China Regulatory Brief: Reformed Procedural Law, Wuhan 72-hour Visa Free, Free Trade Zones Updated
Wuhan to Join List of Cities with 72-hour Transit Visas
The city of Wuhan announced last week that it will allow foreign visitors 72 hours transit without visas. The policy will go into effect in March 2015. Travelers from one country to another who are changing planes at Wuhan Tianhe International Airport will no longer need to apply for a visa. They will be allowed to stay for 72 hours within the city’s limits upon showing their outbound ticket. Prior to implementing the policy, travelers did not need visas for stays of up to 24 hours, and could not leave the airport.
Wuhan Tianhe International Airport is an aviation hub for central China. As the policy allows international travelers to take short day trips into the city, it is hoped that the move will raise the image of the city abroad and improve Wuhan’s tourism industry. Last year the city welcomed 1.3 million tourists, a growth of 29 percent.
Other cities with 72 hour visa-free transit policies are Chongqing (for travelers from certain countries), Guangzhou, Beijing, Shanghai, Chengdu, Dalian, Shenyang, Xi’an, Guilin, Hangzhou and Kunming.
Tianjin, Guangzhou, Fujian Free Trade Zones to Adopt Negative List Approach
According to domestic media, the three new Free Trade Zones in Tianjin, Guangzhou and Fujian will adopt the same negative list investment policy as the Shanghai Free Trade Zone. The “negative list” policy allows foreigners to freely set up companies in any industry, except for those explicitly named on the negative list. With certain types of e-commerce recently removed from the Shanghai FTZ’s negative list, the move is a significant expansion for foreigners looking to enter the Chinese e-commerce market.
In addition, Tianjin is likely to benefit significantly from the same relaxed policy on car imports as in the Shanghai FTZ – the former is the largest importer of finished cars in China. Less is known about the Fujian Free Trade Zone, other than that the Pingtan Zone will focus on trade with Taiwan, whereas Xiamen will support the modern service sector and Quanzhou will feature policies targeting the manufacturing sector.
Among other policies, the Guangdong Zone will likely include a tie-up with the Shenzhen Stock Exchange. In November 2014, the Hong Kong Shanghai Stock Connect program kicked off, allowing traders from one exchange to trade in selected shares from the other. While still a pilot scheme, China’s premier Li Keqiang already announced that if successful, the policy would extend to Shenzhen’s stock exchange as well.
Two New Free Trade Zones Proposed
Two more proposed free trade zones were made public this week. The first will be in the western city of Lanzhou, capital of Gansu province. The Silk Road city is a major transportation hub in western China, and the proposed Free Trade Zone would focus on the petrochemical industry, pharmaceuticals and machinery manufacturing.
Guangxi province also submitted a proposal for establishing a free trade zone. The zone would cover the cities of Fangchenggang, Pingxiang and Dongxing on the border with Vietnam. Notably, Fangchenggang is China’s only port city in the Gulf of Tonkin. As planned, the zone will be set up in cooperation with the Vietnamese government, which will establish its own free trade zone next to the Chinese one. The Vietnamese-Chinese Free Trade Zone would be the first such zone set up in cooperation with another government, and would focus on China-ASEAN trade and investment.
China’s Supreme People’s Court Issued Judicial Interpretation to the Civil Procedure Law
On February 4th, the Supreme People’s Court of China issued a 552-article comprehensive Interpretation of the 2012 Civil Procedure Law (the “Interpretation”), exceeding the length of the Civil Procedure Law itself. With a more sophisticated procedural law, investors are expected to be able to make more informed litigation decisions. Below are a few highlights:
- The “Interpretation” goes into more detail to improve efficiency and procedural justice, further clarifying circumstances when judges should recuse themselves.
- There are more refined rules on evidence, showing how electronic data contained in emails, online chat records, blogs, text messages, electronic signatures, and domain names can be used as evidence.
- The new regulations include more sophisticated procedural rules for public interest and small claims litigation, for example, providing that an organization must show prima facie evidence of harm to the public interest to initiate public interest litigation.
- The “Interpretation” also features clearer treatment of foreign documents and rulings, including provisions concerning foreign language evidence and the recognition and execution of foreign rulings, affording litigants more legal certainty in cross-border litigation.
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Revisiting the Shanghai Free Trade Zone: A Year of Reforms
In this issue of China Briefing, we revisit the Shanghai FTZ and its preferential environment for foreign investment. In the first three articles, we highlight the many changes that have been introduced in the Zone’s first year of operations, including the 2014 Revised Negative List, as well as new measures relating to alternative dispute resolution, cash pooling, and logistics. Lastly, we include a case study of a foreign company successfully utilizing the Shanghai FTZ to access the Outbound Tourism Industry.
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In this issue of China Briefing, we have set out to produce a guide to employing foreign nationals in China, from the initial step of applying for work visas, to more advanced subjects such as determining IIT liability and optimizing employee income packages for tax efficiency. Lastly, recognizing that few foreigners immigrate to China on a permanent basis, we provide an overview of methods for remitting RMB abroad.
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In this issue of China Briefing, we examine the role of Free Trade Agreements and the various regional blocs that China is either a member of or considering becoming so, as well as how these can be of significance to your China business. We also examine the role of Double Tax Treaties, provide a list of active agreements, and explain how to obtain the tax minimization benefits on offer.