China’s GDP in Q3 Grows 7.3%
China’s GDP in the third quarter grew 7.3 % from a year earlier – the slowest pace in five years – according to National Bureau of Statistics data released recently.
In September, fixed asset investment increased 16.3% year-on-year, slowing from a 16.5% rise in August. Industrial production advanced 8.0%, compared with a 6.9% growth the previous month. Retail sales rose 11.6%, compared with an 11.9% increase in August. The inflation rate in September slowed for the second straight month to an annual 1.6%, down from 2.0% in the previous month and reaching the lowest level in nearly five years.
In contrast, exports grew a better-than-expected 15.3% year-on-year in September, up from a 9.4% increase in August.
Quarter-on-quarter, the GDP expanded 1.9%, compared with a 2% growth in Q2. Year-to-date, the economy grew 7.4%.
There are some upsides of the statistics, including the rapid growth of some new businesses and emerging industries.
Shanghai – Free Trade Zone Trials Extend to Jing’an District
The "Negative List" administrative approach in Shanghai FTZ extended to Jing’an district on 9 June 2014. This move is part of Jing’an district’s efforts to further align its business registration policies with those of the Shanghai FTZ to facilitate investments in the area.
For sectors that are not stated in the “Negative List”, foreign and domestic investors will receive the same treatment based on international norms, where they will need to comply with filing procedures applicable to all sectors instead of sector-specific requirements. The sector-specific requirements for foreign investment contracts and Articles of Association will be replaced by a filing procedure where required documents will be submitted to the Shanghai municipal government. Follow-up procedures will also apply according to current laws and regulations. Separately, the registration process with the State Administration for Industry & Commerce will be simplified.
An administrative management system – called the “one-off acceptance” platform – that meets international trade and investment standards was established at the same time as the “Negative List” administrative approach in Jing’an. This move is part of the district’s efforts to further align its business registration policies with those of the Shanghai FTZ to facilitate investments in the area. It shifts the focus of administrative management procedures from prior approval to ongoing control and supervision following establishment of the foreign-owned business.
To form a foreign-owned enterprise in Jing’an district, the investor shall, after obtaining approval for the enterprise name, log on to the “one-off acceptance” platform to enter required information online. As this platform integrates examination and approval, the total business registration time has been reduced by 50% compared with that for the previous approval system.
Two Authorities Increase Tax Credit for Small and Micro Businesses
On September 25, the Ministry of Finance and State Administration of Taxation jointly issued the Circular on Value-added Tax (VAT) and Business Tax (BT) Policies for Further Supporting Small and Micro Businesses (the "Circular"), which states that from 1 October 2014 to 31 December 2015, small VAT taxpayers earning CNY20,000-30,000 (inclusive, similarly hereinafter) in monthly sales will be exempt from VAT. It also states that BT taxpayers recording CNY20,000-30,000 in monthly turnover will be exempt from BT.
The issuance of these tax policies raises the threshold for payment of VAT and BT, and the scope of their application has extended from sole traders and other individuals to small and micro businesses.
Shanghai – Circular on opinions regarding solutions to issues arising from the enforcement of measures implemented by Shanghai Municipality for work-related injury insurance
Read the Circular (bilingual)
SBA Stone Forest Insights
How Reformation of Hukou Household Registration System Impacts Your Employee in China
A Hukou is a record in the household registration system required by law in China. A household registration record officially identifies a person as a resident of an area and includes identifiable information such as the person’s name, parents, spouse, and date of birth. This is a special system unique to China.
On 30 July 2014, China’s State Council introduced new guidelines on the reformation of China’s household registration system. Based on that, the Ministry of Public Security said that in the future, the points system for household registration based on how well applicants score for various criteria will be changed to a more qualitative system. This system will apply to all cities nationwide, including Beijing, Shanghai and Shenzhen. The main factors that will be taken into account include:
- Stability of employment
- Years of social security contribution
- Stability of living place (including rented houses)
- Years of living in the city
The first two factors are closely related to employment. Those applying for a Hukou in first-tier cities would prefer to work in a stable company. And they would only consider companies that contribute social security according to the regulations in China, while avoiding non-compliant organisations. To a certain extent, the reformation of Hukou registration would be helpful for staff retention.
