China
China’s unprepared reopening
Authors: Siyu Qian, China and Li Mingjiang, RSIS
China has had a rollercoaster experience in dealing with the COVID-19 pandemic after the relaxation of the COVID-zero policy. While the situation now has gradually returned to normal, the first few weeks since China reopened on 7 December 2022 were extremely difficult for millions of people in the country.
Many cities were crowded by people waiting outside pharmacies to buy cold and flu medicines. Even more people spent hours every day searching for medicines online. Medicines were often out of stock at local pharmacies and online prices have soared to an astonishing level.
There was chaos in numerous Chinese hospitals in the early days of reopening. Many medical service providers, who reportedly had not been informed of the hasty reopening, fell prey to the first wave of infections. Patients with severe COVID-19 symptoms could not receive timely medical treatment either because ambulance services were overburdened or there were not enough hospital beds. Information about the surge of deaths associated with COVID-19 infection, especially in some big cities, was widely circulated online.
Complaints were pervasive on Chinese social media. People expressed their sadness and bitterness in their online New Year messages. Many people were very critical of the government authorities’ failure in making proper preparations before reopening. The negative impacts of such impromptu decision-making and governance have added to the grievances that manifested in 2022 when lockdowns and draconian social restrictions were the usual responses under the zero-COVID policy.
Days before the reopening, state media outlets were still advocating for a zero-COVID policy while stressing the need to strike a balance between implementing restrictive measures and minimising damage to normal socioeconomic activities. No one expected such abrupt abandoning of the zero-COVID policy and the embracing of a fatalistic ‘lying flat’ approach that the Chinese media had lambasted Western countries for pursuing.
Greater coordination and preparation in advance would have allowed the population who were affected by the first infection wave to have better coped with these challenges. While it may be unrealistic to dramatically increase capacity at hospitals, especially in a short period of time, it was puzzling why there would be a severe shortage of medicines given that China is a major manufacturer of drugs. For example, China’s production capacity of Ibuprofen is approximately 14,000 tonnes per year — almost one third of global output.
Medicine shortages stemmed from China’s slow policy adjustment inadequate preparation for reopening. Over the past three years, the government seriously restricted the sales of cold-related medicines at pharmacies to find and monitor positive COVID-19 cases. This resulted in pharmacies being reluctant to stock these medicines and led to the significant production drop.
Decision-makers should have known that it takes time for companies to resume their production lines, recruit workers and purchase raw materials to mount an adequate response to booming consumer demands immediately after the reopening. The drug shortage problem could have been avoided if the government had alerted large pharmaceutical enterprises ahead of reopening and given more thought to the distribution of medicines in advance.
This problem was compounded by the general public’s panic and fear when reopening was announced. Some people panic bought medicines to build a sense of reassurance under such circumstance. As a result, people infected with COVID-19 had no or very limited medicine to cope with their symptoms.
Chinese authorities also failed to plan to supply some anti-COVID oral drugs before reopening. It took almost three weeks after the reopening for Paxlovid to be provided at hospitals and clinics in Beijing. The availability of Paxlovid at Chinese hospitals is still quite limited. Black market price gouging saw a box of Paxlovid costing between about US$400 and over US$2000 during the first few weeks post reopening.
The reopening is not the first time that impromptu and even campaign-style policymaking has been seen in China. The widely popular anti-corruption effort has seen several rounds of campaigns against some of the ‘big tigers’. But critics have argued that institution-building to address the root causes of corruption has been insufficient. The heavy-handed crackdown on some leading information technology companies has led to significant layoffs in this sector….
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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