May 2023 / China

China's foreign trade grew at a faster pace in the first four months of the year amid uncertain external demand, trade risks and other challenges.

China's total imports and exports expanded 5.8 percent year on year to 13.32 trillion yuan (about 1.92 trillion U.S. dollars) in the period, the General Administration of Customs (GAC) said Tuesday. The growth rate accelerated by 1 percentage point from the pace recorded in the first quarter.

Exports grew 10.6 percent year on year while imports rose 0.02 percent in the first four months, it added.

From January to April, the growth rate of China's trade with the Association of Southeast Asian Nations and the European Union stood at 13.9 percent and 4.2 percent, respectively, the data showed.

China's trade with Belt and Road countries jumped by 16 percent year on year to 4.61 trillion yuan in the period.

In particular, the country's trade with five Central Asian countries -- Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan -- surged 37.4 percent, partly making up for the weak demand in traditional markets.

Private enterprises saw a fast growth rate as imports and exports increased by 15.8 percent to 7.05 trillion yuan in the first four months, accounting for more than half of the country's total.

In terms of types of goods, exports of mechanical and electrical products expanded by 10.5 percent to account for 57.9 percent of the total exports.

Driven by robust exports of new energy vehicles, automobile exports soared 120.3 percent year on year during the period.

A monthly customs survey showed that the proportion of enterprises with growing export orders had increased for four consecutive months.

In April alone, foreign trade increased 8.9 percent year on year, according to the GAC.

Source: Scio.gov

Premier Li Qiang chaired a State Council executive meeting on May 5, 2023, which deliberated and adopted a guideline on accelerating the development of the advanced manufacturing clusters.

The meeting noted that work should be done to promote the transformation and upgrading of traditional industries, as well as the cultivation and strengthening of emerging industries. Work should also be done to facilitate technological innovation and application, advance the country's high-end, smart and green transformation, expand the number of high-quality enterprises, and speed up the modernization of industrial system. The meeting pledged to combine an effective market with an active government in an improved manner, and create a sound ecological environment for industrial development.

The meeting also deliberated and adopted a guideline on speeding up the construction of charging infrastructure to better promote new energy vehicles in rural areas and rural vitalization, stressing the need to optimize the policies supporting the purchase and use of new energy vehicles further, encourage enterprises to enrich supply, and strengthen safety supervision to promote the healthy development of the new energy vehicle market in rural areas.

President Xi Jinping, also director of the Central Commission for Financial and Economic Affairs ("CCFEA"), presided over the first meeting of the CCFEA under the 20th CPC Central Committee on May 5, 2023, discussing speeding up the construction of the country's modern industrial system.

The meeting stressed speeding up the construction of the country's modern industrial system backed by the real economy, calling for seizing opportunities presented by the new scientific and technological revolution, such as artificial intelligence, maintaining and strengthening the country's advantages of a complete industrial system and strong supporting capacity, promoting the efficient aggregation of global innovation factors, and boosting the building of a modern industrial system that is holistic, advanced, and secure. The meeting also pointed out that China should fine-tune its industrial policies for the new development stage and take industrial security as a top priority, enhance the top-level design in areas of strategic importance and policy coordination, strengthen breakthroughs of key and core technologies, and secure the supply of resources of strategic importance. It also stressed ensuring the principal position of enterprises in sci-tech innovation with institutional arrangements.

China's automobile manufacturing sector reported stable output and revenue growth in the first quarter (Q1) of this year, data from the China Association of Automobile Manufacturers showed.

The industrial added value of the sector rose 4.4 percent year on year in the period, up 5.4 percentage points from the first two months and 1.5 percentage points higher than the whole manufacturing industry in the same period, according to the association.

In March alone, the sector's industrial added value jumped 13.5 percent year on year, the data revealed.

During the first three months of 2023, the combined operating revenue of companies in the sector topped 2.14 trillion yuan (about 308 billion U.S. dollars), up 1.3 percent year on year. The pace was 2.6 percentage points faster than that of the overall manufacturing industry.

Chinese authorities Sunday released a set of guidelines for facilitating the building of the basic elderly care system.

The document, released jointly by the General Office of the Communist Party of China Central Committee and the State Council General Office, emphasized that facilitating the building of this system bears great importance in China's efforts to pursue a proactive national strategy in response to population aging and ensure equitable access to public services.

According to the guidelines, basic elderly care services consist of material assistance, nursing, and caregiving services, among others. They are provided directly by the government or by parties supported by the government.

The guidelines noted that the system should follow the principles of meeting essential needs and be universally accessible. In the meantime, the system should also allow families with financial difficulties to be supported in elderly care and ensure all institutional resources regarding elderly care are optimized and integrated.

The guidelines listed five key aspects where more work should be done. They include forming and implementing a list of elderly care services, establishing an active response mechanism for providing accurate services, enhancing the mechanism that ensures sound elderly care services, improving service capacity, and making such services more accessible.

Ministry of Finance and the State Taxation Administration recently released the Circular of the Ministry of Finance ("MOF") and the State Taxation Administration ("STA") on Allowing Integrated Circuit Enterprises for Additional Deduction of Payable Value-added Tax (the MOF and STA No.17 (2023) document).

Enterprises engaged in design, production, packaging and testing of integrated circuits ("IC"), as well as IC equipment and materials enterprises ("IC enterprises"), are allowed for additional deduction of payable VAT as per 15 percent of their deductible input tax for the current period during the period from January 1, 2023 to December 31, 2027, and those IC enterprises that are eligible for the deduction are subject to a list-based management. The specific policy application conditions, management ways and list of enterprises would be formulated by the Ministry of Industry and Information Technology in conjunction with the National Development and Reform Commission, the MOF, and the STA. If an IC enterprise is eligible for the application of several VAT additional deduction policies at the same time, it may choose the prefer one for application, and is not allowed to apply one more at the same time, said the Circular.

The Customs Tariff Commission of the State Council released on May 15, 2023 the Announcement of the Customs Tariff Commission of the State Council on Implementing the Agreed Tax Rates under the Regional Comprehensive Economic Partnership Agreement ("RCEP") for Certain Imports from the Philippines on the website of the Ministry of Finance.

The Philippines has deposited its Instrument of Ratification of the RCEP Agreement to the Secretary-General of ASEAN and with the deposit, the RCEP will enter into force in the Philippines on June 2, 2023, said the ASEAN Secretariat, the custodian of the RCEP. According to the Announcement, China will implement agreed tax rates applicable to RCEP ASEAN member states for certain imports from Philippines on June 2, 2023, and the annual rates for subsequent years will be implemented on January 1 of each year. With the RCEP coming into force in the Philippines, all 15 members will complete the ratification procedures and implement tariff reductions for each other, and the agreement will enter a new stage of full implementation.

Recently, the Ministry of Human Resources and Social Security, the Ministry of Finance and the State Administration of Taxation jointly issued the Notice on the Phased Reduction of Unemployment insurance and work-related injury insurance rates, clarifying relevant issues.

According to the circular, the policy of gradually reducing unemployment insurance premiums to 1% will continue to be implemented starting from May 1, 2023, and the implementation period will be extended to the end of 2024. Within a provincial (autonomous region or municipality) administrative area, the unit rate and the individual rate shall be uniform, and the individual rate shall not exceed the unit rate. Starting from May 1, 2023, China will continue to implement the policy of gradually reducing the premium rate of work-related injury insurance in accordance with the relevant conditions of implementation issued by the State Office No. 13 [2019], and the implementation period will be extended to the end of 2024.