China
Uncertainty ahead for Xi’s China
Author: Kerry Brown, King’s College London
In 2021 China was, and in 2022 again will be, dominated by the domestic economy, relations with the United States, the COVID-19 pandemic and President Xi Jinping.
Despite spectacular bounce-back growth in the first half of the year, China’s economy had slowed dramatically by year’s end. Worries centred on the property market, a perennial concern for over a decade due to fears of overheating.
While disaster has so far been averted, in 2022 all eyes will be both on how the government handles this looming crisis and how it continues to treat the private sector, a significant source of employment. It will also be important to see how Beijing implements its ‘dual circulation’ strategy which is meant to strengthen the role of Chinese consumers and make them more important as sources of growth. The test will be to see whether this reenergises growth. Harsh lockdowns are also unlikely to aid growth in the year ahead.
Relations with the United States remain fractious despite Joe Biden’s replacement of Donald Trump as president in January 2021. On the positive side, the COP26 climate change agreement in October and the US–China dialogue on the environment offered one of the few positive and constructive links between the two powers.
But the two sides remain as far apart politically as ever. The United States is increasingly concerned about China’s assertiveness in the region and posture towards Taiwan. There is also strong bipartisan anger in the United States over China’s human rights issues. In November and December, China and the United States held separate summits on democracy, a remarkable symbol of their almost parallel diplomatic and ideological worlds.
These competing allies will continue to try to manage their mutual antipathy and gain support from third parties in 2022. More deals like the AUKUS pact can be expected, as well as more efforts to promote the Belt and Road Initiative on the Chinese side. The Winter Olympics in late January will offer a moment to see this polarised world in a frozen shot — with China no doubt proclaiming it a huge success. But the United States and its allies — many of whom have already announced a diplomatic boycott — are either condemning or doing their best to ignore it.
In 2021, the management of COVID-19 in China was markedly different to the rest of the world. Beijing’s insistence on draconian lockdowns meant that even single incidences of infection saw cities and regions closed down. The upside to this was effective prevention of COVD-19 spreading.
For the United States, pandemic management underlined deeply divided domestic politics, with masks and vaccinations becoming battlegrounds between left and right. Similar divisions of libertarians versus their opponents were seen across Europe and Australia. 2022 will make clear which of these comes up delivering at least some level of normality. A third year of disruption, economic turmoil and uncertainty will lead to heavier political and social costs.
Whether Xi’s autocracy will prove more resilient than Western democracy will be a decisive question. What is already clear is that the pandemic has deepened divisions in terms of government systems, nations and ideology. These will remain, and most likely deepen, in the coming year.
In 2021, the domestic political narrative within China was dominated by the celebration of the 100th anniversary of the Communist Party in July. Authorised histories of the Party’s time in existence and period in power came out in April, and then as part of an official resolution were issued during the Party’s annual plenum meeting in October. The latter made clear the long list of challenges from delivering public health to addressing China’s environmental problems and dealing with inequality.
Xi’s administration showed it took no hostages, giving figures like multi-billionaire Jack Ma of Alibaba harsh treatment for criticisms he was deemed to have made of the central bank. Other entrepreneurs also found themselves on thin ice. The message was clear — China under Xi was about levelling up the middle class, the new heroes of the revolution. Their standards of living needed addressing, something that became even clearer when the results of the national census held every ten years were issued.
This census showed a dramatically slowing population growth rate, with the final figure barely reaching 1.4 billion. Over 60 per cent of China’s population is now urban, up from 50 per cent in 2010. Xi’s…
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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