December 2022 / China

China will manage COVID-19 with measures against Class B infectious diseases, instead of Class A infectious diseases, in a major shift of its epidemic response policies.

China has renamed the Chinese term for COVID-19 from "novel coronavirus pneumonia" to "novel coronavirus infection," said a statement released by the National Health Commission on Monday.

Starting from Jan. 8, China will downgrade management of the disease from Class A to Class B in accordance with the country's law on prevention and treatment of infectious disease, and remove it from quarantinable infectious disease management carried out in accordance with the Frontier Health and Quarantine Law of the People's Republic of China, added the statement.

Currently, COVID-19 is classified as a Class B infectious disease but subject to the preventive and control measures for a Class A infectious disease in China.

Basic conditions have been in place to support such an adjustment. Authorities will drop quarantine measures against people infected with novel coronavirus and stop identifying close contacts or designating high-risk and low-risk areas, said the document.

COVID-19 cases will receive classified treatment and a timely adjustment will be made to medical care policies. The country will also adjust its testing policies as well as the frequency and content of epidemic information release.

In addition, disease control measures targeting inbound travelers and imported cargo will be lifted, said the document.

Following the adjustment, China's COVID-19 prevention and control efforts will focus on protecting health and preventing severe cases. Measures will be rolled out to protect people's lives and health to the utmost and minimize the impact of the epidemic on economic and social development.

International travelers will no longer need to quarantine upon arrival in China starting Jan 8, according to the country's latest policy on epidemic control.

Inbound passengers will only be required to present a negative nucleic acid test result for COVID-19 obtained within 48 hours of boarding, according to the policy change, which was announced by the State Council's Joint Prevention and Control Mechanism on Tuesday.

COVID-19 testing upon arrival will be scrapped, and as long as passengers' health declarations are normal and they show no signs of illness in a routine checkup while clearing customs, they will not be subject to any special restrictions while in the country.

It added that visa arrangements for foreigners to enter the country for work, business, study, family reunions or other social events will be improved, while restrictions on outbound travel will also be eased.

"In light of the international epidemic situation and service capacity, the outbound travel of Chinese citizens will be resumed in an orderly manner," it said.

China's major industrial firms reported stable revenue growth in the first 11 months of the year, but their profit decline continued due to the resurging epidemic, official data showed Tuesday.

The combined revenues of industrial firms with annual main business revenue of at least 20 million yuan (about 2.88 million U.S. dollars) rose 6.7 percent year on year in the January-November period to 123.96 trillion yuan, the National Bureau of Statistics (NBS) said.

Their profits in total stood at 7.72 trillion yuan in the period, down 3.6 percent from a year earlier.

"In November, industrial production slowed down, and the pressure on business operations increased due to factors such as the resurgence of the epidemic and the weak demand, but the profit structure continued to improve," said senior NBS statistician Zhu Hong.

If excluding sharp declines in a few enterprises, such as steel and oil processing enterprises, the overall profit growth rate will be 6.6 percent in the January-November period this year, Zhu said.

A total of 20 out of 41 major industries saw growth in profits in the period, up from 19 in the first 10 months.

The oil and gas exploitation sector saw profits jump 1.13 times from the same period last year, while the electric and heat power production and supply and the coal mining and washing sectors reported profit increases of 47.2 percent and 47 percent, respectively.

Equipment manufacturing and basic consumer goods also came as bright spots for the industrial sector.

With a sustained recovery, the combined profits of equipment manufacturers climbed 3.3 percent in the first 11 months, 0.1 percentage points higher than the January-October period. In particular, the electric machinery sector saw its profit surge 29.7 percent thanks to booming new energy development.

Meanwhile, the profits of basic consumer goods companies also logged steady expansion. Producers of alcoholic drinks, tea, and other beverages posted a 21.5-percent profit increase.

In general, the resurging epidemic hampered the recovery of industrial profits in the short term, and the "triple pressure," namely shrinking demand, supply shock, and weakening expectation, still has a great impact on the industrial sector, Zhu said.

Zhu urged efforts to better coordinate the epidemic response and economic and social development, guarantee smooth industrial and supply chains, expand domestic demand, and stimulate the vitality of market entities so as to create more favorable conditions for the stabilization and recovery of the industrial economy.

The Shanghai Municipal Administration of Taxation and the Shanghai Municipal Administration of Market Regulation jointly issued the Notice on Further Improving the Service of Inspection of Individual Income Tax Payment Certificates for the Registration of Equity Change. The Notice will come into force on December 20, 2022.

Where an individual transfers the equity to go through the registration of the change of shareholders, the withholding agent or taxpayer shall, before going through the registration of the change with the market supervision and administration department, go through the tax declaration with the competent tax authorities of the place where the invested enterprise is located in accordance with the law.

The two departments in Shanghai implement the automatic interaction mechanism of individual equity transfer information. The market entity registration authority shall handle the registration of the change of equity according to the Form of Tax Payment for the Change of Equity of Natural Person Shareholders provided by the tax authority.

The General Administration of Customs ("GAC") released on December 6, 2022 the Announcement of Matters concerning the Implementation of the Catalogue of Encouraged Industries for Foreign Investment (2022 Version), to be effective on January 1, 2023.

Imports of qualified self-use equipment and related technologies, accessories and spare parts within the total investment amount of foreign-invested projects included the Catalogue will be exempted from the tariffs from January 1, 2023, while the import value-added tax ("VAT") will be levied on the imports according to applicable rules, according to the Announcement, which also clarified that for those foreign-invested projects that are approved, verified or filed prior to January 1, 2023 and fall within the scope of the Catalogue, the project units may apply for tax reduction and exemption as long as they have obtained the relevant documents issued by the competent departments before 2024.

The Chinese government released on December 14, 2022 the Guidelines on Expanding Domestic Demand (2022-2035). The Guidelines rolled out 27 measures in eight aspects for the key tasks of fostering a holistic domestic demand system, forming a strong domestic market, and smoothing domestic economic circulation.

The Guidelines called for expanding the roles of financial and tax systems in regulating income distribution, urging to improve the system of levying tax directly and the individual income tax system, and strengthen the tax regulation and supervision over high-income earners. It also stressed the need to improve the transfer payment system to increase transfer payments to the regions that lag behind in development, increase allocation of funds to the areas that concern people's livelihoods in an orderly manner, optimize the structure of education expenditure, elevate traditional consumption, promote healthy development of the catering industry, and take measures to eliminate food wastes.