Regulatory Updates
Due to its unique economic-social structure, Chinese economy is still experiencing frequent changes. The Chinese government’s policy tends to disperse foreign investments by regions and sectors. The current economic policy is encouraging innovative technology and local investments, reducing investments that are not environmental friendly and low-end production.
The Chinese government is implementing new regulations in order to direct the economy while accomplishing its stated goals. Here you can find a briefing on newly regulatory issues concerning economic and commercial matters.
Subsidies set to spur green vehicles development (July 2010)
The new subsidies announced by the government will not only prompt automakers to manufacture more fuel-efficient vehicles but also make considerable progress in terms of technology and reduced emissions, analysts said on Thursday.
Vehicles eligible for these subsidies should have an engine capacity of 1.6 liters or less and will qualify for a subsidy of 3,000 yuan per unit, the National Development and Reform Commission said in a statement.
Details please refer to articles from China Daily.
Changes in Representative Office Regulations (February 2010)
For those with Representative Offices in China, there are a number of recent changes that may affect their operations. In February this year, the State Administration of Industry and Commerce (SAIC) released new regulations regarding the registration of Representative Offices in China. The changes include the following:
An Overseas company must be at least 2 years old before they qualify to establish a representative office in China.
For detail article, please refer to articles from The JLJ Group
China rolls out fresh measures for property market amid rising house prices (Jan 10, 2010)
The General Office of the State Council, China's cabinet, Sunday issued a notice that required central governmental departments and local governments to strengthen management, stabilize market expectations and facilitate stable and sound development of the real estate market.
"With the recovery of the real estate market, such problems as excessively rising house prices have recently emerged in some cities, which call for great attention," said the notice.
It listed 11 specific measures which should be taken in five aspects -- increasing supply of low-cost houses for low-income families and common residential houses, encouraging reasonable house buying while restraining purchases for speculation and investment, strengthening real estate project loan risk management and market supervision, speeding up construction of housing projects for low-income households, and specifying responsibilities of local governments.
For the full article: http://english.gov.cn/2010-01/10/content_1507154.htm
Catalogue for the Guidance of Foreign Investment Industries (Amended in 2007)
Customs and International Trade Services - 2008 (This information is courtesy of Deloitte).
Foreign Invested Partnerships (December 2009)
With the recent release of China’s State Council Order Number 567, foreign investors, including investors from Taiwan, Macau and Hong Kong, will be eligible to establish foreign invested partnerships within Mainland China. Under the new Measures, foreign investors will be allowed to establish partnerships with other foreign investors, local investors or a combination of both.
The new Measures should provide investors with greater flexibility with the structure of their legal entity within China, particularly for private equity and venture capital firms wishing to establish local currency funds. Furthermore, foreign invested partnerships will not require approval from the Ministry of Commerce and may register directly with the Administration of Industry and Commerce, unless otherwise specified in the foreign investment guidelines; which may eventually simplify the registration process.
However, the Measures do not include detailed implementation rules that will most likely be issued before it comes into effect on March 1st 2010, requiring most investors to wait for further clarification. As with most new forms of investment vehicles introduced in China, the actual implementation at the local level will determine if foreign invested partnerships are a viable option for market entrants. (updated July 2010 by The JLJ Group)
Catalogue for the Guidance of Foreign Investment Industries (Amended in 2007)
Given approval from the State Council, the NDRC and MOFCOM jointly released No.57 document on October 31st with full text of Catalogue for the Guidance of Foreign Investment Industries (amended in 2007) (hereinafter referred to as Catalogue). The catalogue takes effect on December 1st.
This new Catalogue is a significant policy measure to execute the requirement of the 17th National Congress of CPC, and to guide foreign investment direction. It plays an active role in macro control, standardize domestic development and opening up, facilitate optimized and upgraded industrial structure, and raise the quality and level of foreign capital utilization.
