Issue 78

Shanghai Weekly Bulletin

No.2, January 2025

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. China Issues Trial Guidelines for Building a Unified National Market

【Keyword: Unified National Market】

The National Development and Reform Commission (NDRC) recently released the Guidelines for Building a Unified National Market (for Trial Implementation). The document outlines key measures, including unifying the underlying institutions and rules of the market, improving the high-standard market infrastructure connectivity, building a unified market for factors and resources, advancing the high-standard integration of goods and services markets, and curbing unfair market competition and improper intervention.

Source: NDRC

2. China Issues Document to Promote Development of Government Investment Funds

【Keyword: Government Investment Funds】

The General Office of the State Council recently released the Guidelines on Promoting the High-quality Development of Government Investment Funds, in an effort to build a more scientific and efficient management system to promote the high-quality development of government investment funds.

Source: Website of the Chinese Government

3. China Issues Document to Strengthen Regulatory Reform of Drugs and Medical Devices

【Keywords: Drugs; Medical Devices】

The General Office of the State Council recently released the Guidelines on Comprehensively Deepening the Reform of the Regulation of Drugs and Medical Devices to Promote the High-quality Development of the Pharmaceutical Industry. The document specifies that by 2035, China expects to fully ensure the safety, efficacy and accessibility of drugs and medical devices, have a more innovative and competitive pharmaceutical industry and a modernized regulatory system.

Source: Website of the Chinese Government

【Shanghai】

1. Shanghai Encourages Set-up of More Foreign-funded Hospitals

【Keyword: Wholly Foreign-owned Hospitals】

Shanghai Municipal Health Commission and other three municipal departments recently released the Shanghai Pilot Program on Expanding Opening-up in the Field of Wholly Foreign-owned Hospitals. The document encourages the set-up of wholly foreign-owned hospitals in the China (Shanghai) Pilot Free Trade Zone, the Lingang Special Area, the Hongqiao International Business District, the Shanghai Eastern Hub International Business Cooperation Zone, as well as the areas where the bio-pharmaceutical industry clusters, and downtown districts with a high concentration of expat residents. Generally, each of such areas welcomes a maximum of two foreign-owned hospitals. 

Source: International Services Shanghai

2. Shanghai Financial Court Issues Guidelines for Parties in Hong Kong Arbitration Proceedings to Apply for Preservation

【Keywords: Hong Kong Arbitration; Application for Preservation】

Shanghai Financial Court recently issued the Guidelines for Parties in Hong Kong Arbitration Proceedings to Apply for Preservation Pursuant to the Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the  Mainland and of the Hong Kong Special Administrative Region. The document includes 14 questions and answers concerning the scope of preservation applications, materials required, the review period, as well as relief procedures for preservation orders. 

Source:Shanghai Financial Court

3. Shanghai Pushes for the Development of "1+N+X" Green Finance Organization System

【Keyword: Green Finance】

Shanghai Financial Regulatory Administration issued on January 7, 2025 the Circular on Strengthening the Development of the Green Finance Organization System in the Shanghai Financial Sector. The document specifies that in the next five years, efforts will be made to cultivate and build 20 green finance branches and 30 green specialty branches in Shanghai, promote the construction of green and low-carbon outlets, increase the balance and proportion of green credit year by year, and expand the coverage of green insurance, so as to provide replicable and scalable Shanghai experience for the development of green finance across the country.

Source: Shanghai Financial Regulatory Administration

4. Shanghai Issues Document for SMEs to Make Environmental Information Disclosure

【Keywords: SMEs; Environmental Information Disclosure】

The People's Bank of China Shanghai Branch, together with the Shanghai Bureau of Ecology and Environment and the Office of the Financial Commission of CPC Shanghai Municipal Committee, recently issued the Shanghai Action Plan for Environmental Information Disclosure by Small- and Medium-sized Enterprises (SMEs) (for Trial Implementation). The document aims to coordinate environmental information disclosure work of SMEs, increase policy support for the sustainable development of SMEs, stimulate their internal drive for green and low-carbon transformation, and build a beautiful Shanghai. The Format for Environmental Information Disclosure by SMEs (2025 Edition) was released together with the Plan. 

