China Policy Intelligence Issue

April 2005 China Briefing

In this special issue we highlight the recent questions we asked at our annual Ministerial level meetings concerning various aspects of China economy and trade, the answers we obtained and the implications of these. We additionally summarize two key aspects: the new trading / distribution regulations and a piece on the overheating of Chinese real estate. It highlights various aspects of Chinese foreign investment policy and provides clarity directly from Ministers over specific investment regulatory and tax treatment matters. The main article follows Chris Devonshire-Ellis' annual meetings with Chinese Government Ministers. Chris is the Senior Partner of Dezan Shira & Associates and publisher of China Briefing, and is one of the few foreign businessmen with regular access to senior government leaders. In this issue he discusses various key policy issues with various ministers, including the State Administration of Tax, with an interview with Deputy Commissioner Xu Shande. Details of foreign enterprise income tax and domestic enterprise income tax, and the unification of these rates are discussed, in addition to Chinas consumption based VAT trials currently taking place, and new Chinese regulations being drafted for the treatment of taxable incomes for products and services provided by Chambers of Commerce in China. Devonshire-Ellis also meets with Vice-Minister of Commerce, An Min, to discuss Chinese income tax unification, the abolition of export tax rebates for steel products, and the treatment of outward processing agreements between China and Hong Kong. Further meetings with Li Rou Gu, the Vice-Governor of the Peoples Bank of China are described, with conversations with Devonshire-Ellis over the USD-RMB position, Chinas inflation and trade deficit, the reform of Chinas real estate industry, and in banking sectors, the listing of Chinese banks and on-going China banking reforms, the development of Chinas credit industry, global monetary reform and the impact of China, and the ability for Hong Kong banks to increase their RMB scope of business. Professor Zhang Yansheng, of the Chinese National Development & Reform Commission (part of the Chinese State Development Planning Commission) is also interviewed by Devonshire-Ellis with comments on development in Chinas energy policy. Regional Updates are also included in this issue, with Alberto Vettoretti, Regional Partner, Dezan Shira & Associates South China, commenting on "New Minimum Wage Increases in Guangdong Province", Sabrina Zhang, Regional Partner, Dezan Shira & Associates Beijing advising on “Chinas New Commercial Franchise Measures" and Lulu Zhang, of Dezan Shira & Associates Shanghai on "The State Administration of Foreign Exchanges New Circular Concerning Foreign Exchange Quota Management".