China Repeals RO Law in Effort to Improve Business Environment

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By Srinivas Raman

China recently abolished an archaic FDI law from 1995 regulating the establishment of representative offices (ROs) of foreign firms doing business in China.

The reform is part of a larger initiative to cut red tape in China and attract greater foreign direct investment (FDI) amid concerns from the foreign business community over the country’s business environment.

The repeal of the law streamlines the setup process for foreign investors establishing ROs in China, and marks another effort by the government to reform administrative processes.

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What to Expect at China’s 19th Party Congress

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By Alexander Chipman Koty

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On October 18, China’s top leadership will convene at the Great Hall of the People in Beijing to begin the weeklong 19th National Party Congress of the Communist Party of China.

The Congress is the most important political event in China, where the Party’s top representatives meet once every five years to announce changes to top leadership positions and set out the Party’s – and therefore China’s – direction for the next half decade.

This year, around 2,300 delegates will assemble for the Congress. The delegates consist of Party representatives from China’s national party organs, provinces, leading municipalities, the military, and state-owned enterprises (SOEs), as well as some private sector representatives and other influential figures.

The stakes for the 19th National Party Congress are high: five out of seven members of the Politburo Standing Committee (PSB) – the most powerful decision-making body in China – are set to retire, leaving only President Xi Jinping and Premier Li Keqiang remaining. Overall, about 70 percent of posts on the PSB, the 25-member Politburo, and the 350-member Central Committee are expected to shuffle, as well as adjustments to military positions.

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Paying Foreign Employees in China: Individual Income Tax

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By Dezan Shira & Associates
Editors: Steven Elsinga and Zhou Qian

For foreigners working in China, determining the applicability of individual income tax to one’s situation involves decoding a set of intersecting criteria and rules. Following this, you will need to calculate your precise liability and any applicable deductions. Lastly, consulting with a China taxation specialist can help optimize one’s overall income to achieve the most profitable package for you or your employees.

China’s Individual Income Tax Law recognizes 11 different categories of income, with a host of different deductions, tax rates, and exceptions applying to each of them. As our focus here lies with foreign employees, this article will only address the tax treatment of employment income, including salaries, bonuses, stock options, and allowances. Continue reading…

Golden Week Travel, Expenditure Reach New Heights – China Market Watch

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Increased Golden Week tourism highlights industry potential

Officials reported that more than 700 million people in China traveled during the mid-Autumn Golden Week festival, which occurred last week between October 1 and 8. That figure marks roughly half of the 1.4 billion people who live in China, and represents more than a 10 percent increase on the number who traveled during last year’s festival.

The National Tourism Administration (NTA) reported that 705 million people traveled within China, spending approximately US$87.68 billion. The NTA said this expenditure marked a 13.9 percent increase on the amount of holiday money spent last year.

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Coworking Spaces in China: No Longer Just for Tech Startups

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By Zolzaya Erdenebileg

While the sharing economy has taken off globally, it has gripped China in particular. This development can be seen across a multitude of industries and products, including bikes, taxis, hospitality, and even umbrellas.

Now, coworking spaces are in the spotlight. These shareable work and office spaces are rentable on a ‘desk’ rate instead of square meters like traditional office spaces, and they are popping up all around major cities in China.

Usually, coworking spaces conjure up images of tech startups in the incubation stage and millennial entrepreneurs on the go. However, coworking is developing beyond the stereotypes and starting to service more sectors of the economy that had previously been limited to traditional office spaces.

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China’s Free Trade Agreements in South Asia

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By Melissa Cyrill

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China is steadily laying the groundwork for its ambitious ‘One Belt, One Road’ (OBOR) program. Given that it is an expansive regional infrastructure and connectivity initiative, the dismantling of trade barriers throughout the OBOR region is important. China realizes this, and has been actively pursuing free trade agreements (FTAs) with all key stakeholders.

OBOR is now labeled the Belt and Road Initiative (BRI) to reflect the fact that it will connect Asia, Europe, and Africa along five maritime and land routes. This includes two South Asian economic corridors: Bangladesh-China-India-Myanmar (BCIM) and China-Pakistan (CPEC).

As a result, China is actively seeking to improve its trade relations with South Asia. Deeper connectivity, once achieved under the BRI, will boost the development and commercial aspirations of South Asia’s lagging economies, and open up new markets for China. However, China has yet to convince India; the latter is against the China-Pakistan Economic Corridor due to geopolitical concerns.

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A Complete Guide to 2017 Minimum Wage Levels Across China

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By Alexander Chipman Koty and Zhou Qian

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Labor costs in China continue to rise – 17 regions have increased their minimum wages so far in 2017.

Regional authorities in Beijing, Fujian, Guizhou, Henan, Hubei, Hunan, Inner Mongolia, Jiangsu, Jilin, Ningxia, Qinghai, Shaanxi, Shandong, Shanghai, Shanxi, Shenzhen, and Tianjin have all raised their minimum wages in 2017. In total, these 17 regions are more than the nine that increased wages in 2016, but down from 19 in 2015 and 24 in 2014.

While the growth rate of minimum wages is lower than that of much of the last decade, wages are growing from a higher base than before, and wage increases continue to outstrip increases in productivity.

Minimum wages in parts of China – such as Beijing, Shanghai, and Shenzhen – are now higher than certain areas in the EU, namely Bulgaria. However, at their lowest levels – like in parts of Anhui, Guangxi, and Heilongjiang – wages are more comparable to countries such as India and Vietnam.

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New Balance Wins Landmark Trademark Case – A New Dawn for IPR in China?

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By Srinivas Raman

The recent ruling by a Chinese court in a trademark infringement dispute concerning New Balance’s logo marks a watershed moment in China’s intellectual property rights (IPR) regime.

The court awarded a landmark decision in favor of New Balance (NB) against Chinese competitors deemed to have infringed the company’s IPR, reflecting China’s recent efforts to improve IPR protection.

While foreign firms doing business in China may breathe a sigh of relief at this decision, they must also recognize the implications of the decision against the backdrop of the Chinese trademark regime.

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