July 29 Regulator Roundup

Saturday, July 29, 2006 20:30

New Restrictions in Telecom:
Overall Impact Rating: 10 of 10
Industries Affected: IT Services, IT Equipment, Web Services; and anyone hosting web space in China
Date of Implementation: November 2006

Overview/ Introduction:
To curb the abuse of foreign operators operating under locally rented licenses, the MII has come ut swinging. The ministry has tasked local agencies to look into the possible abuses and report back by November 1. Value-added service providers who fail to fully comply with the regulations may have their licenses revoked, the ministry added.

Note – For foreign companies in China who have rented service space, you should check to see if your provider may be affected as many foreign service providers are not fully licensed and could be shut down.

Government Agencies Involved:
State Administration of Radio, Film and Television
Ministry of Information

Links for further Information: China Daily; WSJ; China Economic Review; Forbes; Washington Times


Government to levy assets transfer tax:
Overall Impact Rating: 9 of 10
Industries Affected: Real Estate; Banking; Construction
Date of Implementation: August 1, 2006

Overview/ Introduction:
following a series of new and improved upon real estate regulations, the tax bureau has stepped in as well. Following this announcement, it looks as if investors (domestic and foreign) will be liable for a 20% tax on capital gains if properties are sold within 5 years. It is unclear if this or the recently amended 5% gross tax are deductible. It can be expected that this announcement will significantly reduce the number of transactions in the market for second hand properties and a shift to development investments may occur.

Government Agencies Involved:
Ministry of Finance
State Administration on Taxation

Links for further Information: People’s Daily; China Daily; Shanghai Daily; WSJ


China to Tighten Biological Export Control:
Overall Impact Rating: 4 of 10
Industries Affected: Pharmaceutical; Medical Research
Date of Implementation: Immediate

Overview/ Introduction:
To prevent the possibility of biological agents fall into the wrong hands, the Chinese government has announced that it will ban the exportation of 14 products (in addition to the list released October 2002). With some of these viruses and pathogens holding research value, the only impact we can see to the business community is an inability of foreign medical companies to gain access to the products for R&D purposes..

Government Agencies Involved:
Ministry of Health
Foreign Ministry

Links for further Information: Xinhua; Eastday



(Note: To make sure you are up to date on all regulations, we advise you speak with legal and/ or industry professionals)

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One Response to “July 29 Regulator Roundup”

  1. All Roads Lead To China » China’s New Found Economic Nationalism says:

    August 15th, 2006 at 3:32 am

    […] With the economy growing at 11.3% a year and FDI increasing year on year there is no reason to believe that the doors are closing. Investors that move inland will still find very receptive government officials that will offer incentives, tax breaks, and access to companies within their market. The national government has itself recently come out and begin promoting new incentives for investments in technology and in China made machinery. […]