Korea Trade Association ‘Changes in China’s Major Economic and Trade Regulations in 2024’ Report
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| Archive photo. Shanghai World Financial Center is the economic hub of China. Yonhap |
As China’s business environment is rapidly changing due to legal reforms, there is a growing opinion that Korean companies operating in China must be well-versed in the changes.
The Beijing branch of the Korea Trade Association released a report on Changes in China’s Major Economic and Trade Regulations in 2024 in collaboration with the Chinese law firm Du Zheng on the 24th.
The report outlines upcoming regulatory changes set to take effect this year. These changes encompass various aspects, including annual tariff adjustment specifics, modifications to patent and intellectual property regulations, amendments to laws impacting corporate operations like corporate law and foreign country exemption law, and updates to the list of dual-use items and technology.
According to the report, details and tax rates for specific items have changed due to the annual tariff adjustment by the China Customs Tariff Commission. For 1010 items, a provisional tariff lower than the Most Favored Nation (MFN) tariff is applied. Import tariffs on key equipment and parts that are scarce in China, such as lithium chloride and raw materials for fuel cells, have been reduced to promote innovation and development in advanced manufacturing.
Since January 1st, the Chinese government has suspended tariff reductions under the Economic Cooperation Framework Agreement (ECFA) for 12 imported chemical products from Taiwan, such as propylene and polyvinyl chloride. Therefore, companies that export these items to mainland China via Taiwan must pay attention to such a change.
Regulations on medical devices, pharmaceuticals, and specially formulated food for medical purposes have been supplemented and strengthened while product certification and standard-related norms have become more efficient and simplified.
The requirements for quality management in drug production, storage, and distribution became subdivided and clearly defined.
The issuance of digital certificates for China Compulsory Certification (CCC), which used to be issued only in physical certificates, is now fully implemented, and the ‘Industry Standard Management Method’ is newly established with 32 clauses, which is expected to enhance the efficiency of China’s certification and standard management.
Also, the regulations related to unmanned aircraft (drones) and Patent Application Behavior Regulations have been newly established, which need to be noted by the business operators in the related fields. The ‘Unmanned Aircraft Flight Management Interim Ordinance’ stipulated unmanned aircraft’s production conditions and flight conditions, such as design, production, repair, and assembly. The main point is to strengthen quality control.
Special rules for international applications of appearance design have been created through the amendment of the Patent Law. Administrative punishment regulations targeting institutions and individuals who have abnormally applied for patents have been established based on the Patent Application Behavior Regulations.
Furthermore, a substantial transformation has occurred in a significant portion of corporate activities, brought about by revisions to corporate law. These revisions encompass aspects like the inclusion of employee representatives in the board of directors, alterations in the board of directors’ decision-making process, the establishment of deadlines for registered capital payments, reinforcement of the obligations and accountabilities of controlling shareholders and executives, and enhancement of shareholders’ rights to access information.
Tax benefits are provided to companies purchasing new equipment and eco-friendly corporations, so it can work as an opportunity for our companies if they can make good use of the system.
Corporate income tax deduction benefits are provided to companies that purchase new production facilities under a certain amount to encourage investment in company facilities and equipment. Companies that meet the conditions for supervising and controlling pollutants will be subjected to preferential corporate income tax rates.
Yoon Seop Shim, the head of the Beijing branch of the Korea Trade Association, said, “China’s local business environment is rapidly changing as it is reforming various systems,” and advised, “Our companies should pay attention to changes in China’s economic and trade-related laws and regulations, and promote local business based on a sufficient understanding of the rapidly changing Chinese business environment.”
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