February 2022 / China

The Ministry of Finance, together with the General Administration of Customs and the State Taxation Administration, released on February 14, 2022 the Circular (2022) No.4 of the MOF, GAC and STA to adjust the "zero-tariff" policy on self-used production equipment at the Hainan Free Trade Port. The move aims to further support the building of the Hainan FTP.

The Circular expands the list of "zero-tariff" commodities to add eight pieces of production equipment required in the culture, sports and tourism sector including merry-go-round, swings and rotary platforms, roller coasters, aquatic rides and amusement facilities to the production equipment as defined in Article 2 of the Circular (2021) No.7 of the MOF, GAC and STA. It also extends the scope of entities eligible for the policy, allowing public hospitals, research institutions to register at the Hainan FTP and applying the "zero-tariff" policy on public institutions with the qualification to run as independent legal persons for their self-used production equipment. The remaining provisions of the No.7 Circular would remain in force.

The announcement will take effect from February 10, 2022, and will be valid until December 31, 2025, according to the Shanghai Free Trade Zone Management Committee.

"Measures" make clear that the scope of support includes those science and technology enterprises which register, actual premises and tax households in Lingang new district, with main business in line with the "4 + 2 + 2" key frontier industry guidance. In details, it includes 6 aspects and 10 supporting items, including breakthroughs in key core technologies and products, identification of independent innovation capacity, and industrial capacity building.  Among them, the measures clearly support enterprises to promote digital application.  Support "specialized, special and new" enterprises to use artificial intelligence, 5G, industrial Internet and other related technologies to carry out digitalization, informatization and intelligent demonstration applications, and the maximum amount of support for projects listed in the demonstration application category is 50 million yuan.

14 authorities led by the National Development and Reform Commission jointly released on February 18, 2022 the Several Policy Measures on Boosting the Recovery of Enterprises in Difficulty in the Service Sector, which rolled out 41 policy measures aimed to help ease the difficulties of the enterprises.

According to the document, the policy for add-up deductions of value-added tax in the service sector will be extended. In 2022, taxpayers in producer services and consumer services will continue to enjoy add-up reductions of tax payable at 10% and 15% respectively for their deductible input VAT. And micro, small and medium-sized enterprises (MSMEs) will be entitled to more pre-tax deduction of costs for purchase of equipment. Specifically, MSMEs that purchase new equipment worth above 5 million yuan and with a 3-year depreciation period are entitled to a one-off deduction of total purchase costs from taxable income, or a 50 percent deduction for such purchases of equipment with a depreciation period of four, five or ten years. A firm can enjoy the tax relief on a quarterly basis, and for a loss suffered in the year but insufficient to be deducted in the year, the firm may carry it over to the following five taxable years for deduction.

Micro, small and medium-sized manufacturing enterprises refer to enterprises with annual sales of more than 20 million yuan (inclusive) but less than 400 million yuan (exclusive) (hereinafter referred to as the "medium manufacturing enterprises") and enterprises with annual sales of less than 20 million yuan (exclusive) (hereinafter referred to as the "micro and small-sized manufacturing enterprises") in the manufacturing sector under the national economic classification.

In 2022, not only small-scale taxpayers, but also low-profit enterprises and individual businesses are allowed to enjoy the 50% tax rate reduction of urban maintenance and construction tax, property tax, urban land use tax, stamp duty (excluding securities transaction stamp tax), farmland conversion tax and educational fees.

Government to continue to implement the policy of lowering premiums for unemployment insurance and workers' compensation insurance in phases in 2022. Government will continue to implement the policy of stable unemployment insurance refunds for enterprises that do not or do not lay off employees, and increase the rate of refunds for micro, small and medium-sized enterprises from 60% to 90% at most in 2022.

The policy of 3 months’ tax deferral will be extended for another six months. The policy of partial tax deferral for micro, small and medium-sized enterprises in the manufacturing industry that was implemented in the fourth quarter of 2021 will be extended for another six months, including Quarter 1 & 2 2022.

In the road, waterway and railway transport industry, the advance payment of VALUE-ADDED tax by railway transport enterprises will be suspended for one year in 2022. In 2022, VAT will be exempted for passenger ferry, bus passenger transport, subway, urban light rail, taxi, long-distance passenger transport, shuttle bus and other public transport services.

In the civil aviation industry, air transport enterprises will be suspended from paying value-added tax in advance for one year in 2022.

Cross-border e-commerce is gaining momentum in China against the backdrop of the COVID-19 pandemic that severely impacted international trade, and the recent approval of more cross-border e-commerce comprehensive pilot zones has, undoubtedly, accelerated this trend.

Last week, China's State Council issued a statement, approving the establishment of more cross-border e-commerce pilot zones in 27 cities and regions, including Erdos in Inner Mongolia and Yangzhou City in Jiangsu Province.

