World Newsletter

29 December 2019


China's revised Securities Law will take effect on March 1, setting the legal basis for a phase-in registration-based reform across the whole capital market, according to the top legislature on Saturday.

The Standing Committee of the National People's Congress voted to adopt the revision of the Securities Law — the fundamental law governing the capital market — on Saturday, after the fourth review of the draft revision during a six-day session.

Based on the experience of the sci-tech innovation board, the revised law made new arrangements of initial public offerings to gradually implement the registration-based system across the whole market, said Cheng Hehong, director of the Department of Legal Affairs of the China Securities Regulatory Commission, the top securities regulator.

Specifically, the revision abolished the system of public offering review committee, whereby the CSRC reviews public offering applications, and authorized stock exchanges to review the applications. The CSRC will instead be responsible for securities registration, Cheng said.

The revision also authorized the State Council, China's Cabinet, to decide the scope and steps of registration-based reform, Cheng said, adding that the country will phase-in implementing the registration-based system and ensure a smooth transition.

"The CSRC will fully consider the actual situation of the market, and especially coordinate securities issuances, securities registrations and the market capacity to digest (the reforms)," Cheng said at a briefing on Saturday.

The CSRC is ramping up efforts to push ahead the registration-based reform on the ChiNext, Shenzhen's innovative enterprise-heavy board, he added.

The revised law made information disclosure requirements stricter and streamlined requirements of issuing securities, in compliance with the registration-based reform.

The revision also focused on improving the mechanism of investor protection, and set a separate section of investor protection, according to Gong Fanrong, an official with the NPC's Financial and Economic Affairs Committee.

It distinguished ordinary investors with professional investors and made different investor protection arrangements accordingly and established a system of securities civil action that fits characteristics of the domestic market, Gong said.

Moreover, illegal behaviors in capital markets will face much higher punishments under the revised law.



China will adjust interest rate benchmark for outstanding floating rate loans based on loan prime rate (LPR) in 2020, The People's Bank of China (PBOC) announced Saturday.

Financial institutions and their clients can decide interest rates of existing loans through negotiations in the adjustment period from March to August 2020, according to a statement released by the PBOC.

Existing interest rates set on benchmark lending rates will be replaced by adding basis points to related LPRs. Financial institutions and their clients can also agree to fixed new interest rates in the adjustment period.

Interest rate benchmark is only allowed to be switched once, while the rates of loans in the last interest repricing period do not need to be adjusted, according to the statement.

Lenders and borrowers could reschedule the period and the starting date of interest repricing when switching the interest rate benchmark, while the repricing period for commercial individual housing loans should not be shorter than one year.

Starting from Jan 1, 2020, financial institutions will not be allowed to sign floating interest rate contracts based on benchmark lending rates, according to the statement.

China's central bank announced a plan to reform the LPR mechanism in August 2019 to better reflect market changes in its latest move to reduce borrowing costs to support the real economy. So far, nearly 90 percent of new loans have adopted the LPR benchmark.



Adventure travel is a kind of niche tourism, which includes numerous activities such as caving, climbing, cycling and hiking.

China's per capita disposable income was 49.7 yuan (around $7) in 1949 but reached 28,228 yuan in 2018, an increase of nearly 60 times in real terms after deducting price factors.

As Chinese tourists become richer and more experienced, there is a growing desire to explore the world and try more adventurous activities, from African safaris to polar adventures.

The market consulting firm Allied Market Research forecasted that the global adventure tourism market was valued at $586.3 billion in 2018 and is projected to reach around $1.63 trillion in 2026.

"Chinese travelers are playing an increasingly important role in the global adventure tourism economy," said Han Bo, chairman of the China Adventure Association.

According to a report released by the association, there were 130 million to 170 million people on the Chinese mainland involved in outdoor adventures, with an annual growth of around 15 percent.

Among them, the number of professional adventurers reached up to 60 million. More than 100,000 enterprises are dedicated to providing services for adventure seekers, the report said.

