Issue 70

Shanghai Weekly Bulletin

No.3, November 2024

Shanghai Weekly Bulletin is an information service presented by the Foreign Affairs Office of Shanghai Municipal People's Government in collaboration with Wolters Kluwer to foreign-funded enterprises, foreign-related institutions as well as people from overseas living in Shanghai. Covering major national and Shanghai foreign-related news, event information, policy Q&A and interpretations in the past week, it keeps you up-to-date with the latest foreign-related policies and developments in Shanghai.

Laws and Regulations

【National】

1. Draft Revision to the Arbitration Law under Comments

【Keyword: Arbitration Law】

The Arbitration Law of the People's Republic of China (Draft Revision) is currently under public comments. The draft further improves the foreign-related arbitration system, expands the scope of foreign-related arbitration cases, and adds the "ad hoc arbitration" system with the Chinese characteristics and the "seat of arbitration" system. It supports Chinese arbitration committees in establishing arbitration institutions abroad and allows foreign arbitration institutions to conduct foreign-related arbitration activities in China.

Source:www.npc.gov.cn

2. China Adopts the Measures for Promoting the Steady Growth of Foreign Trade

【Keyword: Foreign Trade】

A State Council executive meeting deliberated and adopted the Policy Measures for Promoting the Steady Growth of Foreign Trade on November 8. The meeting calls for solid work in promoting the steady growth of foreign trade to provide strong support for the economy's continuous recovery. 

Source: XinhuaNet

【Shanghai】

1. Shanghai Tightens Regulation on Temporary Entry for Repairs in FTZ

【Keywords: Pilot Free Trade Zone; Temporary Entry for Repairs】

Shanghai Municipal Commission of Commerce and other four municipal departments and units recently issued the Regulatory Plan for the Pilot Program of Allowing Temporary Entry for Repairs in the China (Shanghai) Pilot Free Trade Zone (FTZ). In addition to clarifying the responsibilities of relevant departments and units, the plan also stipulates the conditions and procedures for the pilot program, as well as the regulatory requirements, the standards for the handling of violations, and exit procedures.

Source: Shanghai Municipal Commission of Commerce

2. Shanghai to Better Use Consumer Credit to Boost Quality Consumption 

【Keyword: Consumer Credit】

Shanghai Municipal Commission of Commerce and other 11 municipal departments recently issued the Guidelines on Better Utilizing Consumer Credit to Boost Quality Consumption and Consumption Upgrading. The document proposes 15 tasks in five aspects, including leveraging on consumption promotion activities to push for the deep integration of consumption and credit; tapping the consumption potential of big-ticket items to increase the penetration of consumer credit; creating new consumption scenarios to enrich the supply of consumer credit loans; smoothing the innovation chain to improve the quality and efficiency of consumer credit services; and refining the risk prevention and control mechanisms to improve the development environment of consumer credit. The document will remain valid until December 31, 2026.

Source:Shanghai Municipal Commission of Commerce

3. Affixing of Chinese Labels on Imported Medical Devices in Shanghai FTZ Regulated

【Keywords: Imported Medical Devices; Chinese Labels】

Shanghai Municipal Medical Products Administration recently issued the Regulations on the Affixing of Chinese Labels on Imported Medical Devices in the China (Shanghai) Pilot Free Trade Zone (for Trial Implementation), which govern imports of medical devices in the Shanghai Pilot FTZ, as well as the affixing of Chinese labels and placement of Chinese instructions on imported medical devices by a domestic agent in the special customs supervision area that is designated by the overseas registrant or filing organization and has a domicile in the Shanghai Pilot FTZ. The regulations will come into force on January 1, 2025, and remain valid for two years.

Source:Shanghai Municipal Medical Products Administration

One Week in Shanghai

【Latest News】 

1. Hongqiao Hub Unveils Intercity Air Routes for Low-altitude Economy

【Keywords: Low-altitude; Trial Air Routes】

The Hongqiao International Opening-up Hub in Shanghai recently unveiled intercity low-altitude air routes on a trial basis. The routes span Hongqiao, Suzhou, Jiaxing, Wuhu and other cities in the Yangtze River Delta (YRD) region, covering areas such as the Panlong Tiandi complex in Hongqiao, Taicang Terminal, Songjiang Helicopter Base, Kunshan Terminal, and Wuyi Airport in Wuhu. They serve a variety of purposes, including business travel, tourism, medical rescue, emergency firefighting, social governance and other scenarios, with the goals of forming a closed-loop low-altitude economic system in the YRD region and accelerating the development of the "Low-altitude Economic Corridor" across Shanghai, Jiangsu, Zhejiang and Anhui. 

