China Enhances Lending Platforms to Assist MSMEs
On 2 April 2024, China’s State Council issued the Action Plan on Coordinating the Construction of Credit Service Platforms to Facilitate Financing for Micro, Small and Medium Enterprises (“MSMEs”).
The plan comprises 12 entries covering five aspects. Additionally, it includes an annex featuring the Credit Information Collection and Sharing List. The annex outlines the specifics and procedures for collecting and sharing 17 types of credit information. A proposal has been set forth to establish a nation-wide credit service platform by integrating individual platforms at the local level. The new national platform will serve as the primary portal, feeding various credit information to financial institutions. The consolidation of the different platforms is anticipated to be concluded by the end of 2024.
The document also states that details regarding key company personnel and their qualifications as well as import and export activities shall be included in the Credit Information Collection and Sharing List. Moreover, the plan urges local authorities to enhance the mechanism of matching borrowers with the appropriate policies. The aim is to facilitate MSMEs to access a wider range of preferential financial policies via the platform.
Hong Kong to Enlarge Innovation and Technology Talent Pool
The Hong Kong Special Administrative Region Government has pledged to boost the supply of the global financial centre’s international talent for innovation and technology (“I&T”).
In a recent speech, Hong Kong’s Secretary for Innovation, Technology and Industry underscored the pivotal role of young individuals in shaping the city’s future. He highlighted the local government’s proactive stance in fostering I&T talent, while concurrently expanding the local talent pool. In addition, he mentioned the active involvement of universities in cultivating skilled personnel in research and development (“R&D”) endeavours. Further, he referenced how the objectives outlined in China’s 14th Five-Year Plan complemented Hong Kong’s aspiration to become a global I&T hub.
Different schemes have been rolled out to expand Hong Kong’s I&T talent pool. These include the following:
- The STEM Internship Scheme encourages university students to engage in work related to I&T while pursuing their studies. This enables them to explore potential careers in this field after graduation. As an added initiative to reel in more I&T talents, the scheme was broadened in June 2023 to include internship opportunities provided by the five government-funded R&D centres and the Hong Kong Productivity Council. Such opportunities have been extended to undergraduate and postgraduate students enrolled on STEM programmes at both local and non-local universities, including campuses in the Guangdong-Hong Kong-Macao Greater Bay Area (“GBA”).
- The Technology Talent Admission Scheme offers a streamlined process for qualifying companies to recruit young mainland Chinese and overseas tech talents to conduct R&D activities in Hong Kong. In 2023, around 108 mainland talents relocated to Hong Kong under the scheme, constituting 87 per cent of all admissions under the programme.
China Issues New Negative Lists for Cross-border Trade in Services
China’s Ministry of Commerce (“MOFCOM”) has recently issued the Special Measures for the Management of Cross-border Trade in Services (Negative List) (2024 Edition) and the Special Measures for the Management of Cross-border Trade in Services in the Free Trade Zones (Negative List) (2024 Edition). Both will come into force on 21 April 2024.
The two negative lists – one enforced nationwide and the other within China’s free trade zones (“FTZ”) – sets out the services that overseas companies are prohibited from selling in the country. This marks the first occasion where China has developed a national-level negative list for cross-border trade in services. The national list consolidates and outlines market entry regulations across different sectors. Domestic and overseas service providers in sectors not listed shall receive equal treatment and enjoy unrestricted access.
MOFCOM’s definition of “cross-border service trade” includes three categories of cross-border activities, namely cross-border delivery, overseas consumption, and the movement of natural persons. This dovetails with the World Trade Organisation’s General Agreement on Trade in Services.
The two lists encompass a total of 11 areas. The national list consists of 71 measures, while the FTZ version comprises 68. The latter relaxes criteria for the professional qualifications of individuals. In addition, it further liberalises the professional services, finance, culture, and other relevant sectors.
MOFCOM anticipates that the introduction of the two new lists would bring China into closer alignment with international trading rules. This, in turn, will accelerate the country’s efforts in enhancing its management mechanism for cross-border trade in services.
China Introduces Further Policy Measures to Boost Foreign Investment
China’s State Council has issued the Action Plan on Solidly Promoting High-level Opening-up and Intensifying Efforts to Introduce and Utilise Foreign Investment. The plan advocates for the implementation of further support measures to enhance China’s appeal to foreign investors.
