April 2021 / China

The State Taxation Administration released on April 1, 2021 its Announcement about the List of Administrative Matters Eligible for "No Penalty for First Violation", with immediate effect.

The announcement stated that all three conditions must be satisfied for an administrative matter to be eligible for "no penalty for first violation". The first is that the matter should be on the list of eligible matters; the second is that the consequence caused by the violation is mild; the third is that the taxpayer has corrected the wrongdoing before it's found or ordered by tax authorities.

The list has listed a total of ten administrative matters eligible for "no penalty for first violation", including those related to document presentation, tax declaration and invoice management.

The Ministry of Finance and the State Administration of Taxation jointly released on April 7, 2021 the Announcement on Further Improving the Policy for Pre-tax Additional Deductions of R&D Expenses, with retroactive effect from January 1, 2021.

According to the Announcement, for any actual R&D expenses incurred by manufacturing firms, if they have not formed intangible assets and have not been included in the current profits and losses, such expenses can be additionally deducted before tax according to 100% of the actual amount on the basis of actual deductions starting from January 1, 2021; in the case they have formed intangible assets, they shall be amortized before tax at 200% of the cost of intangible assets. When an enterprise declares the enterprise income tax for the third quarter (paid quarterly) or for the month of September (paid monthly) of the current year in advance, it can choose to enjoy the preferential policy for additional deductions of the R&D expenses incurred in the first half of the current year.

Five authorities including the People's Bank of China and China Banking and Insurance Regulatory Commission released on April 1, 2021 the Circular on Further Extending the Implementation Period of the Policy of Delaying Repayment of Principal and Interest on Loans of Inclusive Small and Micro Firms and the Policy of Supporting Them with Credit Loans, with immediate effect.

According to the Circular, the two policies will be extended until December 31, 2021. For loans of inclusive small and micro firms due from April 1 to December 31, 2021, the firms and banks are allowed negotiate independently to continue the policy of repayment of principal and interest in phases, and the People's Bank of China will continue to give preferential financial support to eligible local legal person banking financial institutions and increase its support to individual industrial and commercial households through monetary policy tools.

The State Taxation Administration issued the 9^th announcement for 2021 on April 17 to clarify issues related to tax & fee declarations.

According to the announcement, from June 1, 2021 when taxpayers declare and pay urban land use tax, property tax, vehicle and vessel tax, stamp tax, farmland occupation tax, resource tax, land value-added tax, deed tax, environmental protection tax and tobacco tax, they should use the Tax Return for Property and Deed Tax. From May 1, 2021 Hainan, Shaanxi, Dalian and Xiamen will adopt a pilot plan to combine tax returns for value-added tax, consumption tax, urban maintenance and construction tax, education surcharge and local education surcharge, and they will use a series of tax returns, including the Tax Return for Value-added Tax and Additional Taxes and Fees.

As Chinese consumers become more willing to upgrade their handsets, 5G smartphones are expected to account for more than 80 percent of overall smartphone shipments in China in the second half of this year, a senior official from the nation's top industry regulator said on Monday.

Liu Liehong, vice-minister of Industry and Information Technology, said in March that 5G smartphones already accounted for more than 76 percent of overall smartphone shipments in China.

According to Liu, China has preliminarily built the world's largest 5G network, with 260 million 5G mobile connections.

China's phone market boomed in the first quarter of this year compared with the big setback caused by the COVID-19 pandemic at the same period last year, with phone shipments reaching 97.97 million units, up 100.1 percent from the same period last year, according to the China Academy of Information and Communications Technology, a Beijing-based think tank.

In March, a total of 36.09 million phones were shipped, increasing 65.9 percent year-on-year, with 41 newly-released models, up 32.3 percent from a year earlier.

The ministry also is working hard to reduce the digital divide between urban and rural areas by encouraging telecom companies to build base stations and optical networks for relatively poor areas.

Source: China Daily

Industrial production in China has returned to pre-COVID-19 levels amid efforts to revive economic activity and the renewed confidence of enterprises, the Ministry of Industry and Information Technology said on April 20.

Huang Libin, a spokesman for the ministry, said that during the first three months of this year, the utilization rate of industrial capacity in the nation reached 77.2 percent, the highest for the same period since 2013.