"Only a few Chinese such as scientists and archaeologists were engaged in adventure travel in the past," Han said, adding that more ordinary and uninhibited people aged between 15 and 60 have now joined them to explore the unknown.

"Seeking adventure is one of the best ways to satisfy people's spiritual needs. The popularization of adventure travel reflects China's improved national strength and people's better life," Han said.

"With a more affluent life, a growing number of Chinese will be keen to chase thrills the world over," he added.



China's top legislature on Saturday voted to adopt the country's first law on community correction, offering the legal basis for rehabilitating criminals who received relatively lenient punishment and for helping them better integrate into society.

The law clarifies community correction, a noncustodial sentence, is aimed at criminals who have been given a reprieve, released on parole, placed under surveillance or allowed to temporarily serve their sentences out of prison.

It also stipulates judicial administration should take charge of community correction, and courts, procuratorates and public security departments will coordinate their actions.

Besides the law, the Standing Committee of the National People's Congress, also passed the law on promotion of basic medical and healthcare, the revised the Securities Law and the amendment to the Forest Law at the end of its six-day bimonthly session on Saturday.

Lawmakers also decided the 13th NPC will hold its third annual session in Beijing on March 5.



An amendment to the law on the protection of investments by compatriots from Taiwan was adopted in Beijing Saturday to welcome more investment from Taiwan.

The amendment simplifies the procedures for investment in the mainland by Taiwan compatriots by removing the requirement of government examination, approval and filing.

The amendment was approved at the end of a six-day bimonthly session of the National People's Congress Standing Committee.

Taiwan compatriots may set up enterprises that are wholly or partly invested by Taiwan investors, or adopt other forms of investment stipulated by laws, administrative regulations or the State Council, reads the amendment.

The amendment will take effect on Jan 1, 2020.

The amendment aims to better encourage and promote investment from Taiwan compatriots, said Commerce Minister Zhong Shan while briefing the lawmakers about the amendment Monday.

"The foreign investment law passed in March has simplified the management procedures for foreign investors, and we want our Taiwan compatriots to share the benefits of this great change," said Zhong.

Lawmakers have spoken highly of the amendment during the panel discussions.

The amendment makes it more convenient for Taiwan compatriots to invest on the mainland and has a significant impact on promoting the peaceful development of cross-Strait relations and deepening economic integration, said lawmaker Li Yuefeng.

Calling the amendment necessary and timely, lawmaker Chen Jun said it further protects the legitimate rights and interests of Taiwan compatriots and improves their investment environment.

The law on the protection of investments by compatriots from Taiwan was enacted in 1994 and amended in 2016.

Some lawmakers suggested a comprehensive revision to the law as the mainland has carried out a series of preferential policies for Taiwan people who live in the mainland, said Jiang Chenghua with the Ministry of Commerce at a press conference after the session.



China's draft civil code will be submitted to next year's annual session of the National People's Congress (NPC) for deliberation, according to an NPC Standing Committee resolution.

The resolution was approved Saturday at the end of a bimonthly session of the NPC Standing Committee, which ran from Dec 23 to 28.

The draft consists of general provisions and six sections on property, contracts, personality rights, marriage and family, inheritance, and torts.

The draft will be sent to all national lawmakers to solicit opinions in January, and opinions of local legislatures, relevant authorities and the public will also be solicited to improve the draft before it is submitted to the NPC annual session, said Shen Chunyao, vice chairman of the NPC Constitution and Law Committee, while briefing lawmakers on the draft Monday.

The third annual session of the 13th NPC will be held on March 5, 2020.



The sixth and last test aircraft of the C919, China's first domestically-built, narrow-body passenger jet, took part in a test flight in Shanghai on Friday, indicating the model is on a faster track to gaining airworthiness certification before entering the market.

