International Trade 2021

Last Updated December 11, 2020

China

Law and Practice

Authors



JunHe was founded in Beijing in 1989 and is one of the first private partnership law firms in China. It is one of the largest and most recognised Chinese law firms, and has a wide range of practices ranging from corporate, M&A, IP, antitrust, banking and capital markets to regulatory compliance, litigation, white-collar crime and trade. The trade team is much sought-after by clients for many trade, customs and trade controls matters. It has a strong and proven trade remedies practice, particularly in complex cases brought by the USA, the EU and China. In recent years, the team has established an outstanding practice in economic sanctions and export controls, helping multinational clients to do business with and in China, as well as leading Chinese companies coping with US laws and customs issues. It also advises multinational clients in Chinese customs matters and assists in customs audits and investigations.

The People's Republic of China ("China", or PRC) is a member of the World Trade Organization (WTO), but not a member of any WTO plurilateral agreements, even though China is in the process of acceding to the Government Procurement Agreement.

In terms of Preferential Trade Agreements, China is a party to the Asia-Pacific Trade Agreement.

For Free Trade Agreements (FTAs), China has FTAs currently in force with the following parties: Association of Southeast Asian Nations, Australia, Cambodia, Chile, Costa Rica, Georgia, Iceland, South Korea (second phase under negotiation), Maldives, Mauritius, New Zealand, Pakistan, Peru, Singapore and Switzerland.

China also has Closer Economic and Partnership Arrangements with Hong Kong SAR and Macao SAR, and has an Economic Cooperation Framework Agreement with Taiwan, China.

China is a beneficiary under the Generalized System of Preferences scheme of Australia, Belarus, Kazakhstan, New Zealand, Russian Federation, Switzerland and Turkey. Besides, China provides two preferential trade arrangements: (i) least developed countries having diplomatic relations with China are eligible for three phases of special and preferential tariff treatment; and (ii) China provides duty-free treatment to certain agriculture products originated from Taiwan.

China has FTAs under negotiation with the following parties: the Gulf Cooperation Council, Israel, Moldova, Norway, Palestine, Panama and Sri Lanka. China has two regional agreements under negotiation: the Regional Comprehensive Economic Partnership (RCEP) and a China-Japan-Korea FTA. China is considering FTAs with the following parties: Bangladesh, Canada, Colombia, Fiji, Mongolia, Nepal, Switzerland and Papua New Guinea.

On 15 January 2020, China and the USA signed the Economic and Trade Agreement between the Government of the People's Republic of China and the Government of the United States of America (also known as “The Phase One Agreement”), which addressed certain policies and practices of China identified in the Section 301 investigation related to intellectual property, technology transfer and innovation.

The Phase One Agreement commits China to a domestic policy reform, which is already in process, such as the Foreign Investment Law which came into force on 1 January 2020. Moreover, the Phase One Agreement also addresses trade barriers and states that China will increase US agriculture and food imports.

It is believed that the Phase One Agreement rebalanced the trade relationship between China and the USA and achieved meaningful and enforceable commitments to resolve structural issues. The question of whether China and the USA will negotiate a Phase Two agreement is still pending.

The Customs Law is the core legal basis for governing customs matters, together with various regulations governing specific areas – eg, the Regulation on the Implementation of Customs Administrative Punishment.

The General Administration of Customs (GAC) and its local branches administer and enforce customs laws and regulations.

The punitive tariffs measure established by the Foreign Trade Law is mainly implemented by the Tariff Commission of the State Council in China.

Usually, punitive tariffs are applied without an investigation or review process in which the public can participate. Non-domestic companies can participate in the review by submitting a tariff exclusion application. China has imposed punitive tariffs on a total of three series of US origin commodities since July 2018.

Because of COVID-19, the Ministry of Commerce (MOFCOM), the GAC, and the State Administration of Market Regulation (SAMR) issued several announcements on quality controls, import and export process for certain personal protective equipment (including medical devices and non-medical devices) in March and April 2020.