This now brings the overall tally of pilot zones to 132, covering almost all provincial-level regions in China from coastal industrial powerhouses such as Jiangsu, Zhejiang and Guangdong to inland areas.

"As a new form of foreign trade with great potential, cross-border e-commerce is still on its fast growth track," the Ministry of Commerce said.

Cross-border e-commerce, featuring online marketing, online transactions and contactless payment, has boomed in China over the past few years, particularly during the last two years when the pandemic impeded business travel and face-to-face contact.

According to official data, cross-border e-commerce volume soared tenfold over the past five years.

In 2021 alone, China's cross-border e-commerce imports and exports climbed 15 percent year on year to 1.98 trillion yuan (about 311 billion U.S. dollars), with related pilot zones playing a significant role in spurring the growth.

China began setting up cross-border e-commerce pilot zones as early as 2015 in Hangzhou, Zhejiang Province, in a bid to trial the new business form and digitalize its trade channels.

In these pilot zones, local governments provide a variety of trade services ranging from logistics, payment, law, taxation and customs clearance to facilitate enterprises' cross-border e-commerce businesses.

"Our company has seen tangible benefits after the establishment of cross-border e-commerce pilot zones," said Wu Fan, head of the Asia-Pacific region of U-Play Corporation, an Anhui-based hygiene products manufacturer.

Currently, 90 percent of the company's products are sold overseas via cross-border e-commerce retail. The company's cross-border imports and exports soared 62.5 percent from 80 million yuan in 2020 to 130 million yuan in 2021, Wu said, attributing this growth to preferential tax policies.

The favorable policy environment for cross-border e-commerce has led to a continuous increase in the number of cross-border e-commerce companies.

So far, China has seen the establishment of more than 30,000 enterprises related to cross-border e-commerce, with the volume climbing every year.

Apart from benefitting market entities, cross-border e-commerce pilot zones also improve the shopping experience of consumers, said Xu Qing, director of public affairs department at Tmall Global, a leading online shopping platform where Chinese consumers hunt for overseas products.

"Thanks to the cross-border e-commerce boom, domestic consumers can choose from more overseas products with lower prices and faster delivery without leaving their homes," Xu said.

As one of the world's largest goods traders, China is expected to further enhance its competitive strengths in foreign trade through the expansion of cross-border e-commerce pilot zones.

Zhu Caihua, a professor at the University of International Business and Economics, said cities later designated as cross-border e-commerce pilot zones should leverage local development advantages and enhance institutional innovation to propel high-quality development of the new business form.

Source: XINHUANET

China has approved a project involving the construction of eight national computing hubs and plans to build 10 national-data center clusters, indicating that its strategy to channel more computing resources from the country's eastern regions to its less developed yet resource-rich western regions is in full swing.

The project, approved by the National Development and Reform Commission (NDRC) and three other central departments, marks the completion of the overall layout for the national integrated big-data center system. It will better empower the country's digital development.

Following the South-to-North Water Diversion Project, the west-to-east gas pipeline and the west-east power transmission program, this is another cross-regional project in China's pursuit of high-quality development through the optimization of resources and the boosting of sustainable development.

"Like with the South-to-North Water Diversion Project and the west-east power transmission program, we should give full play to the advantage of the country's system and mechanism to make integrated arrangements at the national level," NDRC official Sun Wei said during a recent interview with Xinhua.

The eight national computing hubs will be built in the Beijing-Tianjin-Hebei region, the Yangtze River Delta, the Guangdong-Hong Kong-Macao Greater Bay Area, the Chengdu-Chongqing economic circle, north China's Inner Mongolia Autonomous Region, southwest China's Guizhou Province, northwest China's Gansu Province and Ningxia Hui Autonomous Region.

The eight national computing hubs, as the backbone connection to China's computing network, will develop data-center clusters, carry out collaborative construction between data centers, cloud computing and big data, and bridge the gap between eastern and western regions in computing resources.

Noting that most of China's data centers are distributed in the eastern regions at present, Sun said that shortages of land and energy resources in these regions pose a threat to the sustained development of the data centers.

In contrast, China's western regions are rich in resources, especially renewable energy, and have the potential to nurture the development of data centers and meet the needs of data computing in the eastern regions, Sun said.

"The implementation of the project is conducive to promoting the green development and utilizing green energy in the western regions, and continuously optimizing the energy efficiency of data centers," Sun said.

In the next stage, China will focus on improving the influence of the eight national computing hubs to drive the integrated and coordinated development of data computing across the country.

Along with big-data sector growth, the Ministry of Industry and Information Technology has unveiled a plan for the industry during the 14th Five-Year Plan period (2021-2025). It forecasts that China's big-data industry will exceed 3 trillion yuan (about 474 billion U.S. dollars) by the end of 2025, with a compound annual growth rate of around 25 percent.

