China Announces Seven New Free Trade Zones, Signalling Intent to Diversify Economy

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By Dezan Shira & Associates

On August 31, 2016, Beijing passed approval for Chongqing, Zhejiang, Hubei, Henan, Sichuan, Shaanxi, and Liaoning to establish seven new free trade zones (FTZs), bringing China’s total number to 11.

The decision to increase China’s FTZs by such a significant amount is widely seen as an effort to combat slowing economic growth in the Middle Kingdom, with 2015’s GDP growth of 6.9 percent the slowest in 25 years. As the country’s economy continues to diversify, the FTZs are also seen as a means to open up key markets and industries for foreign investment.

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Post VAT Reform: Defining Small Scale and General Taxpayer Status in China

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By Jake Liddle

China fully implemented the business tax (BT) to value-added tax (VAT) reform on May 1, 2016. The State Administration of Taxation (SAT) issued an announcement in April 2016 regarding the VAT reform, clarifying the calculation and determination of small scale taxpayers and general taxpayers, and changes to the terms of application for general tax payer status. As a general tax payer, entities may enjoy VAT deductions; therefore, it is important for companies to ascertain if they are qualified to apply for general taxpayer status.

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China’s New Advertising Law: Key Considerations and Implications for Online Advertisers

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By Winnie Jin, Content Marketing Associate  

Over the past several years, the Chinese government has turned its attention toward greater regulation of advertising, and more recently of online advertising. Following in the footsteps of the amended Advertising Law implemented in 2015, the State Administration of Industry and Commerce’s (SAIC) Interim Measures for the Administration of Internet Advertising came into effect on September 1, 2016. The new regulation clarifies what content is considered “internet advertising,” lays down rules for “publishers” of online advertisements, and outlines investigation measures and penalties for violators. Given the ubiquity of online advertising in China, the regulations will have a widespread impact on the actions of advertisers and platform operators.

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China Market Watch: Telecom Roaming Fees and the Launch of 7 New FTZs

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Chinese Telecom Providers to Scrap Domestic Roaming Fees

This July, China Telecom, China’s third biggest telecom provider, announced that it would cancel all domestic roaming fees. The country’s largest provider, China Mobile, as well as China Unicom followed suit shortly after. This move is expected to increase competition in the market, and drive telecom fees down, ending the monopoly that the three big telecom providers have consistently maintained in recent years. Currently, consumers are charged RMB 0.6-0.8 per minute for roaming services within the PRC outside of their local service area, double the standard charges, accounting for 10 percent of the company’s net profit. The ability to provide free roaming services stems from technological improvements, but also pressure from the industry regulator, the Ministry of Industry and Information Technology (MIIT).

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City Spotlight: Investing in Hangzhou

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By Alexander Chipman Koty

HangzhouTraditionally overshadowed by metropolises such as Shanghai and Beijing in China’s international events, Zhejiang Province’s capital city of Hangzhou is finding itself in the global spotlight as it prepares to host the upcoming G20 Summit. Hangzhou has made considerable press recently for the Chinese government’s intense efforts to beautify the city and ease congestion for its international guests, including by shutting down polluting factories, shipping away migrant workers, giving citizens vouchers to encourage them to vacation, and spending over US$1 billion on a new convention center. Despite these vast efforts, Hangzhou’s allure is not simply cosmetic. While China’s growth is slowing as its immense manufacturing sector struggles, Hangzhou continues to grow steadily on the back of its burgeoning high-tech industry, making it a model city for China’s broader economic transition.

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China’s New National Fitness Plan and Opportunities in the Sports Industry

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By Jake Liddle

On June 23, 2016, China’s State Council approved the new 2016-2020 National Fitness Plan, which has ambitious targets for national fitness levels and increased sports participation. It also sets out to introduce a new national consciousness of health and fitness, incorporating regular physical exercise and sports activities into the weekly routine of over one billion citizens by 2020. The plan also factors in the health of the elderly by investing in improvement of fitness facilities in retirement communities and providing specialist guidance regarding fitness, which will aid the support of a rapidly increasing elderly population in China. Health and fitness expenditure is estimated to reach RMB 1.5 trillion if these targets are reached.

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Investing in China’s Education Industry – Part 2

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By Dezan Shira & Associates
Editor: Zhou Qian

The following is the second of a two-part article taken from our August magazine, China Investment Roadmap: the Education Sector. The first part can be found here.

Set-up Procedures

Set-up of an international school for the children of foreigners

Theoretically, all foreign organizations, enterprises, and individuals legally established or residing in China can apply to set up an international school as long as it satisfies the following requirements:

  • Has adequate demand
  • Has teaching expertise
  • Has necessary facilities, equipment, and other teaching resources
  • Has stable sources of funding

The main setup procedures include:

  • Submit the application and other documents to the provincial level educational administrative departments
  • Upon review and preliminary approval of the provincial level government, the application shall be delivered to the state-level Ministry of Education for final approval
  • Register with the civil affairs department

This type of school is allowed to enroll children of foreigners legally residing in China, can choose the curricula, textbooks, and teaching programs by itself, and can hire foreign staff according to relevant laws and regulations. However, it is forbidden from enrolling Chinese nationals, opening additional branches, or conducting any for-profit activities.

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China Regulatory Brief: Peer-To-Peer Lending Companies and Property Tax

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Preferential Tax Policies for Import of Products for Animation Enterprises

On August 1, 2016, a notice was issued which stipulates that imported materials and equipment required for the independent development and production of animation enterprises may be exempt from import tariffs and VAT. The notice (Cai Guan Shui [2016] No.36), which was jointly issued by the Ministry of Finance (MOF), General Administration of Customs (GAC), and State Administration of Taxation (SAT), specifies that only goods which are recognized by the relevant regulatory departments may enjoy tax and tariff exemption, and so developed an interim provision bringing into effect the preferential law.

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