Source: International Services Shanghai

【Forum & Exhibition】

1. 2024 China Pharmaceutical Industry Development Conference and IBIWS Held

【Keyword: China Pharmaceutical Industry Development Conference】

The 2024 China Pharmaceutical Industry Development Conference and the International Biopharma Industry Week Shanghai (IBIWS) were concurrently held on November 16-18. Highlighting high-quality development of the pharmaceutical industry, cutting-edge and innovative technologies, and integrated development, the conference discussed development trends, and stressed promoting the implementation and transformation of technologies, and cooperation and exchanges through 16 special activities in various forms such as forum, matchmaking conference, private session, and project roadshow. 

Source:Shanghai Science and Technology 

【Culture & Art】

1. 2024 Shanghai International Sports Trend Culture Festival Kicks off

【Keyword: Sports Trend Culture Festival】

The 2024 Shanghai International Sports Trend Culture Festival kicked off on November 2 and will last until December 15. It features a sports carnival, theme exhibitions, professional sports events, street dance shows, and fashion brands' pop-up stores.

Source:Shanghai Release

2. Shanghai Museum East Reopens Painting and Calligraphy Galleries 

【Keywords: Shanghai Museum East; Calligraphy and Painting】

The Shanghai Museum East opened on November 13 upgraded painting and calligraphy galleries, displaying national treasures as well as works that have never been shown to the public before.

Source:International Services Shanghai

3. Exhibition of Treasuries of the Mountain Resort Opens at Fengxian Museum

【Keywords: Mountain Resort; Eight Outlying Temples】

A special exhibition titled Treasuries of the Mountain Resort · Treasuries Collected in Temples recently opened at the Fengxian Museum. Through 131 exhibits, the exhibition showcases the characteristics of multi-ethnic integration and cultural exchange and integration from the perspectives of the historical origins, garden art, garden functions and Buddhist art of the Mountain Resort and the Eight Outlying Temples, and displays the exquisite garden art features, diverse cultural connotations and unique social and historical value of the Mountain Resort and the Eight Outlying Temples.

Source:Shanghai Fengxian

4. Exhibition of Water Transportation History and Culture in YRD Region Opens 

【Keyword: Transportation History and Culture】

China Maritime Museum, together with Shanghai History Museum, Ningbo China Port Museum, Suzhou Institute of Archaeology and other nine museums, as well as experts and collectors in the shipping industry in the Yangtze River Delta (YRD) region, is set to present an exhibition titled Shipping in Jiangnan · Exhibition of Water Transportation History and Culture in the Yangtze River Delta from November 12, 2024 to February 18, 2025, in order to showcase the historical origins of shipping and transportation in the region. 

Source:Shanghai Transportation

【Corporate Activities】

1. igus Breaks Ground on Asia Pacific Headquarters Project

【Keyword: igus】

On November 11, Fengxian District held a groundbreaking ceremony for major industrial projects in the fourth quarter of 2024 and igus's Asia Pacific Headquarters project. The total planned investment in igus's project is 800 million yuan. The new factory adopts a unique spiral tower design, deeply integrating information and manufacturing technologies. It aims to achieve seamless connection between process, equipment and personnel, thereby promoting collaboration and efficiency.

Source:Shanghai Fengxian

2. Roche Diagnostics Opens New Head Office in China 

【Keyword: Roche】

On November 8, Roche Diagnostics opened its new China head office in the New Bund. The company has been granted the Group Open Innovation (GOI) initiative certification for its Technical Innovation Center (TIC) in China. The TIC will help Roche Diagnostics accelerate cooperation in fields such as clinical validation, the transformation of in vitro diagnostic (IVD) technologies, the application of digital and innovative diagnostic solutions, the commercialization of IVD products, and the promotion of companion diagnostics cooperation.

Source:Pudong Release

Q&A

1: Officials with the Ministry of Commerce (MOFCOM) answered questions at a regular press conference - In the first ten months of this year, the total value of China's imports and exports of goods increased by 5.2% year-on-year. The fourth quarter is usually the peak season for trade. What measures will the MOFCOM take to further promote the development of foreign trade?

A:China's total value of imports and exports reached 36.02 trillion yuan in the first ten months of this year, a record high for the same period in history. Under the complex and severe international trade situation, the stable growth of foreign trade fully reflects the resilience and vitality of China's industrial and supply chains, and it has played an important role in driving economic recovery.

