China Regulatory Brief: FTAs with South Korea and Australia, FDI Accounting Firms in Pingtan and Coal Export Tariffs

November 17, 2014 Posted by China Briefing Reading Time: 5 minutes

China and South Korea Reach Substantial Conclusion on FTA

On November 10, Chinese President Xi Jinping and Korean President Park Geun-hye reached a substantial conclusion on a free trade agreement (FTA) during a meeting in Beijing, after more than two year’s of previous negotiations. The proposed FTA, covering 17 industrial areas including e-commerce, environmental prorection and government purchasing, is supposed to be signed by the end of December, 2014. Further, the two sides agreed to cancel more than 90 percent of commodity tariffs over the next 20 years. China is South Korea’s largest trade partner; in 2013, bilateral trade reached US$230 billion.

China and Australia Set to Sign FTA

China and Australia are set to sign a milestone free trade agreement (FTA) in Canberra this week in a move to boost the two countries’ bilateral trade. The FTA is expected to cover trade in goods and services, including the exemption of export tariffs on a majority of Australian goods such as mineral and energy exports. Meanwhile, China will further open its domestic market to Australian legal services, design and financial firms. In return, Australia may relax its strict restrictions on Chinese investment in the securities market. China is Australia’s largest trade partner and biggest export market. According to Chinese Customs, bilateral trade reached US$150 billion in 2013.

Hong Kong, Macau Accountants Permitted to be Partners in Accounting Firms in Pingtan

The Fujian Government has recently released the “Trial Measures for Accounting Professionals from Hong Kong and Macau to be Partners in Accounting Firms in the Pingtan Comprehensive Experimental Zone (Min Zheng Fa [2014] No.142).” According to the Measures, Hong Kong and Macau professional accountants meeting certain criteria are newly permitted to establish accounting firms in the Pingtan Zone in partnership with eligible Chinese mainland residents (a precedent is to be found in the Shanghai Free Trade Zone). They are also permitted to become partners in accounting firms (exclude branches) starting November 3, 2014.

The Measures stipulate that the number of partners from mainland China must be over 51 percent; the chief accountant (partner) must be a mainland partner; and the Hong Kong/Macau professionals must work in the firm for at least 180 days each year.

China and U.S. Reach Climate Change Agreement

On November 12, China and the U.S. reached an agreement on greenhouse gas emission reductions and officially announced a set of plans and goals for combating climate change. The U.S. made a commitment to reduce its greenhouse gas emissions between 26 percent and 28 percent below its 2005 level by 2025. China stated that its carbon dioxide emissions would peak by around 2030. The two countries pledged to cooperate further in the fields of clean energy, nuclear power and environmental protection in a bid to reduce greenhouse gases and promote international climate change negotiations.

China Seeks to Reduce Coal Export Tax

China is looking to cut its coal export tax from 10 percent to three percent in early 2015, as confirmed by a group of export enterprises from whom the National Development and Reform Commission recently sought opinions on the issue. A reduced coal export tax is expected to boost the Chinese domestic coal industry and help coal miners retake their share of the international coal market. Details regarding the reduction have yet to be released by the government. Analysts have noted that even though the export tax will be reduced, its influence may be limited, given that the transportation and production costs for coal are comparatively high in China. In 2008, China levied an export tariff of 10 percent on domestic coal, up from five percent in 2006.

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