Starting December 1, 2008, the Tariff Commission of the State Council will adjust the scope and rates of export tariffs (including provisional tariffs and special tariffs) levied on certain products, as follows:

　　I. The export tariffs or special export tariffs on certain products will be abolished, including primarily steel products such as hot- and cold-rolled sheets and strips, steel wires, large-sized structural steel, alloy steels, and welded pipes; chemical products such as ammonium nitrate and ammonium sulfate; and grain products including corn (1425, -15.00, -1.04%, bar), coarse grains, and their milled products—totaling 102 items.

　　II. Reduction of export tariffs on certain products, primarily including certain fertilizers and their raw materials, certain aluminum products, as well as wheat (2002, 29.00, 1.47%, bar), rice and its milled products, totaling 23 items. Reduction of special export tariffs on nitrogen fertilizers, phosphate fertilizers, and some of their raw materials, totaling 31 items.

　　3. Adjust the method of collecting export tariffs on fertilizer products such as urea, monoammonium phosphate, and diammonium phosphate during the off-season. Also, adjust the scope of taxable products to include three items, such as powdered natural graphite.

　　4. Increase the export tariffs on five products, including apatite and silicon.

　　V. New export tariffs have been imposed on certain products, primarily including natural barium sulfate, non-pure magnesium oxide, talc, brown fused alumina, cobalt(III) oxide, and fluorides—totaling 15 products.

　　Export duties will continue to be waived on raw grains and their milled products exported for personal use to Hong Kong, Macao, and Taiwan. Export duties will also be exempted for food grains provided as gratuitous foreign aid by our country.
 

The State Council decided to in Implementing the VAT transition reform nationwide.

 

November 10, 2008

On November 10, 2008, Premier Wen Jiabao of the State Council recently chaired a regular executive meeting of the State Council, during which it was decided to implement a value-added tax (VAT) reform nationwide. The meeting also reviewed and approved in principle the "Interim Regulations of the People's Republic of China on Value-Added Tax (Revised Draft)," the "Interim Regulations of the People's Republic of China on Consumption Tax (Revised Draft)," and the "Interim Regulations of the People's Republic of China on Business Tax (Revised Draft)." It is estimated that this reform will reduce the tax burden on enterprises by approximately 123.3 billion yuan next year.



The meeting noted that, with the approval of the State Council, pilot programs for the value-added tax (VAT) reform have been successively carried out in certain regions—including Northeast and Central China—starting from July 1, 2004, and have achieved the expected results. To expand domestic demand, reduce the tax burden on corporate equipment investments, and promote technological advancement, industrial restructuring, and a shift in the economic growth model, the meeting decided to roll out the VAT reform nationwide—in all regions and across all industries—starting from January 1, 2009. The key components of the reform are as follows: enterprises will be allowed to deduct the VAT included in newly purchased equipment; at the same time, the policy exempting imported equipment from VAT and the VAT refund policy for domestically produced equipment purchased by foreign-invested enterprises will be abolished; the VAT rate for small-scale taxpayers will be uniformly reduced to 3%; and the VAT rate for mineral products will be restored to 17%. According to calculations, the implementation of this reform next year will result in a reduction of approximately 120 billion yuan in annual VAT revenue, about 6 billion yuan in urban maintenance and construction tax revenue, and roughly 3.6 billion yuan in education surcharge revenue. Meanwhile, corporate income tax revenue will increase by about 6.3 billion yuan. After offsetting these increases and decreases, the overall tax burden on enterprises will be reduced by approximately 123.3 billion yuan.



To ensure the smooth implementation of the value-added tax (VAT) reform and to facilitate the seamless transition among VAT, consumption tax, and business tax, the meeting reviewed and in principle approved the “Interim Regulations of the People’s Republic of China on Value-Added Tax (Revised Draft),” the “Interim Regulations of the People’s Republic of China on Consumption Tax (Revised Draft),” and the “Interim Regulations of the People’s Republic of China on Business Tax (Revised Draft).” The meeting decided that, after further revisions, these draft regulations will be promulgated and implemented by the State Council.
 

People's Bank of China Completely lift loan restrictions and step up support for small and medium-sized enterprises.

November 9, 2008

In accordance with the unified deployment of the Party Central Committee and the State Council, the People's Bank of China and the China Banking and Insurance Regulatory Commission have conducted in-depth investigations and studies among enterprises. Targeting the practical challenges faced by small and medium-sized enterprises (SMEs) in their development, they have flexibly employed monetary and credit policy tools, intensified research and innovation in financial products, and made concerted efforts to address the difficulties SMEs encounter in obtaining loans and financing, thereby promoting the steady and relatively rapid development of SMEs.