The code number of the sixth test jet, known as the 106 prototype, took off at 10:15 am on Friday morning from Shanghai Pudong International Airport, and flew for two hours and five minutes before successfully returning to the airport. The aircraft completed 30 tests, including tests related to the cabin, lighting and external noise.

So far, all of the C919's static tests have been completed, and the manufacturing process has started on the first batch of aircraft set to be delivered to customers, said its manufacturer, Commercial Aircraft Corp of China.

The first five C919 test jets - the 101, 102, 103, 104 and 105 - are undergoing more test flights at several testing bases, including Pudong New Area of Shanghai, Yanliang district of Xi'an, Northwest China's Shaanxi province, Dongying in East China's Shandong province, and Nanchang in East China's Jiangxi province, COMAC said.

From conducting its debut flight to obtaining airworthiness certification, an aircraft model needs to undergo more than 1,000 tests, including those related to high temperatures, high humidity, extreme cold, strong crosswinds, its minimum liftoff speed and stalling, according to COMAC.

So far, 815 orders have been placed for the C919 from home and abroad. Its competitive models include Boeing's single-aisle B737 and the Airbus SE A320.

The C919's latest test flight comes at a time when its competitor, Boeing's B737 MAX jet, remains grounded worldwide following two fatal crashes. Production on the model has been suspended.



China will revise historical regional GDP data under a unified accounting mechanism to be introduced early next year, the National Bureau of Statistics said Friday.

The new mechanism will unify the standards and procedures for calculating national and local GDP numbers, which had been calculated under different accounting methods adopted by local and national statistics authorities since 1985, the bureau said in an online statement.

The reform is expected to close the current discrepancy between national and regional figures, improving data quality while enhancing the credibility of government statistics, it said.

To ensure data comparability, the country will also revise historical local GDP figures and publish them in 2020, the bureau said. The revised figures for 2018 will be released together with the 2019 numbers.

As the economic activities of some government institutions are only reflected in the national GDP, the combined regional number will be slightly lower than the national amount.



China's leading automaker FAW Group announced that sales of its iconic sedan brand Hongqi have exceeded 100,000 units, the annual sales target for 2019, as of Thursday.

Hongqi's sales have been on the rise this year due to the carmaker's continuous efforts to enrich its production line, with six models currently on sale, including two sedans, two SUVs, the all-electric E-HS3 and the L5, a high-end custom limousine.

By continuing to roll out new models, Hongqi has drawn a lot of attention in the market.

This year, the automaker showcased its first self-designed and self-made super sports car S9, which goes from 0 to 100 kph in 1.9 seconds, and the all-electric full-size SUV flagship E115, with level-4 autopilot and 600-km mileage on a single charge.

Up to 17 new models are expected to be launched by 2025, including new energy models and SUVs, according to FAW.



Regions in the south and the north of China saw a widening gap in the research and development expenditure growth rate and intensity in the last decade, the China Business News analyzed on Thursday based on data from 31 Chinese provincial level administrative regions.

Statistics from the National Bureau show eight out of the top 10 regions with fastest growth in R&D input are located in southern China except for Ningxia and Henan. Meanwhile, all the regions at the bottom of the list are from the north, namely, Heilongjiang, Jilin, Liaoning, Shanxi and Gansu, with the provinces in northeastern China representing the lowest three.

A similar picture emerged for R&D intensity (referring to the R&D/GDP value) among the 31 regions in the past 10 years, according to the China Business News.

Although almost all of the 31 regions had seen growth in R&D intensity from 2008 through 2018, the gap between the south and north was significant. Among the top 10 regions with the highest R&D intensity, the only one from the north was Beijing, while the rest of the regions were from the south, led by Shanghai and Guangdong.

The gap in R&D input growth and R&D intensity between the south and north echoed the differentiation in economic development of the south and north, said Xie Liangbing, president of the Standard Ranking City Institute, who analyzed that the widening gap is rooted in the rise and decline in emerging and traditional industries and the speed of innovation.



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