China Laws and Regulations Update in October 2019

1.Encryption Law of the People’s Republic of China

Promulgated by the Standing Committee of the National People’s Congress

Promulgation date: 26 October 2019

Implementation date: 1 January 2020                            

The Encryption Law states that main rules on commercial encryption including standard, inspection and certification, market access, use requirement, import and export, e-administration and e-certification service and in-process and post regulation rules on commercial encryption. (Source: Website of the National People’s Congress)

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China Laws and Regulations Update in September 2019

1.Arrangements Between Courts of Mainland China and Hong Kong Special Administrative Region for Mutual Support in Preservation Under Arbitration Procedures

Promulgated by the Supreme People’s Court

Document number: L.I.(2019) No.14

Promulgation date: 26 September 2019

Implementation date: 1 October 2019                            

According to the Arrangements, arbitration procedures for preservation in Hong Kong and mainland China should be seen as similar, people to whom arbitration procedures of Hong Kong apply are allowed to file preservation applications to the people’s court of mainland China and people to whom arbitration procedures of mainland China apply may seek mandamus and other provisional remedies from the court of Hong Kong SAR. The Arrangements consists of thirteen clauses covering the preservation scope, evaluation of arbitration procedures of Hong Kong, preservation application procedures, processing of preservation applications, etc. (Source: Website of the People’s Court Daily)

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China Laws and Regulations Update in August 2019

1.Land Administration Law of the People’s Republic of China

Promulgated by the National People’s Congress

Document Number: No.32 President Order

Promulgation date: 26 August 2019

Implementation date: 1 January 2019

The amendments to the Land Law lifts the legal restriction on collective commercial construction land into the market. Collective rural construction land can be transferred, leased or given in other way to and directly used by organizations or individuals other than a collective rural economic organization after being permitted by the plan, legally registered and approved more than two thirds of members of the collective economic organization. The users can subtransfer the land in their possession by transfer, swap and pledge. (Source: Website of the National People’s Congress)

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China Laws and Regulations Update in July 2019

1.Circular Notice on Issuing the Overall Plan for the Lingang New Area of the China (Shanghai) Pilot Free Trade Zone

Promulgated by the State Council

Document Number: G.F.(2019) No.15

Promulgation date: 27 July 2019

To follow the principles of the Notice, there will be a well-designed set of rules to facilitate free trade and investment in the new area, including allowing well-known overseas arbitration and dispute resolution organizations to do arbitration activities as businesses; creating the Yangshan Special Comprehensive Bonded Area to cancel unnecessary trade regulation, permit and process requirements on the basis of full implementation of comprehensive bonded area policies; studying and using free trade accounts that combine RMB and foreign currency payment functions on experimental basis, exploring free capital flow into and out of and free capital exchange in the new area; treating international transport by ships manufactured in the country and registered in “Yangshan Port, China” as exports entitled to tax rebate; implementing globally competitive tax rules and policies, reducing enterprise income tax and other tax rates applying to eligible businesses doing manufacturing and research activities in most important parts of key areas such as integrated circuits, artificial intelligence, bio-medicine and civil aviation in the new area to 15% within five years after the business establishment date. (Source: Website of the State Council)

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China Laws and Regulations Update in June 2019

1.Rules on Human Genetic Resources

Promulgated by the State Council

Document Number: No.717 SC Order

Promulgation date: 10 June 2019

Implementation date: 1 July 2019

The Rules provides that foreign parties cannot collect or store China’s human genetic resources or transfer them to a foreign country; foreign parties that want to use China’s human genetic resources to do scientific research have to enter into cooperation with Chinese scientific research institutions, universities and colleges, medical institutions and businesses; to transfer China’s human genetic resources to a foreign country, permission of the administrative department of science and technology of the state council is required; to transfer human genetic resources or information to or make them available in a foreign country, the recordation process shall be completed and relevant information shall be filed; in a case that may affect the public health, national security and public interests of our country, passing the security investigation organized by the administrative department of science and technology of the state council is required. (Source: Website of the State Council)

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China Laws and Regulations Update in May 2019