South China's Hainan Province will promote high-quality development in tourism consumption, industrial investment and business environment, according to the annual session of the provincial people's congress which concluded on Monday.

Aiming to be an international tourism and consumption destination, Hainan will boost high-end tourism consumption, cultivate new consumption growth areas featuring cruises, yachts, tourism and sports, and promote the international competitiveness of duty-free shopping, according to the provincial government work report.

Hainan eyes a total sales of 100 billion yuan (about 15.8 billion U.S. dollars) in duty-free shopping this year, according to the report delivered at the annual session of the provincial people's congress.

Wang Xuan, deputy general manager of the China Tourism Group Duty Free Corporation Ltd., said two duty-free shops in Sanya will be expanded and the duty-free shop in Haikou Meilan International Airport will be improved to bring in more international brands.

He also noted that this year the provincial capital Haikou will see the opening of a new international duty-free shopping mall, which will be the largest duty-free shopping complex in the world.

The second China International Consumer Products Expo will be held in Haikou in April.

"This year's expo will be larger and more international, focusing more on exquisite and new products," said Han Shengjian, director of the Hainan bureau of international economic development.

The province's duty-free shops raked in around 60.2 billion yuan in 2021, an increase of 84 percent year on year. Bo'ao Lecheng International Medical Tourism Pilot Zone received 127,300 tourists, up 90.6 percent year on year. Lingshui Li'an International Education Innovation Pilot Zone inked agreements with 22 renowned colleges and universities from home and abroad.

Hainan has made great progress in bringing back overseas consumption, and strengthened its role in connecting Chinese and international markets, said Wang Lei, an official with Hainan Provincial Committee of the Communist Party of China.

The provincial government work report this year pointed out Hainan will focus on the tourism industry, modern service industry, high-tech industry and tropical agricultural industry, and intensify innovation and development of industrial clusters.

"We must stimulate the impetus of the cities, counties and industrial parks, and guide more industries to settle in the parks and step up the upgrading of projects," said Gu Gang, director of Hainan provincial development and reform commission.

As one of the 11 key industrial parks of Hainan free trade port, Wenchang International Aerospace City has made substantial progress.

"We will invite investment in rocket, satellite and data chains, attract more key projects home and abroad to settle in the park, and build a world-renowned park with aerospace high-tech industries," said Liu Chong, mayor of Wenchang.

Source: XINHUANET

The successful efforts to involve more than 300 million Chinese people in snow and ice activities is the most significant legacy of the Beijing Winter Olympics to global winter sports and the Olympic movement, said an official with the nation's top sports authority.

Tu Xiaodong, director of the publicity department of the General Administration of Sport, said the commitment was made not only to showcase China's contribution to the Olympic movement, but also to meet the fitness needs of the entire population. "The realization of this goal was arguably the first 'gold medal' of the 2022 Beijing Winter Olympics," Tu said at a news conference on Thursday.

During its bid for the 2022 Winter Olympics, China made a commitment to the international community to "engage 300 million people in ice and snow activities", and recent statistics showed that the country has achieved this goal.

By January, over 346 million people have participated in winter sports since 2015, when Beijing was selected to host the event, according to the National Bureau of Statistics.

The country has also greatly boosted investment in winter sports infrastructure, equipment manufacturing, tourism and winter sports education. The data showed that China now has 654 standard ice rinks, 803 indoor and outdoor ski resorts.

The number of snow and ice leisure tourism trips in 2020-21 snow season reached 230 million, generating income of over 390 billion yuan ($61.6 billion).

The general public has also shown increasing interest in winter sports.

Since November, nearly 3,000 mass events related to the Beijing Winter Olympics have been held across the country, involving more than 100 million participants.

Driven by the Winter Olympics, winter tourism, equipment manufacturing, professional training, venue construction and operation have developed rapidly in recent years, yielding a more complete industrial chain.

The boom in winter tourism has also given a boost to rural areas. Altay prefecture in the Xinjiang Uygur autonomous region, for example, has taken advantage of its ice and snow tourist attractions, which helped the prefecture shake off poverty by March 2020.

The country also independently developed some high-end winter sports equipment, including an innovative snow wax truck that waxes the skis of athletes to maintain performance.

In recent years, China has explored new technologies and advanced simulated ice and snow, built portable ice rinks and introduced dryland curling and roller-skating to attract more people to winter sports. The popularity of winter sports has expanded from regions rich in ice and snow resources to the whole country and is not solely restricted to winter, Tu said.

These measures have not only boosted the development of winter sports in China, but also provided solutions for other countries that do not have abundant ice and snow, he added.

Source: China Daily