In response to pressing issues, the central bank has flexibly employed monetary and credit policy tools to step up credit support for small and medium-sized enterprises (SMEs). In early August of this year, in light of the actual situation following the devastating earthquake in Wenchuan, Sichuan, it was clarified that the total loan volume that nationwide banking financial institutions and local legal-person financial institutions in the disaster-stricken areas could allocate to support the development of SMEs in those areas could be appropriately relaxed. In early September, in response to evolving economic conditions, it was specified that each banking financial institution’s credit scale would increase by 10% over the initial annual target; newly added loans must be primarily directed toward sectors such as SMEs, agriculture, rural areas, and post-disaster reconstruction. Starting in November, restrictions on loan planning were completely lifted, providing robust support for banking financial institutions to significantly enhance their credit support for SMEs.

As the financial crisis spreads and deepens, the China Banking Regulatory Commission promptly convened all relevant banking and financial institutions for a videoconference aimed at improving financial services for small enterprises. At the conference, the Commission clearly set forth two “no lower than” targets: the growth rate of credit allocation to small enterprises must not be lower than the overall loan growth rate, and the incremental amount must not be lower than the previous year’s level. The Commission urged all banking and financial institutions to promote specialized operations in SME financial services through measures such as strengthening institutional frameworks, fostering organizational innovation, tilting resources toward SMEs, and innovating products and services. This will effectively boost credit allocation to small and medium-sized enterprises, providing them with robust financial support to play their crucial role in absorbing employment and stimulating domestic demand during these extraordinary times.
 

The Ministry of Finance and the Ministry of Industry and Information Technology establish... Subsidy Fund System for Credit Guarantee Services for Small and Medium-sized Enterprises

Ministry of Finance of the People's Republic of China, Ministry of Industry and Information Technology

November 6, 2008

The Ministry of Finance and the Ministry of Industry and Information Technology recently issued a notice clarifying the methods and amounts of subsidies for credit guarantee services provided to small and medium-sized enterprises (SMEs). The notice also specifies the various eligibility requirements that SME credit guarantee institutions must meet in order to apply for these subsidy funds. The detailed rules are as follows:

I. Application Requirements

Small and medium-sized enterprises applying for subsidy-funded projects through credit guarantee institutions must meet the following eligibility requirements:

(1) Possess independent legal personality and have paid-up capital of more than 100 million yuan (in the eastern region) or more than 50 million yuan (in the central and western regions).

(2) Established in accordance with the law for more than one year and engaged in SME credit guarantee business for more than one year.

(3) The financial management system is sound, and all reserves are set aside, managed, and used in accordance with regulations.

(4) Good economic benefits.

(5) Good accounting credit, tax credit, and banking credit.

(6) In 2008, the amount of loan guarantee business provided to small and medium-sized enterprises accounted for more than 80% of its total business volume. Among these, the amount of loan guarantees for individual loans below 8 million yuan accounted for more than 60% of its total business volume, or the amount of such loan guarantees exceeded 500 million yuan. The subsidy projects for guaranteed SMEs shall comply with national industrial policies.

(7) In 2008, the total amount of loan guarantees exceeded three times the paid-up capital, and the compensation rate was below 2%.

(8) The guarantee fee rate shall not exceed 50% of the bank’s benchmark lending rate for the same period.

II. Funding Support Methods and Amounts

The subsidy funds for the 2008 SME credit guarantee business will be provided in the form of grants. For SME credit guarantee institutions, the subsidy will be granted at a rate not exceeding 1% of the total guaranteed amount for loan guarantee services provided to SMEs between January 1 and September 30, 2008, where each individual loan guarantee does not exceed RMB 8 million and the guarantee period is one year or longer (including one year). For loan guarantee services provided by SME credit guarantee institutions between October 1 and December 31, 2008, where each individual loan guarantee does not exceed RMB 8 million and the guarantee period is one year or longer (including one year), the subsidy will be granted at a rate of 1% of the total guaranteed amount. The subsidy funds received by SME credit guarantee institutions shall be used to offset compensation losses.

