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China Updates — April 2023

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Qianhai Introduces Further Preferential Policies to Promote Development of Financial Industry

On 12 April, the Authority of Qianhai in Shenzhen promulgated the amended Special Fund Management Measures for Supporting the High-Quality Development of the Financial Industry in the Qianhai Shenzhen-Hong Kong Modern Services Industry Cooperation Zone (“Measures”), which will remain effective for the next three years.  

The package of revised measures comprises 45 articles in total, the aim of which is to accelerate the high-quality development of the local financial sector.  

For the initial three years of the lease period, enterprises conducting business in specialised aircraft and aviation equipment leasing will be granted uncapped yearly incentives at a rate of not more than 2.5 per cent of the rental fee as per the contract.  

Enterprises engaged in the leasing business of ship and marine equipment, and other relevant businesses can enjoy uncapped incentives at a rate of one per cent of the actual lease fee as per the contract, or the purchase amount of the leased assets as per the contract in the current year. 

Under the Measures, financial resources will also be allocated to promote the growth of commercial factoring, facilitate the listing of companies to raise capital, and support financial organisations to fulfil the needs of the real economy. 

Shenzhen to Become a Global Live-Streaming E-Commerce Hub

The Commerce Bureau of Shenzhen (“Bureau”) has recently unveiled an ambitious action plan for 2023-2025 to transform China’s “Silicon Valley” into a live-streaming e-commerce hub with international reach

In an effort to ramp up consumption, the national city of innovation aims to exceed RMB 300 billion in sales by 2025.  

Shenzhen intends to enlarge the local live-streaming e-commerce sector by nurturing and drawing in a minimum of 100 leading agencies over the next three years as well as setting up 50 industrial estates especially for the sector. 

The Bureau notes the central importance of live-streaming e-commerce as a pioneering industry model in stimulating economic recovery and accelerating growth in consumption. 

In addition, the plan seeks to bolster intellectual property rights, foster innovation related to platforms and technologies, enhance live-streaming commerce solutions, and create best practices for the industry. 

Guangzhou to Become a Global Consumption Hub

With the intention of transforming the capital of Guangdong Province, home to over 18 million inhabitants, into a global consumption hub by 2025, Guangzhou has unveiled a grand development plan that will quadruple the number of duty-free and departure tax refund stores from 76 in 2021 to 300.

The plan proposes that the city should take advantage of transportation hubs, such as Baiyun International Airport and Guangzhou East Railway Station in order to promote duty-free shopping, broaden the range of duty-free products, and facilitate the entry of Chinese products.

In July 2021, the Chinese government said that Shanghai, Beijing, Guangzhou, Tianjin, and Chongqing would take the lead and become the nation’s first international consumption centres.

A key strength that Guangzhou can play to in its transformation into an international consumption centre is its convention and exhibition sector. Through platforms, such as the unmissable, signature event – the Canton Fair – the city has long been an important hub for distributing top-notch goods across the country.

According to the development plan, Guangzhou is home to more than 551 markets with around 800,000 merchants and employing over 1.5 million staff. Retail sales of consumer goods surpassed RMB 1 trillion in 2022, which indeed augurs well for the city’s future as a flourishing consumption hub.

Guangdong Unveils New Policy Measures to Boost Investment

Guangdong Province has announced a new package of policy measures to attract foreign investment and foster high-quality development.

The latest batch of nine policy measures adds to the existing 18 policy packages that have been rolled out so far.

According to the Guangdong provincial government, practical steps will be taken to “invigorate” businesses, optimise the business environment, stimulate investment, boost consumption, build key strategic platforms, and further develop core industries.

The focus of the latest batch of policy measures is on attracting and effectively channelling foreign investment, promoting the high-quality development of the foreign investment landscape, expedite the formation of the new “dual circulation” development framework, in which domestic and international markets support each other, with the domestic market as the anchor.

Further, the focus is on attracting investment flows into the 20 industries of strategic importance, including new-generation information technology, green petrochemicals, advanced material, semiconductors and integrated circuits, and high-end equipment manufacturing.

In addition, Guangdong Province will increase its exports of automobiles, particularly new energy vehicles. In 2022, the export of new energy vehicles in the province reached a record high of RMB 8.83 billion, representing a 4.7-fold rise.

Hong Kong Introduces Registration Regime for Dealers in Precious Metals and Stones

Amendments have been made to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615) (“AMLO”) to strengthen the regulatory framework for battling money laundering and terrorist financing. The amended AMLO, which came into effect on 1 April 2023, paves way for the establishment of a registration system for dealers in precious metals and stones.

