11 New Laws That May Affect Your Business in China Starting January 2022

Posted: 6th January 2022 10:51

With the New Year Holiday approaching, many new laws and regulations that may affect your business and everyday life will also come into effect soon. In this article, we list out 11 laws, regulations, or national standards that will take effect on January 1, 2022 and shortly explain why it matters to you.

1. Negative Lists For Foreign Investment Access

The National Development and Reform Commission and the Ministry of Commerce released the Special Administrative Measures (Negative List) for Foreign Investment Access (2021 Edition) (“2021 National Negative List”, English translation available here)  and the Special Administrative Measures (Negative List) for Foreign Investment in Pilot Free Trade Zones (2021 Edition) (“2021 FTZ Negative list”, English translation available here) on December 27, 2021 to be implemented from January 1, 2022.

Why This Matters?

It’s all about market access. These two negative lists enumerate the industries where foreign investment will either be prohibited or restricted. All foreign investment needs to follow the special administrative measures, such as the cap on the share ratio of foreign investment, set in the corresponding negative lists.

The 2021 National Negative List and the 2021 FTZ Negative List were shortened to 31 and 27 items, respectively. Both the lists further widened the opening of the automobile manufacturing and the radio and TV device manufacturing sectors.

The FTZ Negative List removed all the entries relating to the manufacturing sector and proposed to explore the possibility of relaxing the foreign investment access to the services sector, including market research and social surveys. The negative lists also clarify restrictions on Chinese companies operating in fields that are restricted from receiving foreign capital, including overseas listing of such companies.

2. 2022 Tariff Adjustment Plan

On December 13, 2021, the Customs Tariff Commission of the State Council released the 2022 Tariff Adjustment Plan to adjust the import and export tariffs of selected goods from January 1, 2022.

Why This Matters?

It’s all about how much tariff you will need to pay in 2022 if you are engaging in relevant import-export businesses.

From January 1, 2022, China will impose interim import tax rates on 954 commodities, which were previously subject to the default most favored nation (MFN) tariffs – that are higher. These commodities include anti-cancer drugs and medical products, aquatic products and sports equipment, oil paintings and antique artwork, high-efficiency auto parts, materials for environmental restoration, manufacturing components and raw materials, and mineral resources.

To promote the high-quality opening of markets, China will apply agreed tax rates on selected goods originating in 29 countries and regions for 2022 in accordance with China’s free trade agreements (FTA), including the Regional Comprehensive Economic Partnership (RCEP) and the China-Cambodia FTA, both of which will come into effect on January 1, 2022.

China will raise import and export duties on some commodities to balance domestic demand and supply as well as upgrade its industries, including re-imposing MFN tariffs on some amino acids, lead-acid battery parts, gelatin, pork, and m-cresol and raising import and export duties on phosphorus and blister copper.

In addition, to keep consistency with the revised Harmonized System for Commodity Names and Codes and relevant WTO rules – China will make technical conversions of certain tariff items. After the adjustment, China will have in total 8,930 tariff items.

From July 1, 2022, China will implement the seventh-stage reduction of the MFN rates for 62 IT products. After the adjustment, China’s overall tariff level will remain at 7.4 percent.

3. Guideline For Trademark Examination And Trial

On November 16, 2021, China’s National Intellectual Property Administration released the Guideline for Trademark Examination and Trial, to be implemented from January 1, 2022. The original Standards for Trademark Examination and Trial will be abolished simultaneously.

Why This Matters?

It provides detailed and updated rules about trademark registration in China, with new chapters added regarding examination of Madrid trademarks, bad faith trademark application, as well as detailed rules for trademark examination.

The Guideline consists of two parts. Part I is about formal examination and routine work, which has comprehensively sorted out and standardized the terms and expressions involved in trademark examination and trial.

Part II is about the substantive trademark examination and trial, which clarifies the examination and trial of “malicious trademark registration”, “signs that shall not be used as trademarks”, “lack of distinctive features of trademarks”, well-known trademarks, etc.

4. CNIPA Notice On Promulgation Of The Criteria For Judging Ordinary Trademark Violations

On December 13, 2021, the China National Intellectual Property Administration released the Standard for the Determination of General Violations of Trademark Laws, with a view to stepping up trademark management and unifying the law enforcement standards.

Why This Matters?

It’s useful for businesses to determine whether they have trademark violations and whether they are in compliance with the trademark laws and regulations.

The document has 35 articles, which provide standards on determining what kind of behavior will be regarded as violations of trademark management rules as specified in the existing effective trademark laws, regulations, and rules.

Among others, the following nine acts are regarded as typical trademark violations: 1) registering but not using a trademark; 2) using a logo that cannot be used as a trademark; 3) using the words of “well-known trademark” in commercial activities; 4) failing to legally indicate its name and the origin of goods on the side of the trademark licensee 5) making changes to the registered trademark, registrant’s name, address or other registered items without approval; 6) using unregistered trademarks as registered ones; 7) failing to performing the obligation of managing collective trademarks and certification trademarks; 8) failing to perform the obligation of managing trademark printing; and 9) applying for trademark registration in bad faith.

5. Announcement Of the State Taxation Administration On Matters Relating To Evaluation And Repair Of Taxpayer Credit

The State Taxation Administration recently released the Announcement on Matters Relating to the Evaluation and Repair of Taxpayer Credit, to be implemented from January 1, 2022.

Why This Matters?

