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China

Chinese lawfare, resource disputes and the law of the sea

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Fishing boats leave a port to resume fishing after three month fishing ban in Fangchenggang city, south China

Author: Douglas Guilfoyle, UNSW Canberra

China notoriously claims special maritime rights in the South China Sea within the ‘nine-dash line’ that appears on official Chinese maps. The precise origin of the line remains obscured. The ‘nine-dash line’ did not appear on government maps prior to 1947 or in private cartographic exercises before 1933. As late as 2013, prominent Chinese scholars accepted that China had never expressly articulated the line’s legal significance.

Recent Chinese claims to exclusive jurisdiction over resources within it have escalated tensions not only over oil but also over exploited and declining fish stocks ‘fundamental to the food security of coastal populations numbering in the hundreds of millions’. But China’s legal argument about the South China Sea should be seen both in its historical context and in light of China’s doctrine on information warfare.

Law plays an important role in the dispute over the nine-dash line because the line cuts deep into what various coastal states including Vietnam and the Philippines regard as their 200 nautical mile Exclusive Economic Zone (EEZ) under the UN Convention on the Law of the Sea (UNCLOS). Ironically, in the marathon negotiations that lead to UNCLOS, China was a principal advocate of the EEZ concept, aligning itself with developing countries against Russia and the United States.

It is useful to review the issues that were of fundamental concern to China in the UNCLOS negotiations. These are documented in Chinese working papers submitted to the UN Seabed Committee in the early 1970s and in speeches China made during the negotiation process.

China advocated for five main positions. First, that there was no fixed maximum width to the territorial sea — the extent of a state’s maritime domain was a sovereign decision to be informed by economic and security needs. Second, warships had no automatic right of innocent passage through territorial seas and straits. Third, China’s own Chiungchow Strait and vast Bohai Bay had a special status as ‘internal waters’. Fourth, that maritime boundaries should be settled only by consultation and UNCLOS should make no provision for the judicial settlement of such disputes. Fifth, a continental state with sovereignty over an outlying archipelago could draw straight baselines around it and use these to measure a territorial sea.

Notably, though China expressly claimed a special status for some waters it never did so for the South China Sea. China maintained its Chiungchow Strait and Bohai Bay claims throughout negotiations, along with its position on warships and innocent passage. But Beijing abandoned its position on the width of the territorial sea and on ‘outlying archipelagos’. This history shows that China’s recent supposed enjoyment of ‘special historic rights’ within the nine-dash line is the product of a very new legal claim.

A major blow to the Chinese position in favour of coastal states enjoying their ‘ordinary’ EEZs came in the Philippines v China arbitration. Since then, the Chinese government has pivoted back to a version of the ‘outlying archipelago’ argument previously abandoned during UNCLOS negotiations, an argument revived in the Chinese Society of International Law’s ‘critical study’ of the Philippines v China arbitral award. China now claims it can bundle up various maritime features into ‘archipelagos’, enclose them in straight baselines and project EEZs from them.

The argument is both historically revisionist and legally unconvincing. However, in addition to the creation of EEZ claims, re-characterising certain features as islands or archipelagos allows China to claim US warships are constrained in navigating near such features. The United States maintains that such features are not capable of generating territorial seas and that it is exercising freedom of navigation applicable in an EEZ or on the high seas. But why is China bothering to make such arguments at all?

The Chinese Communist Party (CCP) appreciates the power of law. Its ‘three warfares’ doctrine outlines a triad of non-kinetic methods for achieving China’s national goals: public opinion warfare, psychological warfare and legal warfare. Among these, the function of legal warfare (‘lawfare’) is explained by Livermore as ‘leveraging of existing legal regimes and processes to constrain adversary behaviour, contest disadvantageous circumstances, confuse legal precedent, and maximise advantage in situations related to the PRC’s core interests’.

The function…

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The New Company Law brings substantial changes with implications for new and existing foreign invested enterprises and stakeholders. Foreign investors must assess if adjustments to existing structures

Despite recent economic challenges, many organizations’ China operations provide unparalleled access to one of the world’s largest and most competitive global supply chains. Over the past 30 years, a significant number of foreign invested enterprises (FIEs) have been established in China. As of the end of 2022, the number of FIEs operating in China had exceeded 1.12 million.

Compared to their domestic counterparts, FIEs demonstrate greater caution regarding legal revisions and are diligent in making swift adjustments. This stems not only from the closer scrutiny FIEs face from regulatory authorities but also from their commitment to compliance and maintaining a competitive edge.

Clearly, there has been a shift in China’s corporate regulations—from merely encouraging an increase in the number of companies to focusing on attracting mature enterprises and higher-quality investments. While the transition from a broad approach to a more refined one may cause short-term challenges, it ultimately benefits the company’s long-term development. By returning to the original intent of setting registered capital, it not only protects the interests of creditors but also shields shareholders from the operational risks of the company.

