December 2021 / China

December 21 2021

Guangdong forms China’s largest fuel cell vehicle industry cluster

South China's Guangdong Province has attracted more than 300 hydrogen energy enterprises with the total value of its hydrogen energy industry surpassing 10 billion yuan (about 1.57 billion U.S. dollars), local authorities said on Wednesday.

The province is taking the lead in China's burgeoning fuel cell-powered vehicle industry and has formed the country's largest fuel cell vehicle industry cluster, according to data released on Wednesday during the UNDP Hydrogen Industry Conference 2021 in Guangdong's Foshan City.

The province is a major automobile manufacturing base in China and has strived to develop the eco-friendly fuel cell vehicle industry over the years.

Guangdong currently has 39 hydrogeneration stations while 10 more are under construction, making the province rank first nationwide in terms of the number of stations.

December 21 2021

China to build 100 national major cold-chain logistics bases by 2025

China plans to set up about 100 national backbone cold-chain logistics bases during the 14th Five-Year Plan period (2021-2025), the country's top economic planner said on Monday.

The move aims to enhance service capacity and boost the efficiency of the cold-chain logistics sector, Zhang Jiangbo, an official with the National Development and Reform Commission told a press conference, adding that the first batch of the 17 key bases is under construction.

To further enhance the cold-chain transportation network, China will establish eight major channels for cold-chain logistics across the board by 2025, linking core areas for farm production and 19 city clusters, according to Zhang.

Moreover, a national-level logistics platform will also be built by then to enhance cold-chain food logistics tracking and management, he said.

December 21 2021

China’s central bank announces reserve requirement ratio cut

China's central bank said Monday it has decided to cut the reserve requirement ratio (RRR) for financial institutions to support the development of the real economy and reduce the comprehensive financing cost.

The ratio will be cut by 0.5 percentage points, effective on Dec. 15, except for those financial institutions that already implement a 5-percent RRR, said the People's Bank of China (PBOC) in a statement.

After the reduction, the weighted average RRR for Chinese financial institutions will stand at 8.4 percent, the central bank said.

About 1.2 trillion yuan (about 188.4 billion U.S. dollars) in long-term funds will be released through the cut.

Taking it as a regular operation of the country's monetary policy, the PBOC said financial institutions will use part of the released funds to repay the maturing medium-term lending facilities while use the rest to replenish long-term funds to better meet the needs of market entities.

The reduction will also lower the fund costs for financial institutions by around 15 billion yuan per year, according to the PBOC calculation.

It can guide financial institutions to actively use the funds released to strengthen support for the real economy, especially smaller enterprises, and lower the comprehensive financing cost, said the PBOC.

The central bank said it will continue to implement a prudent monetary policy, prioritize stability and avoid "flood-like" stimulus.

It will also make efforts to maintain reasonably ample liquidity, strengthen cross-cyclical adjustments and promote the consistency of macro policies for the year 2021 and 2022.


December 21 2021

Fujian Extends Application of Preferential Tax Rate in the Pingtan Zone for Five Years

The Management Committee of the Pingtan Comprehensive Experimental Zone in Fujian recently released the Circular on Continuing the Policy of Applying Preferential Corporate Income Tax Rate in the Pingtan Comprehensive Experimental Zone to extend the application of the reduced tax rate for five years from January 1, 2021 to December 31, 2025.

According to the Circular, companies set up in the Zone would be levied the corporate income tax at a reduced rate of 15% if they are qualified by meeting the requirements of having its main business in the industry as set forth in the Catalogue of the Industries Eligible for the Preferential Corporate Income Tax in the Pingtan Comprehensive Experimental Zone (2021 Edition), with their income from the main business representing more than 60% of its total income. The total income should be subject to the provisions of the 6th article of the Law on the Corporate Income Tax. The 2021 edition of the Catalogue has added four industries including electronic information, modern logistics, technology and business service, and information service for 12 items on the basis of the 2017 edition.

December 21 2021

State Council Decides to Weight Tax and Fee Cut Policy toward Manufacturing

Premier Li Keqiang chaired an executive meeting of the State Council on December 15, 2021, stressing that a market-oriented approach would be further applied to increase financial support to micro, small, and medium enterprises and policy support for the manufacturing industry would be enhanced.

It is decided at the meeting that support would be increased to help manufacturing firms to overcome difficulties and grow, the tax and fee cut policies would be weighted toward the manufacturing industry, the policies of granting an extra tax deduction on enterprises' R&D costs and refunding and rebating the VAT would be further implemented to support enterprises to conduct innovation in science and technology and transform and update traditional industries. It is also decided to change the policy of allowing micro and small enterprises to defer principal and interest repayments on inclusive-finance loans to the policy of supporting them with inclusive-finance loans. From 2022 to the end of June, 2023, the central bank will provide the funds at 1% of the incremental balance for the inclusive-finance loans granted by local corporate banks to small and micro enterprises and self-employed individuals.

We foresee more tax benefits that will be announced in 2022.

December 21 2021

China’s FDI inflow expected to top 1 trillion yuan in 2021

Foreign direct investment (FDI) into the Chinese mainland, in actual use, is expected to surpass 1 trillion yuan, or 157.49 billion U.S. dollars, in 2021, an official with the Ministry of Commerce (MOC) said Thursday.

During the past two decades since China's accession to the World Trade Organization, the country has achieved marked progress in the use of foreign investment, Gao Feng, an MOC spokesperson, told a virtual press conference.

The FDI inflow totaled 999.98 billion yuan in 2020, skyrocketing 157.7 percent from 338 billion yuan registered in 2001, said Gao.

China will further shorten the negative list on foreign investment, facilitate services for foreign-funded enterprises and projects, and foster a law-based, international, and convenient business environment to share its market opportunities globally, said Gao.

December 21 2021

Shanghai, Guangdong and Inner Mongolia Conduct E-invoicing Pilot Program among Selected Taxpayers

The tax authorities from Shanghai, Guangdong and Inner Mongolia released on November 30, 2021 their respective announcements, saying a comprehensive pilot program of pursuing e-invoicing among selected taxpayers in Shanghai, Guangzhou, Foshan, Guangdong-Macao Intensive Cooperation Zone and Hohhot would be implemented from December 1, 2021.

Taxpayers and drawees selected for the pilot program are specified in the announcements, and taxpayers who do not use or have the Internet are temporarily excluded. E-invoices have the same legal effect and usage as existing paper invoices but have no sheets. They have 17 items of content including dynamic QR code and invoice number. Taxpayers covered in the pilot program would be free from the requirements for the use of special VAT control device, check and verification of invoice types, and application of e-invoices after undergoing real-name verification. They can make out an invoice via the e-invoicing service platform, which can also be used for bookkeeping.

December 21 2021

China Announces 2022 Tariff Adjustment Plan

The Customs Tariff Commission of the State Council released on December 15, 2021 the 2022 Tariff Adjustment Plan to adjust the import and export tariffs of selected goods from January 1, 2022.

From the date, China will apply interim import tariff rates lower than the Most-favored Nation (MFN) rates for 954 items of goods, including imposing zero tariff for a new type of anticancer drug named radium chloride injection, and reducing the import tariffs of selected consumer goods. The country will also increase the import and export tariffs of some commodities. For the goods including lead-acid battery parts and pork, the interim import tax rates would be removed, with the MFN tariff rates resumed. From July 1, 2022, China will implement the seventh-stage reduction of the MFN rates for 62 IT products. After the adjustment, China's overall tariff level will remain at 7.4%. In 2022, the country will apply the agreed tax rates on selected goods originating in 29 countries or regions.