China once welcomed foreign exchange inflows; now, hot money is threatening its developing economy. To control the flow of trade funds, the regulator has set requirements for compliance with rules on advance payments and deferred receipt of payments. The new rules could lead to tax losses and fines for exporters. By David Wang, Chris Yang and Chris Chen, Broad & Bright Shanghai Office.
A new Circular makes it easier for foreign investors to get approval for the conversion of their unlisted shares into B-shares. This may finally render non-listed foreign-investment shares in these issuers obsolete. By Heiner Braun and Miles Ma, Freshfields Bruckhaus Deringer, Shanghai.
A sweeping VAT reform takes place in China on January 1 2009. It will benefit many domestic companies but could block the cash-flow of some foreign invested enterprises, removing advantages enjoyed under the old tax regime. By Joanna Law.
Worldwide, regulators are restricting margin trading and short selling. But China is about to allow securities companies to engage in these types of business for the first time. The new scheme will be tightly controlled and small in scale. By Phil Taylor.
The Chinese capital markers have developed rapidly and sponsorship activities have increased. New Measures for the administration of securities sponsorship aim to fix the weaknesses in the previous legal framework. They will have a significant impact on sponsoring companies and their legal advisers. By Christophe Han and Patrick Chen, Llinks Law Offices, Shanghai.
The Communist Party's Decision on Several Major Issues Concerning the Promotion of Rural Reform and Development proposes a dramatic restructuring of land-use rights in rural China. Farmers will be able to lease their land, and more money will be spent in rural areas. But the effect on migration will be mixed. By Sean Maguire, AllBright Law Offices, Shanghai.