‑tiered structure, and sustainability; stipulating that citizens have both the right and obligation to participate in basic medical insurance in accordance with the law, and that the level of medical security should be commensurate with the level of economic and social development; standardizing the collection, use, and management of basic medical insurance funds, strengthening oversight of these funds, and preventing and cracking down on fraudulent claims; regulating the administration of designated medical institutions and pharmaceuticals, as well as medical security administrative services, promoting direct settlement for out-of‑area medical treatment, and streamlining procedures for beneficiaries to access their entitlements; enhancing supplementary保障 mechanisms such as critical illness insurance and medical assistance, thereby improving the multi‑tiered medical security system; and clarifying the supervisory and administrative responsibilities of medical security authorities and the legal liabilities of relevant stakeholders. The enactment of the Medical Security Law fills a gap in China’s legal framework by providing a comprehensive foundational statute for the field of medical security. It sets out systematic rules governing the rights and obligations of various entities, including medical institutions, manufacturers and distributors of drugs and medical consumables, employers, and insured individuals. Employers are urged to pay close attention to the requirements for aligning insurance contributions with benefit entitlements and to fulfill their obligations to make timely and compliant premium payments.

The draft amendment to the Road Traffic Safety Law has been submitted for deliberation for the first time.

On August 25, the draft amendment to the Road Traffic Safety Law was submitted for its first review at the 24th Meeting of the Standing Committee of the 14th National People’s Congress. This marks the law’s first comprehensive revision since its promulgation in 2003. The draft addresses pressing issues in road traffic safety, introducing targeted provisions on tackling “drunk driving,” “blind driving,” “zombie vehicles,” and “over‑standard vehicles,” as well as on the regulation of electric bicycles and “walking groups.” It also adds a dedicated chapter on “Special Provisions for Autonomous Vehicles,” establishing institutional arrangements for the categorized management, safety assessment, and determination of liability in accidents involving such vehicles, thereby meeting the needs of the intelligent and connected vehicle industry. The draft further strengthens the principal responsibility of all parties involved in road traffic safety, refines the mechanisms for handling traffic accidents and compensating damages, and increases penalties for serious traffic violations. Starting August 28, the full text of the draft amendment has been made public to solicit comments from the general public, with the deadline for submissions set for September 26. The revision of the Road Traffic Safety Law directly affects the rights and obligations of motor vehicle manufacturers and sellers, transportation enterprises, insurance institutions, and the vast majority of drivers. Provisions concerning the approval and liability framework for autonomous vehicles, as well as the regulation of electric bicycles, have drawn particular attention from the automotive and insurance sectors; relevant enterprises are encouraged to submit their views based on their specific business circumstances.

The Ministry of Commerce and eight other departments have issued the Opinions on Promoting the High-Quality Development of Aviation Bonded Maintenance.

On August 27, the Ministry of Commerce, in collaboration with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Finance, the Ministry of Human Resources and Social Security, the Ministry of Ecology and Environment, the General Administration of Customs, the State Taxation Administration, and the Civil Aviation Administration of China, jointly issued the “Opinions on Promoting High-Quality Development of Aviation Bonded Maintenance,” outlining 13 policy measures across six key areas. The document explicitly strengthens support for aviation bonded maintenance by further expanding the catalog of eligible products; removes regional restrictions on aviation maintenance enterprises engaging in bonded‑maintenance activities listed therein; and encourages newly established aviation maintenance firms to locate primarily within comprehensive bonded zones. It also enhances fiscal, tax, and financial incentives: products undergoing bonded maintenance that are subsequently re‑exported domestically under relevant airworthiness certification may, in accordance with national regulations, undergo domestic sales procedures; and enterprises providing bonded‑maintenance and other overseas repair and overhaul services may, as stipulated, benefit from export rebate or exemption policies. Furthermore, it calls for closer coordination between fiscal and insurance‑related financial policies to boost the uptake of export credit insurance. Regulatory facilitation is improved by permitting certain processing steps to be outsourced to qualified enterprises, and by allowing aviation parts removed during bonded maintenance—provided they retain reuse value—to remain in domestic circulation after inspection, repair, and issuance of airworthiness certificates, or to be incorporated into bonded‑management as spare parts, without requiring re‑export. Finally, the document supports the green development of aviation bonded maintenance by encouraging the use of low‑ or zero‑volatile organic compound (VOC) products and raw materials, while bolstering talent‑development efforts through support for aviation‑maintenance training institutions operating within comprehensive bonded zones. To ensure end-to-end dynamic oversight, bonded‑maintenance enterprises are required to maintain information‑technology systems connected to customs and other relevant authorities, enabling full‑process traceability of material consumption and usage data. According to statistics, there are currently 37 aviation bonded‑maintenance projects nationwide, which, despite accounting for only 12% of all such projects, contribute approximately 85% of the sector’s total import and export value.

