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News Review Jie
SHEN 1. Economy On July 8, Merrill Lynch analysts noted that the Chinese stock market was the world's best performing market in the first half of this year, during which period the stock market moved up 47%. However, the NASDAQ-quoted shares of some Chinese Internet companies performed poorly after their initial public offerings. Share prices of both Sohu.com and Netease.com dipped below their offering prices shortly after their offerings. [HXWZ.org] The People's Daily, quoting a spokesperson of the Beijing Foreign Trade Commission on July 19, stated that during the first half of this year, Beijing approved a total of 534 foreign-funded enterprises, over one half of which were Internet concept enterprises. [Chinalawinfo.com] The People's Daily reported on July 25 that China will moderately deregulate the airline services market and allow the market to set fares freely, according to an official with the Civil Aviation Administration of China (CAAC) in Beijing on July 22. Tu Guangshao, secretary-general of the China Securities Regulatory Commission (CSRC) said in late July that the government was considering allowing foreign institutional investors to purchase China-listed A shares on a limited basis, Asia Pulse reported. [Chinalawinfo.com quoting Muzi.net] Tu's remarks were echoed by Liang Dingbang (Anthony Neoh), senior advisor to the CSRC, who was quoted saying that it would take the CSRC eighteen to twenty four months to revamp the Chinese stock market and eliminate the B shares. [HXWZ.org] According to HXWZ.org, Dai Xianglong, Governor of the People's Bank of China (PBOC), was quoted on July 12 saying that PBOC was planning a reform of China's interest rate system. The market will be allowed to play a greater role in setting interest rates. 2. Law According to the People's Daily, the Standing Committee of the Ninth National People's Congress (NPC) held its sixteenth session on July 3 to deliberate nine draft laws. The new legislation, including new drafts and amendments, concerns matters of the customs, product quality, patents, farm seeds, trust law, fishery industry, judges law, procurators law and nationwide written and spoken languages. [Chinalawinfo.com] As a remarkable change to their previous clandestine trial practices, Chinese courts have for the first time started to publish verdicts on the Internet. The Shanghai No.1 Intermediate Court published twenty judgments at a special web site in early July. A court spokesperson said that the move was part of an effort towards the new open trial practice. [Chinalawinfo.com] The China Daily was quoted reporting that the Supreme People's Court will establish special divisions to handle cases of intellectual property rights, maritime affairs and cases involving overseas parties. The reforms are necessary in preparation for China's imminent entry into the World Trade Organization (WTO), said Vice President Zhu Mingshan of the Court. [Chinalawinfo.com] 3. Corruption Cheng Kejie, former Vice Chairman of the Standing Committee of the National People's Congress, was sentenced to death on July 31 for soliciting and taking bribes. The No.1 Intermediate People's Court of Beijing announced this verdict in a public hearing. Cheng was found to have accepted, in collaboration with his mistress, RMB 41 million (about US $4.9 million) in bribes when he served as Chairman of the People's Government of the Guangxi Zhuang Autonomous Region in southwest China. The appeal on Cheng's behalf was denied by the High People's Court of Beijing. Cheng's sentence is awaiting a final appeal at the Supreme People's Court. The China Daily reported on August 22 that all Chinese government and Party officials, including those at the ministry level, are likely to be audited when they leave their posts. "Our goal is to build a new system under which every official will be checked when he leaves his job, including when he retires," said Li Jinhua, auditor-general of the National Audit Office. The highest-ranking officials who have been audited include former Chairman of the CSRC and former Presidents of China's five largest state-owned banks. All these posts were reshuffled in March. [Chinalawinfo.com] 4. Taxation Quoting a state-run newspaper, Muzi.net reported that China plans to tax commercial transactions over the Internet. State Administration of Taxation chief Jin Renqing reportedly said that all trade should be taxed, whether or not the trade is conducted over the Internet. [China Daily Business Weekly] While tax exemptions for e-commerce might promote the fledgling industry's growth, said Jin, they also drain a potential source of tax revenue for developing countries. [Chinalawinfo.com] According to HXWZ.org, China intends to introduce a social security tax to meet a huge financial liability of the government. The current social security system is a fee-based system. Finance Minister Xiang Huaicheng reportedly said that his ministry is working with other government departments to formulate the new tax. However, he warned that there are many obstacles ahead. Xiang pledged that social security funding reforms will be included in the overall financial reforms of the next few years. (Jie SHEN is an Associate at the New York law firm of Davis Polk & Wardwell.) |