The Export Control Law, published on 17 October 2020, emphasises customs enforcement during the export process. GAC may publish certain regulations or guidance in terms of export control enforcement in the future. 

China does not promulgate specific laws for economic sanctions. With permanent seats in the UN Security Council, China implements sanctions within the UN framework. Formerly, China took the stance of objecting to any unilateral sanctions outside the UN framework, but this stance is gradually changing. For example, the Ministry of Foreign Affairs (MFA) has made several announcements since late-2019 to sanction certain US NGOs and individuals in relation to Hong Kong issues and certain US companies in relation to their involvements in arms sales to Taiwan.

In addition, on 19 September 2020, MOFCOM issued the “Provisions on the Unreliable Entity List” (the “UEL Provisions”) laying out the mechanism to designate foreign companies to the Unreliable Entity List (UEL), and may impose sanction measures to designated entities.

The Foreign Trade Law (2016, as amended) and the National Security Law (2015) have provided legal authority for the state to take necessary measures when there is certain emergency or when there is a national security concern. In addition, the UEL Provisions (2020) authorise the imposition of certain sanction measures upon designated UEL entities.

Economic sanctions under the UN regime are administered primarily by the MFA and enforced by multiple agencies such as the GAC, the MOFCOM, the People’s Bank of China (the central bank), the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, the Ministry of Transport and the Ministry of Public Security. In addition, with the enactment of the UEL Provisions, the MOFCOM will lead a multi-agency working mechanism composed of relevant central agencies to administer the UEL measures.

PRC persons and activities within PRC territory are subject to PRC jurisdiction for the purpose of sanctions. Foreign persons may also be subject to unilateral sanctions as announced by the MFA. The UEL will also impose sanction on foreign entities if their activities endanger national security, causing damage to the legitimate rights and interests of Chinese entities, etc.

China adopts the sanction lists under the UN regime. In addition, it is in the process of establishing its own unilateral sanction lists.

As to the UEL designation, the UEL Provisions provide that if a foreign entity conducts the following actions, it could be imposed with applicable sanctions:

  • endangering the national sovereignty, security or interests of China;
  • suspending normal transactions with an enterprise, other organisation, or individual of China, or applying discriminatory measures against an enterprise, other organisation, or individual of China, which violates normal market transaction principles and causes serious damage to the legitimate rights and interests of the enterprise, other organisation, or individual of China.

There has been no one designated to the UEL list so far.

Except for adopting UN sanctions, China does not maintain its own comprehensive sanctions or embargoes against any countries/regions.

While China does not have other types of sanctions besides UN sanctions and UEL, the government (ie, the MFA) may announce other sanctions from time to time. For example, the recent sanctions over certain US NGOs and individuals in relation to Hong Kong issues and certain US companies in relation to their involvements in arms sales to Taiwan; see 3.1 Sanctions Regime.

While China does not have explicit “secondary sanctions” (as under US sanctions), the government may impose sanction measures against foreign persons in case of certain activities endangering China’s sovereignty or national security even when there is no China nexus.

Administrative and/or criminal liabilities could be imposed on PRC persons/entities who violate the regulations and foreign persons when the violation incurred in PRC territory. Foreign persons who are outside of PRC territory, and who have committed a crime against the PRC or its citizens, could be subject to criminal liabilities in China. As to administrative liabilities, the PRC government has broad jurisdiction over PRC persons and activities conducted within the territory of the PRC.

Moreover, based on UEL Provisions, for designated foreign entities, there is a menu of measures the government can choose from, such as restriction or prohibition on import or export activities, investments or a travel ban.

For the UN sanctions adopted by China, there is no such kind of licence available in China, unless authorised by the UN.

As to the UEL mechanism, where, under special circumstances, it is necessary indeed for a PRC person to transact with the foreign entity that is restricted or prohibited from engaging in China-related import or export activities, government approval is required before proceeding transactions with such foreign entity.