Under the amended AMLO, the new registration regime is applicable to a person that conducts any of the following activities in a business and commercial capacity:

  • Trading in (including purchasing and selling), exporting or importing precious metals, precious stones or precious products;
  • Manufacturing, refining or carrying out any value-adding work on precious metals, precious stones or precious products;
  • Issuing, redeeming or trading in precious asset-backed instruments; or
  • Serving as an intermediary in relation to any of the above-mentioned activities.
  • A person running a logistics service business and is only engaged in the import or export of precious metals, precious stones, or precious products in the ordinary course of that business does not fall within scope.

The following items are subject to the regulatory regime:

  • Precious metals: gold, silver, platinum, iridium, osmium, palladium, rhodium or ruthenium – in a manufactured or unmanufactured condition;
  • Precious stones: diamond, sapphire, ruby, emerald, jade or pearl – natural or otherwise;
  • Precious products: jewellery or watches comprised of, including, or having affixed to them any precious metal or precious stone, or both;
  •  Precious asset-backed instruments: certificates or instruments backed by one or more precious metals, precious stones or precious products that grant the bearer rights to such assets, either in full or in part, but excluding:
    • securities, futures contracts, any interest in collective investment schemes, structured products or OTC derivative products under the Securities and Futures Ordinance (Cap. 571); or
    • virtual assets.
Hong Kong Issues Policy Statement to Develop City into International Family Business Hub

The Hong Kong Special Administrative Region Government (“SAR Government”) has released a Policy Statement on Developing Family Office Businesses in Hong Kong (“Policy Statement”), which elaborates on the policy direction, and fleshes out the host of measures on building a dynamic ecosystem conducive to the setting-up and running of global family offices in Hong Kong.

The aim of the Policy Statement is to comprehensively enhance the competitiveness of Hong Kong as a leading international family office hub, and to provide optimal conditions for family offices and asset owners to prosper and flourish.

To enable family offices to capture the wealth of investment opportunities in Hong Kong, the following initiatives will be introduced:

  • Introducing a new Capital Investment Entrant Scheme (“CIES”):

The new CIES seeks to cultivate Hong Kong’s talent pool and draw in an influx of new capital into the city. Eligible assets under the scheme would include equities listed in Hong Kong, debts issued or fully guaranteed by companies listed in Hong Kong, by the SAR Government, or by other corporations, agencies or bodies wholly or partly owned by the Government, subordinated debts issued by authorised institutions, and eligible collective investment schemes (including investment-linked assurance scheme as well as assets denominated in renminbi).

  • Offering tax concessions:

Pending the passage of relevant legislative amendments, profits tax exemption will be offered to eligible family-owned investment holding vehicles (“FIHV”) managed by single family offices in Hong Kong and apply to qualifying transactions, such as investments in securities, futures contracts, foreign exchange contracts, deposits, exchange-traded commodities, OTC derivative products, and investment in private companies, etc.

  • Providing market facilitation measures:

A dedicated communication channel will be set up to handle specific enquiries related to the setting-up of family offices. Further, the Securities and Futures Commission have published several informative references guides that address frequently asked questions regarding licensing requirements.

  • Establishing the Hong Kong Academy for Wealth Legacy:

Given the imperative need to enlarge Hong Kong’s talent pool in this sector, the SAR Government will establish an Academy for Wealth Legacy, providing training and talent development opportunities for industry professionals and future wealth owners.

  • Promoting art storage facilities at the Hong Kong International Airport:

To promote Hong Kong’s art auction and training market, the Airport Authority Hong Kong is actively exploring the possibility of setting up storage, display, and appreciation facilities for art and treasures at the Hong Kong International Airport.

  • Developing Hong Kong into a philanthropic centre:

To further expand Hong Kong’s philanthropic sector, the procedures to process applications for recognition of charities will be streamlined and optimised. In addition, the SAR Government intends to increase the level of beneficial interest that an exempted charity can hold in an FIHV by way of legislative amendment.

  • Consolidating the role of the dedicated FamilyOfficeHK team at Invest Hong Kong (“InvestHK”):

In the 2023-24 Budget, Hong Kong’s Financial Secretary announced that HKD 100 million would be allocated InvestHK over the next three years to ramp up efforts in attracting more family offices to Hong Kong. The scope of the work done by the dedicated FamilyOfficeHK team will be enlarged, which will also include services in philanthropy and education needs.

  • Launching a new Network of Family Office Service Providers:

Since partnerships with service providers are integral to the success of the family office sector, the InvestHK’s dedicated FamilyOfficeHK team will establish a new Network of Family Office Service Providers, comprising private banks, accounting and legal firms, trusts, and other professional services providers.

 

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