Full Catalogue at Governmental Website: http://www.fdi.gov.cn/pub/FDI_EN/Laws/law_en_info.jsp?docid=87372
Additional readings:
http://www.bjreview.com.cn/document/txt/2008-02/13/content_99217.htm
http://www.btmbeijing.com/contents/en/business/2008-05/investmentqanda/investment
http://www.investchengdu.gov.cn/investcden/6/1/1/
Updated: January 2008
Customs and International Trade Services - China Tariff Policy for 2008
One of the major measures adopted to manage China’s international trade surplus and to accelerate the general balance of international trade settlements was the announcement in 2007 of a number of export control and foreign trade policies. These policies came into full effect in 2008.
PRC tariff policy is focusing on adjusting the import and export trade to promote desired transformation of the economic growth model. Specifically, the focus remains on discouraging exports of high energy-consuming, environmentally unfriendly and resource-intensive products while at the same time promoting the import of natural resources, energy and fuels needed to maintain manufacturing activities, and high-tech equipment (including components and spare parts) to improve manufacturing technology.
Changes to MFN Import and Export Tariff Rates
Given that more than 99% of China’s tariff reduction commitments to the World Trade Organization (WTO) have been fulfilled, the government will not, in principle, initiate any further tariff reductions. The average most favored nation tariff rates (MFN rates) will remain stable (9.8%) in 2008.
Reduction Items
In line with its commitment to the WTO in respect of tariff reductions, effective 1 January 2008 China has decreased the MFN rates on 45 tariff items listed in the “Import Tariff”, while the MFN rates on other items remains unchanged.
Interim Duty Rates
The policies for encouraging the import of key resources and technologically innovative goods, and discouraging the export of high energy consumption, environmentally un-friendly and resource-intensive goods, will also continue to be managed in 2008 by the application of interim duty rates, which can be set at any time. Interim import duty rates are generally lower than published MFN rates (available to all WTO signatory countries). Interim export duty rates are generally higher than any normal export duty rates that apply.
At the beginning of 2008, interim import duty rates were applied to 620 tariff codes (significantly increased from 309 at the beginning of 2007). Similarly, the number of tariff codes now subject to interim export duty rates has risen to 334 on 1 January 2008 (significantly increased from 174 at the beginning of 2007).
Most items listed in the 2007 Catalogue of Interim Duty Rates on Imported Commodities (“Import
Catalogue”) and Catalogue of Interim Duty Rates on Exported Commodities (“Export Catalogue”) remain in the 2008 Catalogue. Control on certain goods, however, has and will be further intensified, i.e. the interim duty rates on imports have or will be further reduced and/or the interim duty rates on exports have or will be further increased. For example, the interim duty rates on imports of key resources, such as oil products, have been reduced, whereas the interim duty rates on exports of energy/resource consuming goods, such as steel and coke, have been increased significantly. New additions to the Import Catalogue are mainly chemical materials and resources, such as metal compounds and metal smelting raw materials. To further encourage the domestic production of technologically innovative products, advanced automation equipment (e.g. equipment used in the manufacture of flat panel display equipment and components) has been added to the Import Catalogue. New additions to the Export Catalogue focus primarily on certain anti-environmental protection products, such as heavy metal compounds, pulp, etc.
Revisions to PRC Import and Export Tariff 2008
China began to adopt the new version of the Harmonized Commodity Description and Coding System in 2007, and a wide range of amendments have already been made to the existing law. No further substantive changes are expected to the PRC tariff in 2008. However, specific amendments will be made to the tariff structure to differentiate products or materials, etc. that will be subject to more favorable tariff treatment and those that will be subject to tighter export controls.
Deloitte’s Recommendations
It will be vital that companies closely examine the tariff codes they are using to ensure that they are taking full advantage of preferential treatment and to minimize the risk of falling into categories subject to additional tariff rates and restrictions. The above information is for general guidance only. For more specific information on the changes, and how these will impact your current import or export activities, please contact our Customs & International Trade service team.
Source: The above information is courtesy of Deloitte.
Additional readings: http://www.fdi.gov.cn/pub/FDI_EN/Laws/law_en_info.jsp?docid=88244
Updated: January 2008