According to the Notice of the China Banking Regulatory Commission on Issuing the Guidelines on the Management of Country Risk by Banking Financial Institutions, when a banking financial institution is conducting its due diligence on transaction parties, it shall strictly comply with relevant UN resolutions and remain alert on its business and transactions involving sensitive countries or regions. Furthermore, banks are also required to develop their “know your customer” (KYC) profiles for the administration of bank accounts to implement the relevant UN sanction resolutions.

In addition, with the release of UEL Provisions, it is also important to note that entities cannot undertake certain transactions related to Chinese importation, exportation and investment with the designated foreign entities. So far, the government has not published compliance guidance in terms of UEL Provisions.

According to the Notice of the People’s Bank of China on Implementing the Relevant Resolutions of the United Nations Security Council, upon receipt of the notice from the MFA on the implementation of relevant UN sanction resolutions, financial institutions and specific non-financial institutions shall immediately enter the information about individuals and entities included in sanction lists into the relevant business systems and conduct a retrospective review. If any of the listed persons are identified, the financial institutions and specific non-financial institutions shall take corresponding actions immediately and report the relevant information to the People’s Bank of China and other relevant agencies.

As regulated under UEL mechanism, foreign entities who endanger the national security or violate normal market transaction principles will be reported to government agencies. The relevant agency shall, in accordance with its duties and functions or upon suggestions and reports from the relevant parties, decide whether to investigate the actions taken by the relevant foreign entity; if it decides to investigate, an announcement shall be made.

China does not have blocking statutes.

The most significant development over the past 12 months is the issue of UEL Provisions on 19 September 2020. This is a powerful tool for the Chinese government and will have a profound impact on foreign trade and investment. It even has the potential to have some extra-territorial effect, as this UEL mechanism is designed to protect Chinese companies’ interests.

In addition, on 2 December 2019, MFA announced that China would impose sanctions on five US NGOs for their involvement in the turmoil in Hong Kong. On 13 July 2020, MFA announced sanctions on four US individuals and one entity in response to the US government’s designation of Chinese senior government officials and agency for the alleged human rights concerns. On 14 July 2020, MFA also announced sanctions on Lockheed Martin, which it is said were involved in US arms sales to Taiwan. On 26 October 2020, MFA announced sanctions on companies including Boeing Defense and Raytheon. No details of sanction measures were announced.

With the release of UEL Provisions, China is changing its position to establish its own list of sanctioned individuals and entities. However, the UEL itself has not been released yet. When the list comes out, it may pose significant challenges to the trade and investment community.

China has an export control regime that is distinct from sanctions. The main purpose of export control policies in China is the non-proliferation of weapons and protection of national security and interest. The Chinese government has developed a basic legal framework of export controls of its own since 2002.

On 17 October 2020, the Standing Committee of the National People's Congress passed the new Export Control Law, which implements export controls over goods, technology and service and other technical data regarding dual-use items, military items and nuclear items. The law will take effect on 1 December 2020 and is the first special law in the field of export control.

The Foreign Trade Law provides a general legal basis for the current Chinese export control regime, which announces that the state may restrict or prohibit the import or export of goods or technologies for various purposes, such as national security, public interests, short supply and protection of natural resources, etc. The newly passed Export Control Law, once effective on 1 December 2020, will become the core legal authority for export control-related matters.

Article 5 of the Chinese Export Control Law states that the Departments of the State Council (primarily MOFCOM) and the Central Military Commission are the primary authorities for China’s export controls. The authorities will be responsible for the export control work according to division of responsibilities.

PRC persons and activities within PRC territory are subject to PRC jurisdiction for the purpose of export control. It is noteworthy that the new Export Control Law exerts certain long-arm jurisdiction when any organisation or individual outside the territory of the PRC endangers the national security and interests of the PRC or obstructs the fulfilment of non-proliferation or other international obligations.

China will establish its restricted persons lists to designate those who:

  • violate end-user or end-use restrictions;
  • possibly endanger national security and interests; or
  • use controlled items for terrorist purposes.

Such importers or end users will be listed in the restricted persons list and are prohibited or restricted from transactions of controlled items, and the export of relevant controlled items to these persons may be suspended.