III. Project Application Materials

The credit guarantee institutions for small and medium-sized enterprises applying for subsidy funds shall provide the following materials:

(1) A copy of the corporate license and the articles of association (photocopy);

(2) Basic Information Form of the Guarantee Institution;

(3) Photocopy of the 2008 Guarantee Loan Card voucher;

(4) Summary Table of Loan Guarantees Provided by Small and Medium-sized Enterprise Credit Guarantee Institutions for 2008 (Attachment 1), together with Explanations or Certifications Regarding Guarantee Business Conducted by Cooperative Banks;

(5) The 2008 annual financial statements (including the balance sheet, cash flow statement, income statement, and statement of changes in outstanding guarantees, etc.);

(6) 2008 tax payment certificate and summary table;

IV. Procedures for Organizing and Reviewing Project Applications

The financial departments of provinces, autonomous regions, municipalities directly under the central government, and cities under separate planning—and their corresponding small- and medium-sized enterprise (SME) administration authorities (hereinafter referred to as “provincial-level financial departments” and “provincial-level SME administration authorities”)—are responsible for reviewing and approving applications for subsidy programs within their respective regions. The provincial-level SME administration authorities, in coordination with their corresponding financial departments, shall publicly organize the application process for subsidy programs within their regions and shall assemble relevant experts to review the eligibility criteria and supporting documentation submitted by applicant organizations. The documents to be submitted include:

(1) Application Report for Subsidy Funding Project;

(II) Summary Table of Subsidy Projects for SME Loan Guarantee Business in 2008

(3) Relevant materials submitted by qualified small and medium-sized enterprise credit guarantee institutions.

V. Project Approval and Fund Disbursement

The Ministry of Industry and Information Technology, together with the Ministry of Finance, reviews the application reports and project details submitted by various regions and then formulates project plans. Based on the reviewed project plans, the Ministry of Finance determines the amount of funding support for each project and promptly allocates budgetary indicators to the provincial-level finance departments.
 

The State Council has laid out 10 measures to expand domestic demand and boost growth.

November 5, 2008

Premier Wen Jiabao, Chairman of the State Council, presided over an executive meeting of the State Council and decided to implement an active fiscal policy and a moderately accommodative monetary policy. The executive meeting of the State Council also laid out 10 measures aimed at expanding domestic demand and boosting economic growth.

First, accelerate the construction of affordable housing projects. Increase support for the construction of affordable rental housing, accelerate the renovation of shantytowns, implement a settlement program for nomadic herders, and expand pilot programs for the renovation of dilapidated rural houses.

Second, accelerate the construction of rural infrastructure. Step up efforts to develop rural biogas systems, ensure safe drinking water supplies, and build rural roads; improve the rural power grid; accelerate the construction of major water conservancy projects such as the South-to-North Water Diversion Project and the reinforcement and hazard removal of aging and unsafe reservoirs; and strengthen water-saving upgrades in large-scale irrigation districts. Intensify poverty alleviation and development efforts.

Third, accelerate the construction of major infrastructure projects such as railways, highways, and airports. Prioritize the construction of a number of passenger-dedicated lines, coal transportation corridors, and western trunk-line railways; improve the expressway network; plan and implement the construction of trunk-line and branch-line airports in central and western regions; and accelerate the upgrading of urban power grids.

Fourth, accelerate the development of healthcare, culture, and education. Strengthen the construction of the primary-level medical and health service system, accelerate the renovation of junior high school buildings in rural areas of central and western China, and promote the construction of special education schools and township-level comprehensive cultural centers in central and western regions.

Fifth, strengthen ecological and environmental conservation. Accelerate the construction of urban sewage and waste treatment facilities and water pollution control in key river basins; strengthen the construction of projects for the protection of key shelterbelts and natural forest resources; and support the construction of key energy-saving and emission-reduction projects.

Sixth, accelerate independent innovation and structural adjustment. Support the industrialization of high-tech industries and the advancement of industrial technologies, and support the development of the service sector.

Seventh, accelerate all post-disaster reconstruction efforts in the earthquake-stricken areas.

Eight is to increase the income of urban and rural residents. Raise the minimum procurement price for grain next year, increase the standards for comprehensive direct subsidies for agricultural inputs, subsidies for superior seeds, and subsidies for agricultural machinery and equipment, thereby boosting farmers’ incomes. Raise benefit levels for social security recipients, including low-income groups; increase subsistence allowances for urban and rural residents receiving minimum living guarantees; and continue to raise the basic pension levels for enterprise retirees as well as the living allowance standards for veterans and other preferential treatment recipients.

The ninth step is to fully implement the value-added tax (VAT) reform transition across all regions and all industries nationwide. Encourage enterprises to carry out technological upgrades and reduce their burdens by 120 billion yuan.

Tenth, we will strengthen financial support for economic growth. Remove the credit-scale restrictions on commercial banks, appropriately expand the credit scale, and increase credit support for key projects, agriculture, rural areas, and farmers (“Three Rural Issues”), small and medium-sized enterprises, technological upgrades, and mergers and acquisitions. Targeted efforts will be made to foster and consolidate growth drivers in consumer credit. Preliminary estimates indicate that implementing the above-mentioned projects will require approximately 4 trillion yuan in investment by the end of 2010.