According to Huang, industrial output increased 24.5 percent on a yearly basis in the first quarter, while profits of industrial enterprises jumped 1.79 times on a yearly basis in January and February, with the vitality of enterprises getting a further boost.

In the first quarter, 40 of the 41 major industrial sectors achieved year-on-year growth, the spokesman said.

Huang said rising commodity prices had an impact on the manufacturing industry, but the effect has been controllable. Joint efforts with relevant departments will be made to stabilize the prices of raw materials and prevent panic purchases or stockpiling.

The strong data came after China took a series of measures to revive industrial production and encourage consumption.

Liu Wenqiang, deputy head of the China Center for Information Industry Development, a Beijing-based think tank, said though there have been increases in international commodity prices, its impact on China's sprawling industries will be limited, given the nation's strong industrial capacity and relatively sound industrial system.

The ministry said it is drafting the manufacturing development plan for the 14th Five-Year Plan period (2021-25), which will include goals for the overall development of the manufacturing industry, efforts to boost industrial fundamental technological innovation and initiatives for cultivating strategic industries such as raw materials of major technical equipment.

The ministry said it will carry out a special plan to fight unfair competition in the internet industry, with a focus on rectifying malicious blocking, traffic hijacking and other behaviors that disrupt market competition.

Source: gov.cn

Themed "A World in Change: Join Hands to Strengthen Global Governance and Advance Belt and Road Cooperation," this year's Boao Forum for Asia annual conference is ongoing in Boao, a coastal town in China's southern Hainan province, attracting more than 2,600 delegates from over 60 countries and regions.

The forum on Sunday released two flagship reports: Sustainable Development: Asia and the World Annual Report 2021, and Asian Economic Outlook and Integration Progress Annual Report 2021. Let's take a look at some highlights from these reports.

Going forward in 2021, the pandemic remains the major variable that will have a direct bearing on the performance of Asian economies. Overall, Asian economies are likely to witness recovery in 2021. Its economic growth rate is expected to reach more than 6.5 percent. Asian economies, an "anchor" for multilateralism, play a key role in bolstering global pandemic control, keeping industries and supply chains efficient and stable, and promoting trade and investment.

In 2020, Asia's economic growth was significantly better than other regions, and Asia's share in the global economy, as measured by purchasing power parity (PPP), has therefore further increased by 0.9 percentage point to 47.3 percent from 2019.

As Asia's largest economy, China has made indelible contributions to Asia's economic growth. In 2020, China was the only major economy in the world to achieve positive economic growth, with an economic growth rate of 2.3 percent.

Asia and the Pacific region's share of global GDP has leaped from 26.3 percent in 2000 to 34.9 percent in 2019. According to an estimate from the World Economic Forum, by 2030, Asia and the Pacific region is expected to contribute about 60 percent to the global economic growth and 90 percent of the 2.4 billion new middle-income class around the globe.

The alignment between various regional or even global inter-connectivity programs—the Belt and Road Initiative, Master Plan on ASEAN Connectivity 2025, and Eurasian Economic Union—provide significant impetus for regional trade and economic cooperation and post-pandemic economic recovery and development.

The pandemic has made all countries more fully aware of the value of the digital economy and thus has promoted its faster development. In the post-pandemic era, the digital economy will become a key force after the agricultural economy, industrial economy and information economy, influencing the world economy and international relations.

Asia has become one of the growing regions in developing the digital economy. In 2019, Asia's digital economy grew by 7.7 percent year-on-year, 3.4 percentage points higher than GDP growth during the same period. At present, the overall level of China's digital economy ranks second in the world.

To stride toward sustainable recovery, the report highlights addressing "four development deficits": healthcare, infrastructure, green and digital deficits. To address these deficits, the world should stand on the side of multilateralism and narrow the global governance deficit.

To reduce the health deficit, the world should prioritize vaccination and the establishment of mutual health data recognition arrangements. To narrow the deficits in infrastructure, green development and digital economy, global governance platforms and international organizations will have a vital role to play in urging countries to commit to and implement international agreements and initiatives.

Source: China Daily