1.Governmental Investment Rules

Promulgated by the State Council

Document number: G.L.No.712

Promulgation date: 5 May 2019

Implementation date: 1 July 2019

The Rules clarifies the definition, scope, decision making process, annual investment plan, implementation, supervision and management and legal liability connected with government investments. According to the Rules, government investment funds should be used in non-profit services, public infrastructure, agriculture and rural areas, ecological and environmental protection, significant technological advancement, social administration, national security and other public areas, mainly in non-business projects. All investors should be treated equally when allocating government investment funds. Discriminatory conditions are forbidden. (Source: Website of the State Council)

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China Laws and Regulations Update in April 2019

1.The Trademark Law of the People’s Republic of China

Co-promulgated by the Standing Committee of the National People’s Congress

Promulgation date: 23 April 2019

Implementation date: 1 November 2019

The main contents of this amendment are: 1. new regulations on bad faith registration: refusal of trademark registration applications for a purpose other than use of the trademark and including “trademark registration applications for a purpose other than use of the trademark” as a valid reason for claiming trademark opposition or invalidity; 2. giving more serious punishment for infringement of proprietary rights in the trademark by increasing the multiple used to calculate the amount of damages for a malicious infringement of proprietary rights in the trademark from larger than one but smaller than three to larger than one but smaller than five and increasing the upper limit on legal damages from RMB three million to RMB five million. (Source: Website of the National People’s Congress)

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China Laws and Regulations Update in March 2019

1.The Foreign Investment Law of the People’s Republic of China

Co-promulgated by the National People’s Congress

Promulgation date: 15 March 2019

Implementation date: 1 January 2020

This law will replace the Sino-Foreign Joint Venture Law, Foreign Funded Enterprise Law and Sino-Foreign Business Cooperation Law to be the legal basis for foreign investment in China. According to this law, organizational forms and structures of foreign funded businesses and their course of action should be governed by the Company Law, the Partnership Law and relevant laws, provided that foreign funded businesses set up before the implementation of this law may continue existing in their original organizational form. Foreign investment means direct or indirect investment made in China by natural people, businesses or other organizations in foreign countries, including establishment of a new business, merger and acquisition, creation of a new project and other forms of investment; Capital contributions, profits, capital gains, earnings relating to assets disposal, royalties from licensed use of intellectual property rights, legal redress or compensation, earnings relating to liquidation, etc. can be transferred in RMB into China or transferred in foreign currency out of China. The Chinese government protects intellectual property rights of foreign investors and foreign funded businesses and legal interests of people owning or relating to these intellectual property rights. The Chinese government implements the pre-establishment national treatment and negative list system for foreign investments and follows the principle of treating foreign and domestic investors equally when supervising and administering foreign investments. Foreign investments that will or may affect the national security will be inspected. (Source: Website of the National People’s Congress)

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China Laws and Regulations Update in February 2019

1. Announcement on Publishing the Regulations on Overseas Inspection of Medicine and Medical Instruments

Promulgated by the State Administration for Market Regulation

Document number: No.101 in 2018 by the State Administration for Market Regulation

Promulgation date: 26 December 2018

Effective date: 26 December 2018

The Announcement states that overseas inspections are conducted for medicine and medical instruments that have been marketed or are proposed to be marketed and that overseas inspections do not only include inspections in places where production is being performed but mean inspections in places where research, development or production is being performed. Matters to be investigated are decided by considering risks in registration, supervision, examination, inspection, reporting, adverse effect, etc. of medicine and medical instruments as required for risk control. (Source: Website of the State Administration for Market Regulation)

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China Laws and Regulations Update in December 2018

1.Patent Agent Regulations

Promulgated by the State Council

Document number: No.706 State Council Order

Promulgation date: November 19th, 2018

Effective date: March 1st, 2019

The Regulations sets forth patent agent responsibilities for their signature, stating that patent agents should be responsible for patent cases they have signed to handle. In addition, it contains details of patent agent aid services and encourages patent agencies to provide aid services for small businesses and low-income people, advising on patent applications and their legal rights. (Source: Website of the State Council)