However, the difference between non-locals and locals still exists, particularly in first-tier cities. In Beijing for example, locals can purchase housing, but non-locals can only buy a house after five years of social security contributions. In Shanghai, locals can purchase a car at any time. But non-locals can only do so if they have a residence permit for at least a year. In response, many non-locals have pursued the Hukou status, which is very hard to attain.
Under such circumstances, a residence permit is a good way to get the Hukou status for non-locals who wish to work in first-tier cities, as the benefits for residence permit holders would be similar to those for locals. In Beijing for example, residence permit holders can purchase housing, even if they contributed less than five years of social security. Given such situations, employers in first-tier cities may offer residence permit application and renewal as a staff benefit to attract and retain qualified non-locals. Without renewal of their residence permits, some employees would return to their home towns to work, affecting staff turnover. This shows that attaining and retaining Hukou status is not only a concern for non-local staff but also for the enterprise itself.
SBA Stone Forest Highlights
China Economic Information Magazine Interviews Chio Kian Huat and Tan Lee Lee on the Firm’s Unremitting Pursuit of Corporate Social Responsibility
Article in Chinese
SBA Stone Forest Hosts Tax Workshops in Shanghai, Shenzhen and Beijing
SBA Stone Forest organised several workshops from July to September 2014 in Shanghai, Shenzhen and Beijing. The workshops, which attracted more than 100 participants, covered updates on China’s VAT reformation and individual income tax issues.
Shanghai Tax Workshop
Shenzhen Tax Workshop
Beijing Tax Workshop
To find out more about our tax workshops or tax advisory services, please contact Gary Cheng for more information.
FBC Shanghai 2014
SBA Stone Forest sponsored FBC (Factorynetwork Business Conference) Shanghai, which ran from 3-4 September 2014 at ShanghaiMart.
This exhibition – organised by Factory Net Asia (FNA), a B2B e-commerce platform for Chinese and Japanese manufacturers – attracted more than 500 exhibitors and 8,800 delegates. SBASF introduced its accounting & tax services, corporate advisory and payroll outsourcing services to Japanese manufacturers that wanted to expand into China.
SBA Stone Forest Sponsors AmCham’s SME Conference in Shanghai
SBA Stone Forest sponsored AmCham's inaugural SME Conference in Shanghai on September 4, titled "Small Business is Big Business – Seizing Untapped Opportunities in China for US SMEs". The conference featured speakers from Amazon, Wells Fargo, Koehler, Ja-e and others, which shared their insights about opportunities available to SMEs in China. Representatives from both the US and Chinese governments highlighted various ways to assist small businesses operating in China.
SBA Stone Forest (SBASF) is a wholly owned subsidiary of RSM Chio Lim, the largest accounting and business advisory group outside the Big 4 in Singapore, and a member of RSM International, the world’s 7th largest accounting and consulting network. For more than 11 years, SBASF has been serving foreign companies in China as their trusted business advisor, giving them peace of mind to focus on revenue-generating functions as they leave non-core activities to us.
Our staff, totalling over 320 in six major Chinese cities, help foreign investors to form legal entities in China smoothly. Thereafter, we continue to support them in navigating China’s regulatory and business environment, including ongoing Accounting, Corporate Advisory, Risk Management, Tax Advisory, Tax Compliance and Payroll & Human Resources matters.
We adopt the international best practices in client service, business processes and work methodologies of our parent company in Singapore, and deploy local talents with a deep on-the-ground understanding of topical issues and the necessary local connections. Our advisory is meticulous and well-rounded, focusing on starting right, so you do not get surprises as you grow your business.
SBA Stone Forest (SBASF) has the following qualifications/accreditations:
- Qualified Entity Incorporation Agency Company, certified by State Administration for Industry & Commerce
- Qualified Accounting, Bookkeeping and Related Accounting Services Company, certified by Shanghai Finance Bureau
- Qualified Translation Services Company, certified by State Administration for Industry & Commerce
- SSAE 16 Certification: SBASF’s Accounting and Payroll Divisions achieve SSAE 16 Compliant Status for the Sixth Year
- Chapter Member of Shanghai Bookkeeping Association
- Standing Council Unit of Shanghai Bookkeeping Association
- Member of AmCham Shanghai and AmCham Shenzhen
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