Dec. 5 – The People’s Bank of China (PBOC) released the “Opinions on Leveraging the Role of Finance in Supporting the Construction of China (Shanghai) Free Trade Zone (hereinafter referred to as ‘Opinions’)” on December 2, which puts forward the detailed financial reform guidelines to support the Shanghai Free Trade Zone (Shanghai FTZ).
The Opinions mainly cover the following four aspects:
- Exploring ways to facilitate investment and financing remittance, and promoting the convertibility of capital account;
- Promoting the cross-border use of RMB to allow enterprises and individuals in the Shanghai FTZ to use RMB to carry out cross-border trade in a more flexible way;
- Pushing forward the market-oriented reform of interest rate; and
- Deepening foreign exchange reform and further streamlining administrative examination and approval, so as to gradually establish a suitable foreign exchange control system.
Detailed information can be found below. Continue reading
Dec. 3 – The new issue of China Briefing Magazine, titled Revisiting China’s Value-Added Tax Reform, is out now and will be temporarily available as a complimentary PDF download on the Asia Briefing Bookstore throughout the month of December.
As China’s economy develops, its tax regime has also continued to evolve as the government strives to create a system that best promotes sustainable market growth. Both business tax (BT) and value-added tax (VAT) are indirect taxes that have been implemented in China for decades. VAT income is shared between the central and local governments, with the majority going to the central government.
Meanwhile, the entire BT levied goes to the local governments. While this arrangement ensured a steady and sufficient stream of income for both the central and local governments, it also created high tax burdens for enterprises. Continue reading
Dec. 2 – The Shanghai People’s Government released the “Provisional Measures on the Administration of Wholly Foreign-Owned Medical Institutions in the China (Shanghai) Free Trade Zone (hufubanfa  No.63, hereinafter referred to as the ‘Measures’)” on November 13, which specify the requirements and application materials for foreign investors who wish to set up wholly foreign-owned medical institutions in the Shanghai Free Trade Zone (Shanghai FTZ). Detailed information can be found below. Continue reading
Nov. 26 – Authorities from different departments of China have recently rolled out their respective plans for the highly-anticipated Shanghai Free Trade Zone (Shanghai FTZ). Included in this is the summary of the development plans and policies for the Shanghai FTZ. Continue reading
Average wages for 48 cities across China – from Guangzhou to Qingdao, Beijing to Luoyang
Nov. 19 – When determining social insurance contributions, there is a base figure for calculating the minimum and maximum contribution amounts for individuals whose salaries fall below or above certain thresholds. This base figure is derived from the average monthly wage of staff of the relevant city/province in the previous year, which is released around May to August each year.
As an example, in 2012, Beijing’s annual average salary was RMB62,677, with a monthly average salary of RMB5,223. In 2013, the cap for the social insurance base is three times the monthly average salary of 2012, i.e., RMB15,669. This gives a maximum contribution amount of RMB7,333 for the employer and RMB3,481.5 for the employee. For pension and unemployment insurances, the base figure for calculating the contributions is 40 percent of the 2012 monthly average salary (i.e., RMB2,089). Continue reading
Nov. 13 – Foreign companies that have established a representative office (RO) in China do not have the ability to hire local staff directly. Instead, Chinese staff must be seconded from an agency that will take the title of official employer.
The reason for restricting the right of an RO to employ staff is quite simple, it is not a capitalized legal entity in China. An employee must have the right to claim against their employer, and an RO will not be a suitable entity to claim against. By forcing ROs to employ staff through an agency (which is a capitalized legal entity in China), the interests of the employee are protected. Continue reading
Majority equity ownership in China does not always equate to majority control
Op-Ed Commentary: Chris Devonshire-Ellis
Nov. 13 – As the proposed Apollo-Cooper Tires M&A deal continues to go south amid accusations and lawsuits, lessons can be learned from this New York-brokered deal about the perils of ignoring even minority-owned assets based in China.
Cooper, who own 65 percent of a joint venture with state-owned Chengshan Group in China, have been the subject of a US$2.5 billion takeover by Apollo Tires of India. Lessons about structuring this deal, and the importance of getting both political and operational due diligence into M&As, are highlighted by the manner in which this particular acquisition has run into problems. Continue reading
Nov. 8 – Foreign-invested companies in China will see an easing of company registration requirements based on the principle of national treatment, according to Zhang Mao, head of China’s State Administration of Industry and Commerce (SAIC).
Zhang reiterated China’s new policies to ease company registration requirements at a press conference held on Thursday, and further clarified that those policies also apply to foreign businesses.
“Based on the national treatment principle, foreign companies are entitled to the same policies as their Chinese counterparts enjoy, meaning, when the Chinese government eases the setting-up requirements for Chinese companies, foreign investors should receive the same treatment,” said Zhang. Continue reading