February 2023 / China

The Ministry of Finance ("MOF") released on February 1, 2023 the Announcement on the Tax Policy for Returned Cross-border E-commerce Exports (No.4 (2023) of the MOF, the General Administration of Customs and the State Taxation Administration), in an effort to support the development of new forms of foreign trade.

Import duties, import value-added tax ("VAT") and consumption tax would be exempted for goods (excluding food) of which exporters declare export under the cross-border e-commerce Customs supervision codes (1210, 9610, 9710 and 9810) within one year from January 30, 2023, and that are returned within six months from the date of export due to dull sale or return, export duties levied at the time of export can be refunded, VAT and consumption tax levied at the time of export would be subject to the applicable tax rules for the return of goods sold domestically, and export tax rebate that has been made should be paid back according to existing rules, according to the Announcement.

The State Taxation Administration ("STA") released on February 6, 2023 the Announcement on Matters concerning the Settlement and Payment of Individual Income Tax ("IIT") on Comprehensive Income on a Consolidated Basis in 2022, which generally continues the basic framework and main contents of the previous three announcements while highlighting changes in three aspects.

First, it added the provision that allows additional deduction of expenses for care of children under three years old, deduction of private pensions, and other deductions in the final settlement of IIT for comprehensive income according to the provisions of the State Council No.8 Document and the MOF and the STA No.34 (2022) Announcement. Second, it fine-tuned the appointment-based tax handling system, extending the appointment expiry date to March 20, 2023 while keeping the appointment starting date (February 16, 2023) unchanged. Third, it added the provision that gives priority to taxpayers with heavier burdens in refunds of taxes. The Announcement also opened services such as providing intelligent codes for taxpayers to scan to file returns for pre-tax deduction of private pensions.

China's petrochemical industry saw an increase in revenues and a decline in profits in 2022, according to the China Petroleum and Chemical Industry Federation (CPCIF).

The country's petrochemical industry registered a total revenue of 16.56 trillion yuan (about 2.41 trillion U.S. dollars) in 2022, climbing 14.4 percent year on year, while its total profit eased 2.8 percent to 1.13 trillion yuan.

In 2022, the import and export volume of petrochemical products rose 21.7 percent year on year to 1.05 trillion dollars.

According to the CPCIF, China's crude oil output stood at 205 million tonnes in 2022, a year-on-year increase of 2.9 percent, in a fourth consecutive year of growth.

In the period, the country's natural gas output was 217.79 billion cubic meters, a year-on-year increase of 6.4 percent.

China's furniture industry reported profit growth in 2022, data from the Ministry of Industry and Information Technology showed.

Total profits of enterprises with annual revenue of at least 20 million yuan (2.91 million U.S. dollars) stood at 47.12 billion yuan, according to the ministry.

This represented a year-on-year increase of 7.9 percent, the ministry's data revealed.

These firms reported combined operating revenue of 762.41 billion yuan, down 8.1 percent year on year.

Foreign enterprises remain adamant in ramping up investment in the Chinese market, as the immense potential in economic vitality and consumption backed by an optimized COVID response strengthened their confidence in the world's second-largest economy.

In mid-January, French multinational Schneider Electric's secure power innovation lab was officially launched in Shanghai. The lab will shoulder the research and development responsibilities concerning key power supply and energy storage for the Chinese market and the rest of the world.

Yin Zheng, executive vice president of Schneider Electric's China & East Asia Operations, noted that China is not only a huge market but also a driving force for development and a source of innovation.

"Through continuous investment, China has become one of Schneider Electric's four R&D bases in the world, with more than 2,000 R&D staff and over 2,800 patents. At present, Schneider Electric has built five R&D centers in China, namely Beijing, Shanghai, Wuxi, Xi'an, and Shenzhen," Yin said.

Yin added that China's high-quality development direction and policies related to the "dual carbon" goals have opened up a huge space for the company's development.

"Facing the challenges of digitalization and decarbonization transformation, Chinese industries have an increasingly strong demand for green products and digital solutions. Schneider Electric's technical expertise is highly consistent with the direction of dual transformation, which brings a lot of opportunities for the development of Schneider Electric in China," Yin said, adding the company will continue to enhance its overall strength in China.

Swiss tech giant ABB also expressed a willingness to increase long-term investments in China, propelled by the confidence that the Chinese market will generate appealing opportunities in the years to come, according to James Zhao, senior vice president of ABB China, adding that China now is ABB's second largest market.

"Therefore, our investments in innovation and R&D in this market have always been sustainable and long-term. On the one hand, our products and industrial chain need to be upgraded so that our innovative technologies can better serve the Chinese market. On the other hand, in the field of manufacturing, we are working on further improving our manufacturing capacity, efficiency, and product quality," he noted.

Data released by the Ministry of Commerce shows that foreign direct investment in the Chinese mainland, in actual use, expanded 6.3 percent year on year to 1.23 trillion yuan in 2022. In U.S. dollar terms, the FDI inflow went up 8 percent year on year to 189.13 billion U.S. dollars.

Li Peigong, a professor at Shanghai Lixin University of Accounting and Finance, noted that at present, China's economic growth is positively projected, providing new opportunities for the development of foreign enterprises.

"China's market potential is being released at an accelerated pace, and foreign enterprises are actively tapping the market trends and speeding up their investment layout, which reflect their confidence and determination to cultivate the Chinese market," said Li.

Source: scio.gov