Tax Scrutiny

China will establish a comprehensive system to monitor foreign companies' profitability in order to curb cross-border tax evasion, the State Administration of Taxation (SAT) announced on December 1, 2014. The move is one of several steps against tax avoidance by the SAT to protect the country's ambition to be the top destination for foreign direct investment. The system will allow the SAT to acquire foreign companies' profit information so that it can launch "targeted actions" and use information technology to prevent them from shifting taxable profits overseas.

FTZ Trial

From December 2014, businesses in China (Shanghai) Pilot Free Trade Zone (FTZ) can open bank accounts to guarantee tax payments as local customs authorities streamline clearance procedures. The enterprises need to deposit a minimum amount of funds in the account and have a bank guarantee letter before they can deliver goods prior to paying tariffs. When a company transfers goods outside the zone with duty payment certificates, the bank will deduct the payable amount. As soon as customs authorities confirm that the duty is paid, the bank will refund the amount automatically into the account. The Bank of China, Bank of Communications, China Minsheng Bank, China Merchants Bank and the Bank of Shanghai are the first batch of banks to operate such accounts for FTZ-based businesses.

Industry Fund

China's first industry fund in poverty-stricken areas was jointly established by the Ministry of Finance, China National Tobacco Corp. and State Development and Investment Corp. This is the first such fund with a government background but independent operation, an important move to innovate poverty relief and fiscal investment, the founders said. The initial registered capital of the fund is 2.8 billion yuan ($457.55 million). It aims to attract more social funding for featured and potential industries in poverty-stricken areas. According to a cooperation memorandum, the fund will target farming, breeding, processing, tourism, forestry, clean energy, logistics, high technology, culture, medical care and natural resources.

Homegrown GPS

A Chinese company has rolled out a chip that can help smartphones access the country's homegrown answer to the U.S.-developed Global Positioning System - the Beidou Navigation Satellite System. The 40-nanometer chip, developed by Shanghai Beiga Satellite Technology, was unveiled at a Shanghai exhibition promoting the civilian use of military technologies. Wang Yongping, General Manager of Beiga, said they are currently testing with smartphones and expect to begin mass production of devices with the chip in 2015.  

Internet Finance

China will continue to support the development of Internet finance amid moderate government regulation, said Pan Gongsheng, Vice Governor of the People's Bank of China, the country's central bank. The bank is considering issuing a guideline, in cooperation with other financial watchdogs, on Internet finance centered on openness and inclusiveness.  Pan said online financing holds a promising future. If used right, it can play a very active role in promoting the country's real economy, Pan added. But he also warned of the potential risks, saying self-regulation should be practitioners' duty.

Boost Service Outsourcing

China will boost the service outsourcing industry to forge a new advantage in foreign trade and offset weakening exports, the Central Government announced. China will bolster outsourcing hi-tech and high value-added businesses to facilitate structural adjustment and industrial upgrades. The sector will be a new engine for tertiary industry and create new jobs. China is the world's second largest provider of service outsourcing after India. The sector's growth has exceeded that of commodity trade and the economy as a whole in the last two years despite the financial crisis and domestic overhaul, said Jiang Rongchun of the Institute of International Economics, University of International Business and Economics.