On November 8, a State Council executive meeting adopted the Policy Measures for Promoting the Steady Growth of Foreign Trade, which made arrangements for the next stage of work on foreign trade. We will work with local governments and relevant departments to intensify efforts to promote the implementation of various policies, especially in three aspects:

Firstly, we will increase financial support, expand the scale and coverage of export credit insurance, increase financing support for micro, small and medium foreign trade enterprises, guide banking institutions to optimize their overseas presence, and enhance their service capabilities to help enterprises explore international markets.

Secondly, we will strengthen new momentum for foreign trade, promote the development of cross-border e-commerce, and advance the construction of overseas smart logistics platforms. We will support eligible regions to explore the construction of cross-border e-commerce service platforms and provide enterprises with overseas legal and tax services.

Thirdly, we will strengthen service guarantees for foreign trade enterprises, promote innovative development of green trade, border trade between residents, and bonded maintenance, support business personnel from key trading partners to come to China, support foreign trade enterprises and shipping companies to strengthen strategic cooperation, and strengthen employment services for foreign trade enterprises. Thank you.

Source: MOFCOM

Expert Perspective

MIIT's No. 107 Document Brings New Opportunities to FIEs in China

By: Chen Jihong, Sun Ruxi (Zhong Lun Law Firm)

[Continuing from the Last Issue]

III Opportunities for foreign-invested enterprises brought by the Circular of the Ministry of Industry and Information Technology on Launching a Pilot Program to Expand the Opening-up of Value-added Telecommunications Services (the Circular)

The Circular has opened a new window for foreign-invested enterprises to expand their business in China.

1. Change the traditional tech cooperation and VIE structure pathways. Currently, foreign-funded enterprises enter China's telecommunications service market through tech cooperation or VIE structure. However, there are drawbacks in the relevant pathways.

Under the tech cooperation pathway, foreign-invested enterprises carry out telecommunications business operations through their Chinese partners' value-added telecommunications business licenses. The overall business framework is highly dependent on Chinese partners, and there are a lot of uncertainties in defining the boundaries of technical services that can be provided by foreign parties. It is also necessary to consider many issues such as the ownership and control of telecommunications facilities involved in the cooperation, intellectual property protection, and possible compliance with cross-border data transmission.

As far as the VIE pathway is concerned, it has made an indelible contribution to the rapid development of China's Internet industry, but the legality of such models has always been in a gray zone. In addition, the smooth development of related businesses relies on the appropriate performance of control agreements by domestic enterprises and their shareholders, and there are relatively high moral risk factors.

After the pilot opening-up is implemented, foreign-invested enterprises can change the traditional tech cooperation and VIE structure pathways, apply for relevant licenses and carry out independent telecommunications business.

2. New scenarios such as Internet of Vehicles and Internet of Things. The Circular is conducive for foreign-funded enterprises to expand new business forms in China. For example, foreign-funded automobile companies have to hold multiple telecommunications licenses such as EDI, ICP, and IRCS in order to operate the Internet of Vehicles business. In the field of Internet of Things such as smart home and smart industrial control, it is usually necessary to obtain an EDI license to carry out related business. In the past, foreign-invested enterprises were subject to restrictions on foreign equity ratios when conducting such businesses, and most of them were carried out in cooperation with domestic license holders. The pilot opening-up can open a window for foreign-invested enterprises to operate new businesses in China.

3. IT services within the group. One of the common practices of multinational group companies in China is to set up a subsidiary engaged in IT technical services. The subsidiary builds IT infrastructure such as data centers and servers, and multiple companies within the group use such IT infrastructure to enhance efficiency. Under such business forms, whether the provision of IT infrastructure services by IT subsidiaries to group-affiliated companies is an operational behavior has always been controversial. After the pilot opening-up is implemented, IT subsidiaries can consider directly applying for IDC licenses to eliminate regulatory uncertainty risks. Not only can they collect operating profits from such internal infrastructure sharing, but they can also consider expanding customers to other companies outside the group.

4. Seize opportunities brought by the AI boom. China's AI industry is in a period of vigorous development and requires a lot of computing power. Encouraging foreign cloud computing service providers to enter China is in line with current market demand, conducive to the introduction of advanced technologies into China, and helpful to inject vitality into China's AI industry. It should also be noted that as foreign-invested enterprises offer cloud computing services in China, their introduction of relevant technologies may trigger export control regulations from overseas regulators (such as the US EAR).

In summary, it is recommended that enterprises examine the implementation plans to be issued by each pilot area, so that they can review their business expansion plans and seize policy benefits from the Circular.