China
With Xi’s new power is collective leadership over?
Author: Shen Dingli, Fudan University
There is currently much talk about whether China’s President Xi Jinping is shifting away from collective leadership. Western observers tend to conclude that, given his command of all powers since becoming Chinese communist party chief and state president, Xi is centralising power around himself. But that is a premature conclusion that bears more careful scrutiny.
China’s communist party has always claimed to adopt ‘democratic centralism’. And, at different times, the party has emphasised either the ‘democratic’ or ‘centralist’ aspect. The key has been to strike a balance. On the one hand, an overly democratic system may act with low efficiency. The recent inability of the US Congress to make a compromise on budgetary sequestration is a key example of this. On the other, an overly centralist system tends to push the paramount leader’s own agenda while ignoring the ideas of others. For example, George W. Bush’s pre-emptive war against Iraq in 2003 — without adequate intelligence or consensus in the United Nations Security Council — has, mistakenly and unnecessarily, led both America and Iraq in the wrong direction.
China’s overall system, by design, is more centralised than many in the west, so it has also been burdened by a number of frustrations in the past — such as the launch of the Cultural Revolution. China has adopted a series of political reforms to prevent such problems from arising again. For instance, China now employs a fixed five-year term system — instead of the lifelong system under Mao — to set its political cycles. More emphasis is also put on collective leadership by allowing for effective and more regular policy consultations and deliberations.
The division of jobs within China’s Politburo level seems to be an institutional means to attain collective leadership, but it hasn’t always been successful. Though policymaking behind the wall of the Forbidden City tends to be opaque, it is still possible to feel that members of the Politburo Standing Committee — such as Zhou Yongkang, who took charge of legal and judicial matters between 2007 and2012 — could abuse collective leadership for personal ambition. While Zhou never paralysed the system, his actions have adversely affected the efficacy of collective leadership.
With this in mind, China has to improve its leadership system to make it truly collective, and prevent any individual from monopolising power under the guise of collective leadership. Xi’s return to a more centralised system seems to be part of his efforts to manage effectively these power relations so as to prevent a situation like Zhou’s power trip from re-emerging. Looking from the outside, Xi has so far successfully managed this process.
The current domestic and international circumstances required that Xi move to centralise. In addition to the weak collective leadership of Standing Committees in the past, China’s rapid growth has rendered the present government organisation less effective in responding to the demands of economic and social reform. Meanwhile, the international response to China’s rapid ascendance also warrants cordial — yet decisive — Chinese leadership. During China’s own fast transformation and a period of regional, as well as global, power transition, China needs a determined leader who can command collective leadership domestically.
Obviously, in the course of strengthening the effectiveness of collective leadership the chance of shifting away from its original intent may actually increase. But as long as Xi allows policy consultation and deliberation before decisions are made, his revamped system may actually enhance China’s ‘democratic centralist institution’.
Given his expected ten-year tenure, Xi seems to be poised to make the democratic centralist system a stronger and more efficient institution. At the same time, to avoid the pitfalls of shifting away from collective leadership, he must — after two years of consolidating his power base — be aware of the importance of both leading his team and sharing his power.
Shen Dingli is Professor and Associate Dean at the Institute of International Studies at Fudan University.
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With Xi’s new power is collective leadership over?
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.
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- 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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