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China Updates – June 2021

Relevant FDI cases for 2021 

Since the beginning of the year, despite the economic impact of COVID-19, foreign companies see China as one of the top destinations for investment.

A major FDI case is the chemical production site that involved a USD 10 billion investment in Guangdong. Another is a power chips company that is investing in a plant in Jiangxi. A sign of China’s opening policies is Allianz, a German insurer that has now obtained approval to set up an insurance asset management company as a Foreign-Invested Enterprise, the first one in all China fully funded by foreign capital. Samsung is building a multi-layer ceramics capacitors plant in Tianjin. Global Logistics Properties established a fund of 4.5 billion RMB for modern logistic assets in Shanghai. The Ministry of Commerce said China would keep reviewing the negative list to attract more investment, guarantee speeding up processes in implementation, protect the rights of foreign investors, and improve transparency and convenience.

 

China keeps relaxing restrictions on FDI

The Ministry of Commerce has publicized its plans to ease the restrictions for foreign direct investment, serving as an official announcement and a sign for its long-term plan to be the number one recipient of investment.  The Foreign Investment Law and the opening of the stock market also depict its relaxation on FDI restrictions. According to the Ministry of Commerce, foreign direct investment into China has incurred a 38.6% year-on-year surge.

Over the years, China has highly invested in world-class airports and high-speed railways, transforming itself into a strategic marketplace to compete with the largest urban areas such as San Francisco, New York, and Tokyo. For example, the Fortune 500 company Proctor & Gamble has invested USD 100 million and plans to launch an intelligent technology innovation center in Guangzhou.

 

Reminders about the 2021 Tax Filing deadlines

As we finish the first half of the year, it is important to keep notes of the deadlines to file the monthly taxes in Mainland China. It is mandatory to make a tax declaration on the 15th of every month. However, there are times when deadlines fall on public holidays. For these specific scenarios, the government provided a calendar with adjusted due dates as follows:

  • May: Deadline on the 18th of June (Dragon Boat Festival Holiday).
  • June: Deadline on the 15th of July.
  • July:  Deadline on the 15th of August.
  • August: Deadline on the 15th of September.
  • September: Deadline on the 26th of October (National Week Holiday).
  • October: Deadline on the 15th of November.
  • November: Deadline on the 15th of December.
  • December: Deadline on the 15th of January of 2022.

Keeping these deadlines in mind will help you avoid penalties and ensure proper company compliance.

 

China expands the use of its digital currency

To reduce their dependency on foreign currency and expand their international presence, the Chinese government authorities launched the digital yuan, also known as E-Yuan, widely known through the term €˜Digital Currency Electronic Payment’ (DCEP). Commencing trials in a few cities last year in April, the program has expanded to major cities, and it’s even contemplated being used for the 2022 Winter Olympics in Beijing.

Local stores and platforms accepting the digital yuan are rapidly expanding, with other banking institutions joining the initiative. It is expected that the trial finishes by the end of 2023 to evaluate the overall implementation, flaws, security threats and see what other technological advances can be implemented.

 

China considers changing the rules for food exporters

PRC has recently published two revised decrees that would enforce substantial requirements for foreign companies that export food and beverages to China.

The two decrees are:

  • Decree 248 on food facility registration: All the foreign companies related to the food export industry, including producers, processors, as well as storage facilities, to be registered with the General Administration of Customs of China (GACC) to export products to China.
  • Decree 249 on food importation: The GACC will launch new enforcement instruments to suspend and/or prohibit food products from being imported into China if the companies violate applicable Chinese laws and regulations.

Both decrees are scheduled to be enforced on 1 January 2022.

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