Source：People's Bank of China Shanghai Branch

One Week in Shanghai

One Week in Shanghai

【Latest News】

1. Shanghai Unveils China-BRICS AI Development and Cooperation Center

【Keyword: AI】

The Shanghai Conference on Artificial Intelligence + Promotion and the Launch Ceremony of the Operation Base for China-BRICS Artificial Intelligence (AI) Development and Cooperation Center were held at the West Bund Theater on January 3, 2025. The Center will focus on three main areas: hosting an AI-themed exhibition, providing AI training for BRICS countries, and creating a research platform for AI projects that bring together experts from all BRICS countries. 

Source:Shanghai Municipal Commission of Economy and Informatization

2. Shanghai Launches Online Shopping Event for Chinese New Year

【Keyword: Online Shopping Event】

The 2025 Online Shopping Event for Chinese New Year was launched on January 7 and will last until February 5. The month-long event will offer high-quality Spring Festival goods, and highlight fashion consumption, cultural & tourism consumption, rural revitalization, and trade-in purchases. Through the distribution of red envelopes and coupons, merchants are offering a variety of benefits, including discounts, flash sales, and buy-one-get-one-free promotions.

Source:International Services Shanghai

【Culture & Art】

1.Shanghai Museum Holds Snake-themed Exhibition to Celebrate the Year of Snake

【Keywords: Slithering into Spring; the Year of the Snake】

To celebrate the Year of the Snake, Shanghai Museum has selected eight cultural relics from its collection and borrowed five relics from Yunnan Lijiashan Bronze Museum and Hubei Provincial Museum to hold a snake-themed exhibition titled Slithering into Spring: A Celebration of the Year of the Snake. From January 14 to March 2, 2025, the exhibition will be open to the public free of charge at No.3 Exhibition Gallery of Shanghai Museum (People's Square).

Source: Shanghai Museum

2. West Bund Museum "Deep Space" Exhibition Presents Four New Themes

【Keyword: Deep Space】

The West Bund Museum's immersive exhibition "Deep Space" is presenting four new themes from January 4 until April 27, 2025, including "Departing from Paris", "From Pyramid to Notre Dame De Paris", "Magic Academy", and "8K Select". 

Source: Deep Space

3. Exhibition of Tangshan Shadow Puppetry Opens at Jiading Museum

【Keyword: Tangshan Shadow Play】

Stories in Light and Shadow - Tangshan Shadow Puppetry Art Exhibition recently opened in the special exhibition hall of Jiading Museum, and will last until March 2, 2025. The exhibition showcases character design, stories, production and performance of Tangshan shadow puppetry from five parts: Figures, Scenes, Repertoires, Production Technology and Manipulation Performance.

Source: Jiading Museum

【Corporate Activities】

1. International Industrial Park for Japanese SMEs in Shanghai Inaugurated

【Keyword: Japanese Enterprises】

The International Industrial Park for Japanese Small and Medium-sized Enterprises (SMEs) in Shanghai was inaugurated on January 7, 2025 at the Lingang Special Area. The industrial park aims to build a cooperative demonstration zone highlighted by "cooperation in advantageous industries, integration of innovation resources, and in-depth cultural exchanges."

Source: Shanghai Lingang

2. Schaeffler Group to Build Hydrogen Energy Project in Jiading

【Keyword: Schaeffler】

Schaeffler Group signed an agreement on January 6, 2025 to set up a new company and build a hydrogen energy project in Jiading District, Shanghai. The new company aims to boost the development of the hydrogen energy industry with high-end equipment by leveraging Schaeffler's tech advantages in the field of hydrogen energy, and increasing R&D efforts and localization capabilities.

Source:Shanghai Jiading

Q&A

Q1: Officials with the Ministry of Commerce (MOFCOM) answered questions at a special press conference held by the National Development and Reform Commission about the relevant situation of deepening the construction of a unified national market. Promoting high-standard opening-up is an inevitable requirement for building a unified national market. How does the MOFCOM promote the building of a unified national market through high-standard opening-up?

A1: The unified national market is not a closed market, but a fully open market accessible to the entire world. The MOFCOM sticks to high-standard opening-up, aligning with international high-standard economic and trade rules, promoting reform through opening-up, pushing for efficient connectivity between domestic and international markets, and promoting the establishment of a unified national market. Our work has been dedicated to four aspects:

The first is to shorten the negative list on market access for foreign investors. As of now, the national version of the negative list for foreign investment access has been reduced to 29 restrictive measures. In the manufacturing sector, restrictions on foreign investment access have been completely lifted; in the service sector, we are promoting orderly opening-up in the fields of telecommunications, the Internet, education, culture, and medical care. In 2024, the national and free trade zone versions of the negative list for cross-border trade in services were released to promote the expansion of opening-up in the field of cross-border trade in services. Besides, the Measures for the Administration of Strategic Investment Made by Foreign Investors in Listed Companies have been amended to further lower the threshold for foreign investment in Chinese companies and encourage foreign investors to carry out long-term investment and value investment.