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China Laws and Regulations Update in August 2018

1.Decision to Amend the Provisional Rules on Filings of Establishment and Change of Foreign Funded Enterprises

Promulgated by the Ministry of Commerce

File number: No.19 MOC Order in 2018

Promulgation date: 29 June 2018

Effective date: 30 June 2018

The Provisional Rules states that in order to establish a foreign funded enterprise or change a domestic enterprise into a foreign funded enterprise by merger, acquisition, absorption, combination, etc. by filing as required by the Provisional Rules, filings of establishment of the foreign-funded enterprise shall be submitted online during the establishment and change recordation processes of the administration of industry and commerce and the market supervision and regulation department and the recordation authority shall begin the recordation process upon and inform the investor of receipt of the filings transferred by the administration of industry and commerce and the market supervision and regulation department. If the foreign-funded enterprise or its investor delays in submitting or has a material omission in its filings, the commerce department should give an order to correct it within a limited period of time. A fine of less than RMB 30,000 should be payable for a failure to correct it as required or a serious misconduct. (Source: Website of the Ministry of Commerce)

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China Laws and Regulations Update in July 2018

1.Circular on Promoting Economic Growth by Actively and Effectively Using Foreign Funds

Promulgated by the State Council

File number: No.19 issued by SC in 2018

Promulgation date: 15 June 2018

Effective date: 28 April 2018

The Circular states that the foreign funds “regulatory system” reform will continue. Provincial governments are responsible for approving and administering the incorporation and change of any foreign-funded company with a total investment of less than USD 1 billion in items on the negative list for admittance of foreign investment funds. Local governments are encouraged to attempt an intensive reform of the administrative permit system. Foreign-funded companies outside the negative list can complete the recordation and the AIC registration formalities through “one-stop” service. (Source: Website of the State Council)

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Application of Laws on Non-Competition Clauses (Part I)

(By Lisa Li) In accordance with relevant laws of People’s Republic of China (“PRC), judicial interpretation by PRC Supreme People’s Court, judicial interpretation by local Superior People’s Courts and local regulations and based on the author’s research into and analysis of over two dozens of litigation cases from Shanghai and Beijing etc, the author elaborates on the application of laws on non-competition clauses from the perspective of Chinese employment law practice. The following is Part I of this topic on application of laws on non-competition clauses.[1]

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China Laws and Regulations Update in December 2017

1. Circular Notice on Adjusting Import Taxes on Certain Commodities
Promulgated by the Ministry of Finance
Document number: No.25 [2017] TB
Promulgation date: 22nd November 2017
Effective date: 1st December 2017

As from 1st December 2017 import taxes on certain commodities are reduced based on current tax rates. The import tax reduction this time applies to 187 commodities with an 8-digit tax number such as food, healthcare products, medicine, cosmetics, clothes, shoes and hats. The average tax rate is reduced from 17.3% to 7.7%. The tax rate of diapers and nappies is reduced from 7.5% to 0%. The tax rate of certain baby milk powder products is reduced from 20% to 0%. (Source: Website of the Ministry of Finance)

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China Laws and Regulations Update in Augest 2017

1.Catalogue of Industries for Guiding Foreign Investment (Revised Edition 2017)

Promulgated by the National Development and Reform Committee

File No. No.4 Order of the NDRC

Promulgation date: 28th June 2017

Effective date: 28th July 2017

The Catalogue of Industries for Guiding Foreign Investment (Revised Edition 2017) first introduced the negative list for foreign investment access, containing 63 articles about restrictions and prohibitions, decreased by 30 articles compared with the 2015 edition. The Catalogue shall be the basis on which the pre-establishment national treatment and negative list administration model is implemented. No measure should be taken to restrict foreign investment access to any area outside the scope of the negative list. The new Catalogue further relaxes the restrictions on foreign investment access to service, manufacturing and mining industries and especially abolishes the restrictions on foreign investment access to industries of oil and gas for special use, precious metals, lithium ores, etc. (Source: Website of the National Development and Reform Committee)

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