China
Canada–China relations remain on the rocks
Author: John Kirton, University of Toronto
The deepening diplomatic dispute between China and Canada that began in December 2018 marks a fundamental change in their longstanding and relatively benign relationship. The conflict is having a damaging effect on both countries. The dispute also compromises China’s claim to be the new champion of the open, rules-based multilateral order, at a time when the United States is retreating from the role.
In December 2018, Canadian police arrested Huawei executive Meng Wanzhou in Vancouver at the request of the United States. The United States is seeking her extradition to answer questions over alleged violations of sanctions against Iran. China, for its part, has called the move politically motivated. They view the arrest as baseless discrimination against China’s businesses and citizens.
During her public extradition hearing in Canada, expected to last another year, she has had access to her legal team, lives in her Vancouver home and travels freely in the city during the day. Her treatment supports Canada’s claim that it is following the rule of law, even if some accuse the Trump administration of taking advantage of Canada. While the US request came through in the midst of the US–China trade war and at the height of security concerns surrounding Beijing’s influence over Huawei, Canada has been steadfast in following proper and transparent legal procedure.
China’s arrest of two expatriate Canadians soon after Meng’s arrest has not involved the same transparency or treatment. Besides the legal process and reasons for detention being shrouded in mystery, they have also had difficulty accessing legal advice, contacting family members and the reading glasses of one were seized. China also re-tried and imposed the death penalty on a Canadian it had previously sentenced to 15 years imprisonment for drug smuggling. China then arrested another Canadian on drug charges, along with 15 other foreigners.
At the same time as demanding Meng’s release, China has initiated escalating, discriminatory trade sanctions against Canadian agricultural products. And Chinese fighters recently ‘buzzed’ Canadian warships in international waters in the East China Sea. While China has not overtly linked these actions to the Meng case, the timing and language suggests strong connection.
Despite mounting pressure from Canada’s opposition Conservative party, Prime Minister Justin Trudeau’s Liberal government has achieved little in resolving the dispute. With the elephant standing in the room, he also sent the Minister for Small Business to China to foster trade. Trudeau managed to enlist the support of partner countries over the dispute, securing backing by March from the United States, the European Union and NATO. The G7 foreign ministers meeting in France on 6 April publicly declared, ‘we are deeply concerned by recent arbitrary actions of Chinese authorities, including the arbitrary detention and sentencing of foreign citizens’.
Trudeau then had US President Donald Trump intervene with Chinese President Xi Jinping on Canada’s behalf at the June Osaka G20 summit. Trudeau also persuaded Xi to resume bilateral discussions over the issue. The dispute will likely continue and even deepen if further steps and dialogue on constructing a path forward are not developed.
China risks losing Canada as a serious and prospective free trade partner and Huawei customer. Before December 2018, 55 per cent of Canadians favoured concluding a bilateral free trade deal with China. But in February 2019, a University of British Columbia poll showed that only 22 per cent had a favourable image of China, down 14 points from the previous year. By July, a Research Co. poll showed that more than two-thirds of Canadians rejected closer ties with China. Almost three-quarters supported the Trudeau government’s management of the Meng case and wanted Huawei banned from Canada’s 5G networks. A long road now lies ahead in the recovery of relations and the improvement of perceptions between the two.
The Canadian government has for now delayed its decision on whether to allow Huawei to supply 5G network equipment in Canada until after the general election this October. But Canada will likely join its other security partners who have denied Huawei 5G network access — the United States, Japan, Australia and New Zealand. These countries are pressing for unanimity among intelligence partners in general and from the United Kingdom in particular — the other remaining Five Eyes partner. Should they…
China
New Publication: A Guide for Foreign Investors on Navigating China’s New Company Law
The sixth revision of China’s Company Law is the most extensive amendment in history, impacting foreign invested enterprises with stricter rules on capital injection and corporate governance. Most FIEs must align with the New Company Law by July 1, 2024, with a deadline of December 31, 2024 for adjustments. Contact Dezan Shira & Associates for assistance.
The sixth revision of China’s Company Law represents the most extensive amendment in its history. From stricter capital injection rules to enhanced corporate governance, the changes introduced in the New Company Law have far-reaching implications for businesses, including foreign invested enterprises (FIEs) operating in or entering the China market.
Since January 1, 2020, the Company Law has governed both wholly foreign-owned enterprises (WFOEs) and joint ventures (JVs), following the enactment of the Foreign Investment Law (FIL). Most FIEs must align with the provisions of the New Company Law from July 1, 2024, while those established before January 1, 2020 have bit more time for adjustments due to the five-year grace period provided by the FIL. The final deadline for their alignment is December 31, 2024.