The second is to improve business environment. We are implementing national treatment for foreign-invested enterprises, give full play to the role of special task forces for key foreign investment projects, improve foreign investment complaint mechanism, and ensure fair competition between domestic and foreign-invested enterprises, so that foreign companies are willing to invest in China, stay here for a long time, and have sound development prospects. Since the start of 2024, the Ministry of Commerce has held 15 roundtable meetings with foreign enterprises, and resolved 370 problems for them. We support foreign enterprises in equally participating in the trade-in programs of consumer goods. In the subsidized auto sales for consumers to replace their old cars, foreign brands account for about 35% of new car sales, driving rapid sales growth at foreign auto companies. At the same time, many foreigners living in China have also enjoyed the trade-in subsidies.

The third is to align with international high-standard economic and trade rules. We will implement the Regional Comprehensive Economic Partnership Agreement, actively advance the process of joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Digital Economy Partnership Agreement, and continue to expand the global high-standard free trade zone network. For example, China has substantially completed negotiations on the 3.0 version of the ASEAN Free Trade Area and signed a protocol to upgrade the free trade agreement with Peru. By aligning with international high-standard economic and trade rules, we will promote the interoperability of rules, regulations, management, and standards in a wider range of fields such as intellectual property protection, industrial subsidies, environmental standards, government procurement, e-commerce, and finance, promote efficient link between domestic and international markets, and optimize the domestic business environment.

The fourth is to accelerate integrated development of domestic and foreign trade. Pushing for integration of domestic and foreign trade is an important way to facilitate dual circulation in the domestic and international market. We have implemented 18 policy measures announced by the General Office of the State Council on accelerating integrated development of domestic and foreign trade, and deepened the pilot projects of domestic and foreign trade integration in nine regions. In response to difficulties encountered by enterprises in terms of standards, channels, regulations and funds, we have redoubled efforts to improve connections between internal and external systems, between internal and external market channels, optimized the environment for integrated development, and strengthened policy support. We have made progress in fostering enterprises that are at the forefront of domestic and foreign trade integration, built a number of domestic and foreign trade integration development platforms, and improved the level of trade integrated development. In the first 11 months of 2024, 16.7% of above-size industrial enterprises have adopted integrated operations in the domestic and international markets.

Source:National Development and Reform Commission

Expert Perspective

A Brief Comment on the Revisions to the Measures for the Administration of Strategic Investment Made by Foreign Investors in Listed Companies

By Guo Kejun, Wei Haitao, Miao Yuqian, Ding Wei (Zhong Lun Law Firm)

[Continuing from the Last Issue]

II. Other Reflections about the Revision

(2) Special issues on investor eligibility in asset purchase transactions involving share issuance

In past transactions where A-share listed companies issued shares to purchase equity in foreign-invested enterprises held by foreign shareholders, or where A-share listed companies issued shares to purchase equity in overseas companies held by foreign shareholders (including other cross-border share swaps), foreign shareholders may fail to meet the foreign investor eligibility criteria due to various reasons, such as failure to meet the asset requirements for foreign investors, or the proportion of listed company equity acquired after the investment not reaching 10%. In this situation, some A-share listed companies and foreign shareholders will try to narrow the interpretation of "strategic investment" and the minimum shareholding ratio acquired by foreign shareholders, thereby arguing that the relevant provisions of the original Measures for the Administration of Strategic Investment Made by Foreign Investors in Listed Companies need not apply. The authors believe that this method may be difficult to sustain in the future because the definition of "strategic investment" in the revised Measures has been changed from "medium- and long-term strategic investment of a certain scale" to "the act of acquiring and holding A-shares of listed companies in the medium and long term", no longer requiring "strategic M&A" as a condition,. At the same time, it no longer stipulates the lower limit of the proportion of shares that foreign investors can acquire through private share placement.

If the Measures are indeed required to be applied, foreign shareholders may not be able to meet the asset requirements and/or other eligibility criteria. As to whether such circumstances will inevitably prevent A-share listed companies from issuing shares to foreign shareholders to purchase assets, in the current policy environment that encourages foreign investment and corporate mergers and acquisitions, we believe there is still room for case-by-case communication, and it is not ruled out that further clarification will be made at the legislative level in the future.