Taxation

TAXATION

The Ministry of Finance and the State Taxation Administration have clarified VAT-related matters, including non‑taxable transactions.

On August 27, the Ministry of Finance and the State Taxation Administration issued the “Announcement on Clarifying Certain VAT‑Related Matters, Including Non‑Taxable Transactions” (Ministry of Finance and State Taxation Administration Announcement No. 25 of 2026), which will take effect on September 1, 2026. As an important supplementary document to the Value‑Added Tax Law and its Implementing Regulations, it standardizes nationwide administrative guidelines on the deduction of input VAT for non‑taxable transactions. The announcement specifies that taxpayers who, in any of the following six situations—receiving insurance indemnity as the insured party; accepting donations of monetary or non‑monetary assets; obtaining liquidated damages arising from the non‑performance of a contract without any taxable transaction; providing services gratuitously (excluding the gratuitous transfer of financial products); transferring receivables—including accounts receivable—acquired through their own taxable transactions (excluding marketable securities); or receiving fiscal subsidies not directly linked to sales revenue or volume—are not subject to the prohibition on deducting input VAT for non‑taxable transactions set forth in the Implementing Regulations. Accordingly, the corresponding input VAT may be deducted from output VAT in accordance with applicable rules. Conversely, the following four situations are deemed to fall under the category of non‑deductible non‑taxable transactions: the sale of goods, services, intangible assets, or real estate that does not constitute a taxable transaction within China; the paid transfer of equity interests (excluding marketable securities); dividends and bonuses received from holding equity; and commodity futures trading (excluding physical delivery). In these cases, the corresponding input VAT may not be deducted from output VAT. The announcement also clarifies the definition of agricultural product sales invoices as VAT tax‑deduction vouchers, further delineates the scope of tax‑exempt entities such as vocational schools and the range of first‑ticket revenues, and establishes specific rules, including: determining the purchase price of financial products in asset‑restructuring transactions based on the transferor’s purchase price; requiring general taxpayers who waive VAT preferential treatment to submit a written declaration and file it with the competent tax authority; mandating separate accounting and taxation at the respective rates for goods gifted along with telecommunications services; and stipulating that commercial discounts must be clearly indicated in the “Amount” column of a single invoice to qualify for taxation based on the discounted sales amount. Additionally, the announcement repeals provisions previously set forth in documents such as Cai Shui [2007] No. 127. Enterprises subject to VAT should closely monitor changes in the criteria for deducting input VAT and promptly adjust their accounting practices and filing procedures.

Litigation and Arbitration

LITIGATION & ARBITRATION

A number of courts across the country held集中 (concentrated) sentencing sessions for 12 cases involving organized crime and evil forces.

On August 28, courts in 11 localities, including Beijing, Tianjin, and Shanghai, delivered first-instance public verdicts in 12 organized‑crime cases involving black‑and‑evil forces, sentencing 12 criminal organizations and 163 defendants to penalties ranging from life imprisonment to fixed-term imprisonment of 10 months. According to the Supreme People’s Court, the cases adjudicated publicly underscore the strict application of the law to crack down on organized criminal groups that exploit online platforms and employ “soft violence” to carry out illegal lending, unlawful debt collection, labor‑related extortion, and other illicit activities. They also reflect a resolute stance against “city tyrants,” “street bullies,” and other criminal gangs, as well as against criminal organizations that manipulate minors into committing offenses or infringe upon their rights. In one case, heard by the Jizhou District People’s Court of Tianjin, Li and others, driven by illicit profit, engaged in long‑term high‑interest lending and used violent and “soft‑violent” tactics—such as assault, online harassment, sending insulting photos, and spray‑painting graffiti—to collect debts, thereby causing harm to more than ten victims. The ringleader, Li, was sentenced to four years and ten months’ imprisonment. In another case, tried by the Donggang District People’s Court of Rizhao City, Shandong Province, Ma and his associates recruited workers under false pretenses via online job‑posting platforms, gaining access to construction sites. They then employed “soft‑violent” methods—including verbal abuse, physical blockades, and threats to cut off electricity—to extort unreasonable travel and work‑loss fees from employers, perpetrating over 20 incidents of labor‑related fraud and illegally profiting more than 200,000 yuan. The principal offender, Ma, was sentenced to six years’ imprisonment. The Supreme People’s Court stated that courts nationwide will continue to focus on areas where organized‑crime and evil‑force issues are particularly acute, maintaining a strong, high‑pressure crackdown to deter such criminal activity.