According to the circular, authorities will enact relevant policies, allowing projects funded by domestically established enterprises, with reinvestment from foreign-invested enterprises, to qualify for duty exemptions on imported equipment for their own use. Eligibility for these exemptions will be contingent upon meeting specified conditions detailed in the Catalogue of Encouraged Industries for Foreign Investment. In addition, the plan pledges to introduce tax relief measures for foreign investors interested in participating in the Chinese bond market and other financial markets.
Further, the plan aims to broaden the scope under the Catalogue of Encouraged Industries for Foreign Investment and the roster of foreign-funded projects. China will also enhance the provision of support for the advanced manufacturing, high-tech, energy efficiency, and environmental preservation industries. In particular, Beijing, Shanghai, Guangdong, and other designed pilot free trade zones will select eligible foreign-invested enterprises to conduct pilot projects in fields, such as gene diagnosis and treatment technology development and application.
Under the Catalogue of Priority Industries for Foreign Investment in Central and Western China, support will be extended to basic manufacturing, applicable technologies, and other relevant areas. Additionally, China will endorse the incorporation of foreign-funded projects in integrated circuits, biomedicine, and high-end equipment into the List of Foreign-funded Projects. This move will enable more projects to be covered by the support policies.
Hong Kong Launches Guangdong-Hong Kong-Macao Three-Places-One-Lock Scheme
On 8 March 2024, Hong Kong launched the Guangdong-Hong Kong-Macao Three-Places-One-Lock Scheme (“Scheme”), which is designed to streamline customs procedures. Specifically, it aims to prevent redundant inspections carried out by customs authorities across Guangdong, Hong Kong, and Macao.
The initial shipment of transshipment cargo from the DHL Central Asia Hub successfully arrived at the Macao clearance point. The cargo was transported via the Hong Kong-Zhuhai Macao Bridge and the recently constructed Macao Cross-border Cargo Transfer Terminal.
The Scheme further strengthens connectivity between Guangdong, Hong Kong, and Macao. Amidst the rapid growth of the GBA, the introduction of the new fast track will significantly boost cargo clearance efficiency. In addition, it will open up new business opportunities for the logistics sector in the three regions. Simultaneously, the Scheme is expected to stimulate trade and commerce, bolstering Hong Kong’s pivotal role as a global logistics hub.
To expedite the growth of logistics and trade within the GBA, customs authorities from the three sides have established robust communication and cooperation channels. In 2016, Guangdong and Hong Kong customs authorities jointly introduced the Single E-lock Scheme. In 2020, the Guangdong-Macao Customs Single E-lock Scheme was launched.
The Single E-lock Scheme simplifies the clearance process for intermodal cargo transshipment between the two special administrative regions and Guangdong. By leveraging technology, it results in reduced time and transportation costs. This enhances the efficiency of cross-boundary road cargo clearance. Scheme participants can transport cargo between Hong Kong/Macao and the Mainland via the land boundary control points.
Hong Kong Signs Double Tax Agreement with Bahrain
On 3 March 2024, Hong Kong signed a Comprehensive Double Tax Agreement (“Agreement”) with Bahrain. During an official visit to Manama, Hong Kong’s Secretary for Commerce and Economic Development signed the Agreement with the counterpart representing Bahrain.
The Agreement is scheduled to take effect upon completion of ratification procedures. In Hong Kong, the implementation will occur through an order issued under the Inland Revenue Ordnance (Cap. 112).
The Agreement marks the 49th double taxation treaty signed by Hong Kong to date. It delineates the distribution of taxing rights between the two jurisdictions. The treaty will aid investors to evaluate their tax liabilities arising from cross-border economic endeavours more effectively.
Bahrain is among the economies involved in the Belt and Road Initiative. Hong Kong’s local government has expressed confidence that this Agreement will enhance economic and trade ties between the two sides. In addition, the pact is slated to further incentivise companies to engage in bilateral business and investment activities.
Under the Agreement, Hong Kong businesses are eligible for double taxation relief. Specifically, any tax paid in Bahrain, whether directly or through deduction in line with the Agreement, can be used as credit against taxes owed in Hong Kong for the same income.
Moreover, Hong Kong remains committed to ongoing negotiations with trading and investment partners to broaden its tax treaty network. The aim is to boost Hong Kong’s appeal as a leading business and investment hub. In so doing, it will also reinforce the city’s position as a preeminent international economic and trade centre.
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