China does not use the Wassenaar List. China has its own control lists, such as the Catalogue of the Import and Export License for Dual-use Items and Technologies (“Dual-use Catalogue”). Dual-used equipment, materials, software and related technologies are covered.

Besides the list-based controls, for any item, when the exporter knows or ought to know the items are to be used for mass weapons of destruction or for terrorism purpose, or may jeopardise national security, the export without a licence should be prohibited.

Administrative Penalties

These include the non-acceptance of export licence applications, prohibition of person in charge from engaging in relevant export business activities within five years, revocation of licences, confiscation of export licences, and revocation of export business qualifications for related controlled items, warning, order to stop illegal activities, confiscation of illegal gains and hefty fines.

Criminal Penalties

These include the crime of smuggling, the crime of illegal business operations, the crime of leaking state secrets, or the crime of endangering national security and interests.

Obtaining an export licence requires a three-step process.

  • Step 1: registration with MOFCOM for engaging in dual-use exports.
  • Step 2: approval – application must be filed with MOFCOM to obtain an approval letter for exporting related dual-use products.
  • Step 3: obtaining licensing – upon issuance of the approval letter, the applicant may proceed to apply for the export licence.

Customs would subsequently review the relevant licence to release the goods.

The newly passed Export Control Law encourages companies to establish their own compliance systems and the national export control authority will publish export control guidelines in the future. In 2007, MOFCOM has issued guiding opinions on the establishment of an internal export control system for companies exporting dual-use items and technology, which mainly contains six elements:

  • a policy statement;
  • an independent compliance department;
  • a screening policy;
  • a management manual;
  • compliance training; and
  • record-keeping.

Chinese export control mainly controls the end use of controlled items and the end user who receives the items. In connection with the exportation application, exporters are required to provide documentation establishing the intended end use and end user for the controlled items, and end users are required to commit not to change the end use or transfer the item to any third party without authorisation. Exporters and importers are further obliged to report to the government when it becomes aware of any potential change in the end use or end user.

The Catalogue of Technologies Prohibited or Restricted from Export of 2008 was updated in 2020, and the Dual-use Catalogue is updated on an annual basis, with the most recent update in late 2019.

The most important development regarding export controls is the passage of the new Export Control Law in October 2020, which is the first law in the field in China.

With the passage of the new Export Control Law, effective from 1 December 2020, MOFCOM is to establish a restricted persons list to designate parties violating the law. In addition, the new law introduces a new concept – “deemed export” – which would cause significant challenges to entities engaging in research and development activities.

The Foreign Trade Law provides the legal authority for imposing AD/CVD duties and safeguard measures. Imposition of AD/CVD duties measures and safeguard measures (resulting in additional tariffs) is determined by MOFCOM and authorised by the Tariff Policy Committee under the State Council. MOFCOM has sole authority for the imposition of safeguard measures in the form of quota. Customs is responsible for implementing the measures.

The MOFCOM Trade Remedy and Investigation Bureau (TRIB) is responsible for conducting dumping/subsidy and injury investigations, as well as the safeguard investigation.

Customs is responsible for implementing the measures and taking enforcement actions.

For AD/CVD investigations, MOFCOM may initiate interim reviews as requested by interested parties, including the petitioner, domestic industry, foreign exporters/producers and domestic importers. MOFCOM may also self-initiate interim reviews on its own discretion.

AD/CVD interim reviews and safeguard measure are conducted on a regular basis. Interested parties may request an interim review on AD/CVD measures within 30 days of the anniversary date of the enforcement of AD/CVD measures.

Interested parties, including the petitioner for investigation, domestic industry, foreign exporters and producers and domestic importers, may request an interim review or participate in an initiated interim review.

The relevant process for the investigation and imposition of duties and safeguards is as follows.