First-instance verdict delivered in the bribery case of Jiang Chaoliang.

On August 28, the Intermediate People’s Court of Nanjing, Jiangsu Province, delivered a first-instance public verdict in the bribery case involving Jiang Chaoliang, former member of the Standing Committee of the 14th National People’s Congress and former deputy director of the Agriculture and Rural Affairs Committee of the NPC. Jiang Chaoliang was sentenced to death with a two-year reprieve for the crime of accepting bribes, deprived of political rights for life, and had all his personal property confiscated. Upon expiration of the two-year reprieve, his sentence will be commuted to life imprisonment, with no possibility of reduction or parole. The illicit proceeds and any孳息 seized in the case shall be turned over to the state treasury in accordance with the law, and any shortfall will continue to be pursued. The trial established that, from 1995 to 2025, Jiang Chaoliang, taking advantage of his positions as Director of the Comprehensive Planning Department of the Agricultural Bank of China, Party Secretary and Chairman of the Bank of Communications, Deputy Secretary of the Party Committee, Vice Chairman and President of the China Development Bank, Party Secretary and Chairman of the Agricultural Bank of China, Deputy Secretary of the Jilin Provincial Party Committee and Governor of Jilin Province, and Secretary of the Hubei Provincial Party Committee, as well as the conveniences afforded by his official authority and position, provided assistance to relevant entities and individuals in matters such as business operations, loan approvals, project contracting, and promotion, and illegally accepted property totaling more than RMB 746 million. The court held that Jiang Chaoliang’s bribery amounted to an especially large sum and caused particularly grave losses to the interests of the state and the people; accordingly, he should be sentenced to death. However, considering that his bribery included attempted offenses, that he truthfully confessed his crimes upon surrendering, voluntarily disclosed most of the bribery facts not yet known to the investigating authorities, and that his reports of others’ serious criminal conduct were verified as true, demonstrating significant meritorious service, coupled with his admission of guilt, remorse, and active restitution of illicit gains, the court decided that, in accordance with the law, the death sentence would not be carried out immediately. At the same time, it ordered that, after his sentence is commuted to life imprisonment, he shall be subject to lifelong imprisonment without the possibility of reduction or parole.

First-instance verdict delivered in the bribery case involving Ren Yuzhong, former vice president of Peking University.

On August 24, the Intermediate People’s Court of Dandong City, Liaoning Province, delivered a first-instance public verdict in the bribery case involving Ren Yuzhong, former member of the Standing Committee of the CPC Committee and vice president of Peking University. Ren Yuzhong was sentenced to eight years’ imprisonment for bribery and fined RMB 2.6 million. The illicit proceeds and any孳息 derived from his criminal conduct were confiscated and turned over to the state treasury in accordance with the law. The trial established that, between 2006 and 2025, Ren Yuzhong, taking advantage of his positions as deputy director and later director of the Policy Research Office of Peking University’s CPC Committee, head of the Personnel Department, head of the Publicity Department of the CPC Committee, and member of the Standing Committee of the CPC Committee and vice president of Peking University—along with the conveniences afforded by his official authority and status—provided assistance to relevant organizations and individuals in matters such as education and training, academic advancement, and employment, thereby illegally accepting property totaling more than RMB 31.95 million. The court held that Ren Yuzhong’s conduct constituted the crime of bribery, with an especially large amount involved, and thus warranted punishment under the law, leading to the aforementioned judgment. This case once again underscores the judiciary’s firm stance of strictly punishing corruption among university leaders in accordance with the law. It also serves as a cautionary reminder regarding the oversight and checks on the exercise of power in areas such as university admissions, personnel management, and infrastructure and logistics, while urging all types of institutions to strengthen their internal supervision and management mechanisms and to guard against integrity risks in key positions.

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