Taxpayer credit rating is becoming increasingly important for foreign enterprises operating in China as its government – at all levels – is working continuously to improve the country’s social credit system. A good tax credit rating means the enterprise will access more favorable treatment when obtaining tax incentives, making bids, applying for loans, obtaining business qualifications, etc., while a poor rating can lead to more stringent scrutiny in a wide range of tax-related matters.

The Announcement provides updated provisions regarding the evaluation and restoration of the taxpayer credit ratings.

According to the Announcement, there are five circumstances under which a taxpayer may apply with the tax authorities in charge for the restoration of its taxpayer credit after it corrected the dishonest behavior, performed the tax legal liability, is waived from the release of its major tax violating information, and recorded no dishonest tax-pay behavior for six or 12 months.

After completing the repair, the taxpayer can apply the corresponding tax policies and management services based on the repaired tax credit.

6. Administrative Measures Of The People’s Republic Of China For The Safety Of Food For Import Or Export

The General Administration of Customs (GAC) released the Measures for the Safety Administration of Imported and Exported Food (GAC Decree No.249) and the Provisions on the Administrative Provisions on Registration of Overseas Manufacturers of Imported Food (GAC Decree No.248) on April 12, 2021.  Both regulations will take effect from January 1, 2022.

Why This Matters?

The GAC Decree No.249 covers broad range of requirements on food exports to China, including overseas facilities registration, record filing by importers and exporters, quarantine and inspection, and product labeling, among others.

In comparison with the measures currently in effect, GACC Decree No.249 presents the following major changes:

GAC Decree No.248 expands the scope of enterprises that need to make the registration, changes the method for registration and the application materials, imposes new packing and labeling requirements, and clarifies who is the competent authority.

7. Measures For The Supervision And Administration Of Cosmetics Manufacturing And Operation

The State Administration for Market Regulation (SAMR) released the Measures for Supervision of Cosmetics Production and Operation (SAMR Decree No.46) on August 2, 2021 to be implemented from January 1, 2022.

Why This Matters?

As a supporting law to the Cosmetics Supervision and Administration Regulation, the SAMR Decree No.46 provides more detailed rules on the management of cosmetics production licenses and the production and sales of cosmetic products. Upon its implementation, the safety responsibilities and other obligations of enterprises in production and operation are established. Relevant businesses should understand the new points of the measure as soon as possible and make timely adjustments to ensure compliance with the law.

Among others, the SAMR Decree No.46 will:

8. Announcement Of The Provisions For Supervision And Administration Of Cosmetics For Children

To strengthen the supervision and administration of children’s cosmetics and ensure the safe use of children’s cosmetics, the National Medical Products Administration (NMPA) released on October 8, 2021 the Provisions on the Supervision and Administration of Children’s Cosmetics (NMPA Announcement [2021] No.123).

Why This Matters?

The regulation specifies that children’s cosmetics shall be marked with a special label on the surface of the sales package. “Attention” or “Warning” shall be used as the guiding words for children’s cosmetics, and warning words, such as “should be used under adult supervision”, shall be marked on the visual surface of the sales package.

Besides, the regulation stipulates that children’s cosmetics must not be labeled with languages that indicate the cosmetics are made with food-grade or edible materials or labeled with food pictures.

9. Decision On Amending The Trade Union Law Of The People’s Republic Of China

On December 24, 2021, the 32nd session of the Standing Committee of the 13th National People’s Congress adopted the Decision on Amending the Trade Union Law of the People’s Republic of China. The Decision will take effect from January 1, 2022.

Why This Matters?

The Decision decided to expand the coverage of the grassroots trade union organizations. It states that laborers working in enterprises, public institutions, government organs, and social organization within the territory of China with the wage income as their main source of income, regardless of their nationality, race, gender, occupation, religious belief, educational level – all have the right to join and organize trade unions by law. No organization or individual may obstruct or restrict their rights.

10. Decision On Amending The Civil Procedure Law Of the People’s Republic Of China

The Standing Committee of the 13th National People’s Congress adopted on December 24, 2021 the Decision on Amending the Civil Procedure Law of the People’s Republic of China at its 32nd session. The Decision will come into force on January 1, 2022.

Why This Matters?

In the revised law, seven new articles were added and 26 original articles were revised. The revision is mainly aimed at speeding up the litigation process and improving the efficiency of civil proceedings.

The new law stipulates:

11. National Standard: Basic Specification Of Service Safety For Senior Care Organization (GB38600-2019)

On December 27, 2019, the State Administration for Market Regulation (SAMR) and the Standardization Administration of China (SAC) approved and released the Basic Specification of Service Safety for Senior Care Organization (GB38600-2019), which will come into force on January 1, 2021.

Why This Matters?

This is the first mandatory national standard in the field of elderly care services in China, which clarifies the “red line” of service safety in elderly care institutions and will help prevent, investigate, and rectify potential safety hazards in elderly care institutions.

In the basic requirements, it provides that institutions for the elderly should comply with the mandatory provisions and requirements of fire protection, sanitation and health, environmental protection, food and medicine, construction, and facilities and equipment standards. At the same time, it is clear that the service safety risk assessment should be carried out before the elderly are admitted to the nursing home, and the scope of service safety risk assessment should include choking, accidental ingestion of food and drugs, pressure ulcers, scalds, falling from bed, falling, other injuries and self-injury, lost, accidents in recreational activities, etc.

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