In this publication, we guide foreign investors through the implications of the New Company Law for existing and new FIEs and relevant stakeholders. We begin with an overview of the revision’s background and objectives, followed by a summary of key changes. Our in-depth analysis, from a foreign stakeholder perspective, illuminates the practical implications. Lastly, we explore tax impacts alongside the revisions, demonstrating how the New Company Law may shape future business transactions and arrangements.
If you or your company require assistance with Company Law adjustments in China, please do not hesitate to contact Dezan Shira & Associates. For more information, feel free to reach us via email at china@dezshira.com.
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.
China
Lingang New Area in Shanghai Opens First Cross-Border Data Service Center to Streamline Data Export Process
The Lingang New Area in Shanghai has launched China’s first Cross-Border Data Service Center to facilitate data export for companies in Shanghai. The center will help with applications, data catalogs, and management, aiming to provide legal and safe cross-border data transfer mechanisms.
The Lingang New Area in Shanghai’s Pilot Free Trade Zone has launched a new cross-border data service center to provide administrative and consulting services to companies in Shanghai that need to export data out of China. The service center will help facilitate data export by accepting applications from companies for data export projects and is tasked with formulating and implementing data catalogs to facilitate data export in the area. The Shanghai cross-border data service center will provide services to companies across the whole city.
The Lingang New Area in the Shanghai Pilot Free Trade Zone has launched China’s first Cross-Border Data Service Center (the “service center”). The service center, which is jointly operated by the Cybersecurity Administration of China (CAC) and the local government, aims to further facilitate legal, safe, and convenient cross-border data transfer (CBDT) mechanisms for companies.
The service center will not only serve companies in the Lingang New Area but is also open to companies across Shanghai, and will act as an administrative service center specializing in CBDT.
In January 2024, the local government showcased a set of trial measures for the “classified and hierarchical” management of CBDT in the Lingang New Area. The measures, which have not yet been released to the public, seek to facilitate CBDT from the area by dividing data for cross-border transfer into three different risk categories: core, important, and general data.
The local government also pledged to release two data catalogs: a “general data” catalog, which will include types of data that can be transferred freely out of the Lingang New Area, and an “important data” catalog, which will be subject to restrictions. According to Zong Liang, an evaluation expert at the service center, the first draft of the general data catalog has been completed and is being submitted to the relevant superior departments for review.
In March 2024, the CAC released the final version of a set of regulations significantly facilitating CBDT for companies in the country. The new regulations increase the limits on the volume of PI that a company can handle before it is required to undergo additional compliance procedures, provide exemptions from the compliance procedures, and clarify the handling of important data.
Also in March, China released a new set of technical standards stipulating the rules for classifying three different types of data – core, important, and general data. Importantly, the standards provide guidelines for regulators and companies to identify what is considered “important” data. This means they will act as a reference for companies and regulators when assessing the types of data that can be exported, including FTZs such as the Lingang New Area.
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.
China
A Concise Guide to the Verification Letter of Invitation Requirement in the China Visa Process
The application procedures for business visas to China have been simplified, with most foreigners now able to apply for an M/F visa using only an invitation letter from a Chinese company. Some countries are eligible for visa-free entry. However, a Verification Letter of Invitation may still be needed in certain cases. Consult the local Chinese embassy for confirmation.
In light of recent developments, the application procedures for business visas to China have undergone substantial simplification. Most foreigners can now apply for an M/F visa using only the invitation letter issued by a Chinese company. Additionally, citizens of certain countries are eligible to enter China without a visa and stay for up to 144 hours or even 15 days.
However, it’s important to note that some applicants may still need to apply for a “Verification Letter of Invitation (邀请核实单)” when applying for an M/F visa to China. In this article, we will introduce what a Verification Letter of Invitation is, who needs to apply for it, and the potential risks.
It’s important to note that in most cases, the invitation letter provided by the inviting unit (whether a public entity or a company) is sufficient for M/F visa applications. The Verification Letter for Invitation is only required when the Chinese embassies or consulates in certain countries specifically ask for the document.
Meanwhile, it is also essential to note that obtaining a Verification Letter for Invitation does not guarantee visa approval. The final decision on granting a visa rests with the Chinese embassy abroad, based on the specific circumstances of the applicant.
Based on current information, foreign applicants in Sri Lanka and most Middle East countries – such as Turkey, Iran, Afghanistan, Syria, Pakistan, and so on – need to submit a Verification Letter for Invitation when they apply for a visa to China.
That said, a Verification Letter for Invitation might not be required in a few Middle East countries, such as Saudi Arabia. Therefore, we suggest that foreign applicants consult with their the local Chinese embassy or consulate to confirm in advance.
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.
- New Publication: A Guide for Foreign Investors on Navigating China’s New Company Law
- Lingang New Area in Shanghai Opens First Cross-Border Data Service Center to Streamline Data Export Process
- A Concise Guide to the Verification Letter of Invitation Requirement in the China Visa Process
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