In China’s foreign investment landscape, while most FIEs exercise commercial prudence in determining registered capital—factoring in capital expenditures, operational costs, and setting aside surplus funds—some opt for higher registered capital levels to avoid future capital increase procedures. This typically involves lengthy document signing and registration changes, lasting 1-2 months.

Joint ventures (JVs) often impose stricter payment deadlines for registered capital in their articles of association to ensure both parties’ simultaneous contributions align with operational needs. Conversely, wholly foreign-owned enterprises (WFOEs) tend to favor flexibility in payment deadlines, often allowing full payment before the company’s operational period expires.

Given these circumstances, despite the generally stronger capital adequacy among foreign companies compared to domestic entities, many FIEs could be affected by the new capital contribution rules.

This article is republished from China Briefing. Read the rest of the original article.

China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at china@dezshira.com.

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Foreign Tourist Groups on Cruise Ships Fully Permitted Visa-Free Entry in China

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China will allow visa-free entry for foreign tourist groups arriving by cruise ship at 13 ports along the coast, starting May 15, 2024. Visitors must stay with the same ship and in permitted areas for up to 15 days. This policy aims to boost tourism and facilitate high-quality development in the cruise industry.


China’s immigration agency announced that it will grant a visa-free policy for foreign tourist groups to enter China by cruise at all cruise ports along the coast of China, starting May 15, 2024. The tourist group must remain with the same cruise ship until its next port of call and stay within permitted areas for no more than 15 days.

Effective May 15, 2024, the National Immigration Administration (NIA) has officially implemented a visa-free policy for foreign tourist groups entering China via cruise ships. This progressive move aims to enhance personnel exchanges and foster cooperation between China and other nations, furthering the country’s commitment to high-level openness.

Under this policy, foreign tourist groups, comprising two or more individuals, who travel by cruise ship and are organized by Chinese domestic travel agencies, can now enjoy visa-free entry as a cohesive group at cruise ports in 13 cities along the Chinese coast.

The tourist group must remain with the same cruise ship until its next port of call and stay within China for no more than 15 days. The eligible areas for this policy are coastal provinces (autonomous regions and municipalities) and Beijing.

Furthermore, to support cruise tourism development, seven additional cruise ports—Dalian, Lianyungang, Wenzhou, Zhoushan, Guangzhou, Shenzhen, and Beihai—have been included as applicable ports for visa-free transit.

The recent implementation of the visa-free policy for foreign tourist groups entering China via cruise ships is poised to have several significant effects. The policy will provide crucial support for the cruise economy and the overall cruise industry. By facilitating smoother travel for foreign tourist groups, it acts as a catalyst for high-quality development in this sector.

Additionally, under this policy, international cruise companies can strategically plan their global routes by designating Chinese port cities, such as Shanghai, Xiamen, and Shenzhen, as docking destinations. This move is expected to attract more cruise ships to Chinese ports, ultimately bringing in a larger number of international visitors to the Chinese market.

This article is republished from China Briefing. Read the rest of the original article.

China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at china@dezshira.com.

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China’s New Tariff Law: Streamlining and Standardizing Current Tariff Regulations

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China’s new Tariff Law consolidates import and export duties, clarifies rules for imposing counter-tariffs, and sets a December 1, 2024 effective date. It codifies existing practices on cross-border e-commerce and rules on the origin of goods into law, impacting trade relations.


China’s new Tariff Law consolidates rules on import and export duties that were previously implemented via several legal documents and makes important clarifications and additions to prior regulations. Among other changes, it stipulates provisions for the Chinese government to impose counter-tariffs on imported goods, codifying these powers into law for the first time. We outline all the notable updates to the China Tariff Law and discuss the implications for the country’ current trade relations. 

On April 26, 2024, the National People’s Congress (NPC), China’s legislature, adopted the Tariff Law of the People’s Republic of China (the “Tariff Law”) after several rounds of revisions.

The new Tariff Law will replace the Import and Export Tariff Regulations of the People’s Republic of China, which fall under the purview of the State Council, and adopts many of its provisions.

Previously, Chinese law had not stipulated legislative powers to implement countervailing tariffs, although China was nonetheless able to impose counter-tariffs on trade partners through other means.

China’s new Tariff Law comes into effect on December 1, 2024.

China’s Tariff Law elevates several existing provisions and practices to the level of law. For instance, Article 3 of the Tariff Law clarifies the obligations of cross-border e-commerce platforms for tariff withholding and implementing consolidated taxation.

The Tariff Law also solidifies the rules and regulations on the origin of goods, stipulating that the application of tariff rates shall comply with the corresponding rules of origin. Although this has been previously implemented in practice, it is the first time this has been codified into law.

This article is republished from China Briefing. Read the rest of the original article.

China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at china@dezshira.com.

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