China Premier Li Keqiang presided over a State Council executive
meeting on February 14, 2016 in which it was decided that China
would commence a new pilot program (the "Pilot Program")
in ten cities and provinces along with five new districts to
provide more flexible rules to boost service trade. On February 22,
2016, the State Council issued the Official Reply of the State
Council on Approving the Commencement of Service Trade Pilot
Program (Guohan  No. 40)
which disclosed more details about this Pilot Program.
The ten cities and provinces are Tianjin, Shanghai, Hainan
Province, Shenzhen, Hangzhou, Wuhan, Guangzhou, Chengdu, Suzhou and
Weihai. The five new areas are Harbin New District (Harbin,
Heilongjiang Province), Jiangbei New District (Nanjing, Jiangsu
Province), Liangjiang New District (Chongqing), Gui'an New
District (Guiyang and Anshun, Guizhou Province) and Xixian New
District (Xi'an and Xianyang, Shanxi Province). The term of the
Pilot Program is two years.
The main purposes of this Pilot Program are to further open the
domestic service trade market to foreign companies and encourage
domestic service suppliers to boost service exportation. The State
Council also confirmed the following guidelines to facilitate the
Further open up the domestic service market with respect to
financing, education, culture, medical treatment, child care and
the elderly care, architectural design, accounting and auditing,
and trade logistics. Support domestic service providers to approach
the global service market with respect to tourism, research,
development and design, accounting, assets appraisal, credit
rating, legal consulting and trade logistics.
Explore new development patterns of the service market. Create
online trade platforms based on new technologies related to big
data, internet of things, mobile internet and cloud computing.
Undertake offshore outsourcing services and enhance cross-border
Simplify customs clearance procedures by adopting new
supervision rules in connection with cross-border e-commerce and
supply chain management. Make it more convenient for foreign
professionals to work within the territory of China.
Contribute fiscal funds and encourage social funds to invest in
the service trade. Set up specific service trade investment funds
to support the service companies. Encourage financial institutions
to provide financing opportunities to service companies by
developing more financial products and services.
In order to support the guidelines mentioned above, the State
Council further approved the issuance of relevant regulations or
policies in the pilot areas in terms of the following matters:
Tax reduction. The service companies with advanced technologies
which are identified by relevant authorities will be granted a tax
level decreasing from 25% to 15%. Currently, the State Council has
not published any specific requirements or thresholds for such
service companies with advanced technologies;
Settlement and financing. The State Council will support the
service companies and banks to use Renminbi as settlement currency
to avoid exchange risks. The financial institutions will also be
encouraged to develop their service to service providers, such as
financing export credit insurance, overseas mergers and
acquisitions, and financial leasing; and
Financial subsidies. Financial subsidies will be granted to the
service providers who import service with respect to research and
development, design, energy conservation and environment
protection; all of which are urgently needed in the domestic
According to the data disclosed by the PRC Ministry of Commerce,
the total service export-import volume was 71.3 billion US dollars
in 2015, which amounted to 18% of the total export-import volume.
Even though there was a significant increase in the 2015 service
volume compared to 2014, it still needs to grow. Since global
economic growth is slowing down and appears to cool even further,
this Pilot Program is a valuable attempt for the Chinese government
to further open up the domestic service market, readjust the
industrial structure and improve its international
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
As a destination for foreign investors, India is fast closing the gap on China to become the world's most popular investment hub. Figures released by the country's Reserve Bank in August 2008 showed that foreign direct investment in India for the first quarter of this financial year exceeded the total received in 2005/06.
Developing Asia is facing considerable headwinds. Delayed recovery in major industrial economies and moderating prospects for the large economies of the China and India weigh on region's project growth forecasts.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).