  • Petition received by MOFCOM.
  • Initiation: MOFCOM reviews the petition and decides whether to initiate an investigation within 60 days after the receipt of the petition (this may be extended under special circumstances). MOFCOM may also self-initiate investigation on its discretion.
  • Registration: interested parties may register with MOFCOM within 20 days after initiation of the investigation.
  • Investigation: MOFCOM may conduct the investigation and obtain information from interested parties by means of a questionnaire, sampling, hearing and on-site verification, etc.
  • Determinations and provisional measures: for AD/CVD investigations, MOFCOM will publish the preliminary determination within six months (up to nine months if extended) after the initiation. Within 12 months (up to 18 months if extended), MOFCOM will publish the final determination. There is no statutory time limit for safeguard investigation. MOFCOM may publish the final determination without a preliminary determination.

Findings with business proprietary information will be released to interested parties before the determinations. Both preliminary and final determinations will be published, which will disclose basic findings.

There is no jurisdictions on which the authorities cannot or will not impose AD/CVD duties or safeguards.

Reviews on AD/CVD measures are not mandatory. Interested parties may request for an interim review on AD/ CVD measures within 30 days of the anniversary date of the enforcement of AD/CVD measures. MOFCOM may also self-initiate a review of AD/CVD duties.

For safeguard measures more than three years, the MOFCOM shall conduct an interim review during the term of implement. There is no statutory time limit for the interim review.

Interim reviews on AD/CVD measures are as follows.

  • Request received by MOFCOM.
  • Initiation: MOFCOM may self-initiate the interim review or within 60 days after its receipt of the petition for review.
  • Investigation: MOFCOM may conduct the investigation and obtain information from interested parties by questionnaire, sampling and on-site verification, etc.
  • Decisions: MOFCOM will publish the final decision within 12 months after the initiation of review.

Safeguard measures are as follows: for safeguard measures with a term longer than three years, MOFCOM shall conduct an interim review; there are no provisions or regulations regarding the review process.

Interested parties may apply for an administrative reconsideration in accordance with the Administrative Reconsideration Law of the People's Republic of China or bring a lawsuit to the court.

Administrative Reconsideration

An application for administrative reconsideration should be filed to the Tariff Policy Committee under the State Council within 60 days upon the notification of the measure. The Tariff Policy Committee will review the application and make a decision whether it will conduct a reconsideration or not, within five days after its receipt of application. If the Tariff Policy Committee decides to conduct a reconsideration, the decision will be made within 60 days (up to 90 days after extension) from the date of acceptance of the case.

Lawsuit

An interested party may bring a lawsuit to the court, against the Tariff Policy Committee’s decision not to conduct a reconsideration or a reconsideration decision, within 15 days from the date of receipt of the rejection decision or the date of expiry of the reconsideration period, respectively.

Non-market situation (NMS) investigation has become a useful tool by MOFCOM for the adjustment of the foreign producers’ domestic production costs in calculating the anti-dumping margin.

The NMS investigation was first applied in the AD investigation against phenylethylene from South Korea, Taiwan and the USA. In this case, MOFCOM determined that an NMS exists in the natural gas industry, the oil industry and the electricity industry of the USA. However, MOFCOM determined not to make adjustments for NMS in the final determination. In the preliminary determination of AD investigation against polyphenylene sulphide (PPS) originated from the USA, Japan, Korea and Malaysia, MOFCOM determined that a NMS exists in the natural gas industry, the oil industry, the electricity and the water industry of the USA and calculated 214.1-220.9% anti-dumping duty for US exporters, based on adjustments of NMS.

The escalation of trade friction between China and the USA has significantly impacted the results of AD/CVD investigations against the USA. Specifically, MOFCOM determined more than 200% dumping margins for US companies in the aforementioned PPS case in 2020; however, this is an extreme example.

Similarly, the strained relationship between China and Australia also dramatically impacts trade remedy investigations against Australian products. In the barley case, MOFCOM did not issue a preliminary determination and provided only ten days for the Australian government and exporters to comment on its disclosure of findings for final determination. In the final determination, MOFCOM imposed a dumping duty of 73.6% against barley from Australia, which was even higher than the dumping margin alleged by the petitioner.

