China Regulatory Brief: Approved Investment Directory, Guangdong Collective Contracts, Interest Rate Cuts

November 24, 2014 Posted by China Briefing Reading Time: 4 minutes

China Releases Directory of Government Approved Investments for 2014

China’s State Council recently released the “Directory of Government Approved Investments for 2014,” which removed or delegated to a lower level 38 administrative approval items. According to the 2014 Directory, encouraged foreign projects with a total investment of over US$1 billion and requiring Chinese holding (including relative holding) as listed in the Guidance Catalogue for Foreign Investment, as well as restricted projects (excluding real estate) with a total investment of over US$100 million, shall be approved by the investment departments of the State Council; projects with a total investment of over US$2 billion shall also be filed with the State Council. A complete Chinese version of the Directory can be found here.

Guangdong Releases Provincial Regulations on Collective Contracts for Enterprises

The Guangdong provincial government recently released a revised version of the “Regulations on Collective Contracts for Enterprises,” which will take effect on January 1, 2015. A collective contract is a special type of commercial agreement, usually defined as one negotiated “collectively” between the company and trade unions (on behalf of employees). The revised Regulations further specified negotiable subjects and stipulated that collective negotiations between enterprises and employee representatives should be held no more than once a year. Within seven days of signing, the collective contract should be sent by the employer to the Ministry of Human Resources and Social Security for recording.

China Reduces Interest Rates to Stabilize Economic Growth

On November 21, China cut its benchmark interest rates for the first time in more than two years, aiming to maintain steady and speedy economic growth. The People’s Bank of China reduced the one-year benchmark lending rate by 40 basis points to 5.6 percent in a bid to shore up small and medium-sized enterprises now struggling to repay loans. Meanwhile, the one-year benchmark deposit rates were lowered by 25 basis points to 2.75 percent. Further, the central bank announced that the ceiling for deposit rates would be raised to 1.2 times the benchmark level, up from a previous ceiling of 1.1 times and a large step toward interest rate liberalization.

Rare Earth to be Included in Resource Tax Reform

The Chinese government is expected to extend its sales value-based resource tax reform to the rare earth industry, in a move to create a more competitive environment for the rare earth trading market. Although the final plan has yet to be finalized, if implemented, the tax burden on rare earth is set to increase substantially. It is said that the resource tax rate on rare earth in North China will be 22 percent and may reach as high as 35 percent in South China. China initiated a resource tax reform on crude oil and natural gas in northwestern Xinjiang in 2010 and later extended this nationwide after two delayed launches.

About Us

Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email china@dezshira.com or visit www.dezshira.com.

Stay up to date with the latest business and investment trends in Asia by subscribing to our complimentary update service featuring news, commentary and regulatory insight.

‍

Adapting Your China WFOE to Service China’s Consumers
In this issue of China Briefing Magazine, we look at the challenges posed to manufacturers amidst China’s rising labor costs and stricter environmental regulations. Manufacturing WFOEs in China should adapt by expanding their business scope to include distribution and determine suitable supply chain solutions. In this regard, we will take a look at the opportunities in China’s domestic consumer market and forecast the sectors that are set to boom in the coming years.

Revisiting the Shanghai Free Trade Zone: A Year of Reforms
In this issue of China Briefing, we revisit the Shanghai FTZ and its preferential environment for foreign investment. In the first three articles, we highlight the many changes that have been introduced in the Zone’s first year of operations, including the 2014 Revised Negative List, as well as new measures relating to alternative dispute resolution, cash pooling, and logistics. Lastly, we include a case study of a foreign company successfully utilizing the Shanghai FTZ to access the Outbound Tourism Industry.