MOFCOM is in the process of amending three anti-dumping rules in the future:

  • the Rules on Sunset Review of Anti-Dumping Investigations;
  • the Rules on New Shipper Review of Anti-Dumping Investigations; and
  • the Rules on Price Commitment of Anti-Dumping Investigations.

The comment period ended on 20 October 2020.

Regarding NMS, it is anticipated that MOFCOM may more frequently resort to such investigation in the future, even though so far NMS investigation has only been initiated against the energy industry of the USA.

In China, the investment security mechanism mainly refers to the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, and the National Security Review for Foreign Investments in Pilot Free Trade Zones; the review procedure is the same for both.

The review is initiated upon foreign investors’ own application, or upon requests by relevant stakeholders, such as government agencies, national industry associations, peer enterprises and upstream and downstream enterprises.

Upon the application from foreign investors or the request from a stakeholder, the National Development and Reform Commission (NDRC) will make a preliminary determination as to whether the transaction falls under the scope of the national security review. If a review is deemed necessary, it will be submitted to an Inter-ministerial Joint Conference for a general review of up to 30 working days.

During this period, if the Inter-ministerial Joint Conference determines that the transaction has no national security impact, it will make a decision to allow the transaction to proceed; if it determines that the transaction may have any impact on national security, a special review process will start (for up to 60 working days).

During the special review process, upon mutual determination by the departments, a final decision of the Inter-ministerial Joint Conference may be made to allow the transaction to proceed, to require adjustments to the M&A transaction, or to terminate the transaction and eliminate the impact, depending on the circumstances. In the event of significant disagreement among the departments, the case will be submitted to the State Council for final decision; there will be no clear time limit if entering this process

The Inter-Ministerial Joint Conference on Security Review of Mergers and Acquisitions of Domestic Enterprises by Foreign Investors is responsible for the specific security review of foreign investment. The Inter-Ministerial Joint Conference is a non-permanent body headed by the State Council, led by NDRC and MOFCOM, and may be jointly formed by various other departments depending on the industries and sectors involved in concerning foreign M&As.

MOFCOM used to be the front authority to interact with foreign investors in receiving filings and to submit the materials to the Inter-Ministerial Joint Conference for review; after 30 April 2019, NDRC became responsible for receiving security review materials, negotiation, submission for review, feedback on review decisions, etc.

While transactions subject to investment security review within Pilot Free Trade Zones is expanded from "mergers and acquisitions" to “investment” generally, only mergers and acquisitions that meet either one of the following conditions are subject to security reviews:

  • mergers and acquisitions of domestic enterprises and supporting enterprises involved in the military industry, enterprises located near key and sensitive military facilities, and other units related to national defence and security by foreign investors; or
  • mergers and acquisitions of domestic enterprises that are in industries related to national security, including key agricultural products, key energy and resources, vital infrastructure, important transportation services, core technologies, significant equipment manufacturing; the actual controlling rights of the enterprises may be obtained by foreign investors.

Furthermore, it is worth noting that the National Security Law provides a general term of security reviews – "foreign investment affecting national security" – which give the regulatory authorities broad discretion to determine whether a transaction falls within the scope for security review.

As to the definition of mergers and acquisitions subject to security review, the following four situations are specifically listed by the law:

  • a foreign investor purchases the equity of a domestic non-foreign investment enterprise or subscribes to the capital increase of a domestic non-foreign investment enterprise, such that the domestic enterprise is transformed into a foreign investment enterprise;
  • a foreign investor purchases the equity of the Chinese shareholder of a domestic foreign investment enterprise or subscribes to the capital increase of a domestic foreign investment enterprise;
  • a foreign investor establishes a foreign investment enterprise and agrees on purchasing the assets of a domestic enterprise and operating such assets through such foreign investment enterprise, or purchases the equity of a domestic enterprise through such foreign investment enterprise; and
  • a foreign investor directly purchases the assets of a domestic enterprise and uses the assets to invest in the establishment of a foreign investment enterprise for operating such assets.

It is further required that foreign investors shall not substantially circumvent security review on mergers and acquisitions in any way, including holding shares on behalf of others, trust, re-investment at multiple levels, lease, loan, control through agreement, overseas transactions.

Where the merger and acquisition of domestic enterprises by foreign investors falls within the scope for security review, the foreign investor shall submit an application for security review on mergers and acquisitions to the MOFCOM.

There are no items and/or parties that are exempt from review if the transaction is subject to security review.

For transactions which do not have impact on national security, the parties may proceed the transactions.

For transactions which may have impact on national security and have not been implemented, the parties concerned shall terminate the transactions. The transaction cannot proceed if no adjustments have been made for the transactions as agreed by the agency.

Where the transactions have resulted in or may result in significant impact on national security, the parties concerned shall terminate the transactions or adopt effective measures such as transfer of relevant equity or asset, etc, to eliminate the impact of such transactions on national security.

For transactions within Pilot Free Trade Zones, where investments have or may have impact on national security but such impact can be eliminated through imposition of conditions. Upon undertaking in writing for revision of the investment plan from the foreign investor, the transactions may proceed.

The investment security reviews or filings do not require any fees.

The Foreign Investment Law, which came into effect on 1 January 2020, clearly provides that the state shall establish a security review system for foreign investment and conduct security reviews of foreign investment that affects or may affect national security.

The Foreign Investment Law defines the scope of security review as "foreign investment". The scope of the security review for Pilot Free Trade Zones has been expanded from "M&A" to "investment". Therefore, it is likely that in the future the security review system will be applied to all types of foreign investment transactions in Pilot Free Trade Zones.

There are several subsidies and incentive programmes for domestic production, such as promotion of domestic market grants, assistance for research and development expenses, the state key technology renovation project fund, preferential tax policies for township enterprises, etc.

There are no standards or technical requirements employed that aim at reducing imports and/or encouraging domestic production.

China maintains different certifications and accreditation requirements to control the standards of imports, such as Certificate of Origin, Quarantine Inspection Permit (QIP), Meat Quarantine Import Permit (MQIP), Automatic Registration Form (ARF) on Poultry and Biotech Product Labelling Policy.

With regard to competition policy and anti-monopoly, China published several compliance guidelines in 2020 for business operators, automotive industry and intellectual property management respectively, which apply to both imported and domestic products.

The Guiding Opinions Promoting the Adjustment of State-owned Capital and the Reorganization of State-owned Enterprises issued by The State-owned Assets Supervision and Administration Commission of the State Council provides that it is necessary to promote the concentration of state-owned capital on major industries and key fields to encourage domestic production and enhance the controlling power of the state-owned economy.

Government procurement in China is primarily under the regulation of the Government Procurement Law (GPL), the Tender Law and local government procurement measures. The GPL requires government procurements to buy domestic goods, projects and services, with certain exemptions. 

There are no geographical indication protection measures employed that aim at reducing imports or encouraging domestic production. On 24 September 2020, the China National Intellectual Property Administration issued the Provisions on the Protection of Geographical Indications (draft for public comment), which includes applications, examination, revocation and modification of geographical indications.

All significant issues and developments have already been addressed.

JunHe LLP

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288 Shimen Road (No.1)
Shanghai
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(86-21) 2208 6373

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Law and Practice

Authors



JunHe was founded in Beijing in 1989 and is one of the first private partnership law firms in China. It is one of the largest and most recognised Chinese law firms, and has a wide range of practices ranging from corporate, M&A, IP, antitrust, banking and capital markets to regulatory compliance, litigation, white-collar crime and trade. The trade team is much sought-after by clients for many trade, customs and trade controls matters. It has a strong and proven trade remedies practice, particularly in complex cases brought by the USA, the EU and China. In recent years, the team has established an outstanding practice in economic sanctions and export controls, helping multinational clients to do business with and in China, as well as leading Chinese companies coping with US laws and customs issues. It also advises multinational clients in Chinese customs matters and assists in customs audits and investigations.

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