Economic Law - Knowledge
Points
Chapter I: Competition Law
Section 1: Anti-Monopoly Law
The legislative purpose of the Antitrust Law
This Law is enacted in order to prevent and stop monopolistic
behavior, protect fair competition in the market, improve the
efficiency of economic operations, safeguard the interests of
consumers and the public interest, and promote the healthy
development of the socialist market economy. It can be seen that
"in order to prevent and stop monopolistic behavior, protect fair
competition in the market, and improve the efficiency of economic
operation" is its direct purpose, and "safeguard the interests of
consumers and the public interest, and promote the healthy
development of the socialist market economy" is its fundamental
purpose.
The object and scope of the adjustment of the Anti-Monopoly
Law
The Anti-Monopoly Law mainly regulates the legal relationship
between competing undertakings, so it is necessary to define
undertakings. Article 12, paragraph 1 of the Law stipulates: "For
the purposes of this Law, the term "business operator" refers to
natural persons, legal persons and other organizations engaged
in the production and sale of goods or the provision of services. ”
As a domestic law, the Anti-Monopoly Law is applicable to
monopolistic acts engaged in economic activities within the
territory of the People's Republic of China. However, considering
that with the development of economic globalization, the impact
of economic activities (especially the monopolistic behavior of
large enterprises) is not limited to the territory of a country, the
law further clarifies: "...... This Law applies to monopolistic
conduct outside the territory of the People's Republic of China
that has an impact on the elimination or restriction of competition
in the domestic market. ”
Basic principles of antitrust law
1. Improve the unified, open, competitive and orderly market
system. With the promulgation of the Anti-Monopoly Law,
together with the Anti-Unfair Competition Law, it has built the
skeleton of China's competition law system and formed
competition rules that are compatible with the socialist market
economy.
2. Combine the protection of the right to economic freedom with
regulation and regulation. Anti-monopoly law suppresses
monopoly but does not eliminate it. It recognizes and protects
the economic freedom of business operators, and allows business
operators to implement concentration in accordance with the law,
expand the scale of operation, and improve market
competitiveness through fair competition and voluntary
association. At the same time, in order to establish and improve a
unified, open, competitive and orderly market system, it is
necessary to supervise and regulate the anti-competitive
behaviors (such as monopoly agreements, hostile mergers and
acquisitions, and restriction of competition) of business
operators.
Overview of monopoly agreements
A monopoly agreement refers to an act of restricting competition
carried out by two or more undertakings by agreement,
resolution or other joint means.
Monopoly agreements are divided into horizontal monopoly
agreements and vertical monopoly agreements. The so-called
horizontal monopoly agreement refers to a monopoly agreement
between two or more competitors in the same industry who are in
the same stage of operation in the production or sales process
due to the operation of similar products or services, such as the
alliance between two automobile manufacturing companies; A
vertical monopoly agreement refers to a monopoly agreement
between two or more enterprises that are at different stages in
the same industry and have a buying and selling relationship.
Elements of a monopoly agreement
1. An agreement or concerted act is composed of multiple
independent entities. A monopoly agreement must take place
between two or more competing undertakings and have the
characteristics of "joint conduct by multiple entities", thus
distinguishing it from market monopoly acts (such as abuse of
market dominance) carried out by a single operator.
2. There is collusion or concerted action between business
operators. The objective element for constituting a monopoly
agreement is that the undertakings have engaged in a
conspiracy or concerted act.
Regulation of monopoly agreements
(1) Horizontal monopoly agreements and vertical monopoly
agreements. (1) Fix or change the price of goods; (2) restricting
the quantity of goods produced or sold; 3. Divide the sales
market or raw material procurement market; (4) Restricting the
purchase of new technologies and equipment, or restricting the
development of new technologies or products; (5) boycott
transactions; (6) Other monopoly agreements identified by the
anti-monopoly law enforcement agency of the State Council.
(2) Acts of industry associations restricting competition. A
typical industry association should be a legal person composed
of operators of a single industry, which is non-profit and
intermediary, protects the interests of its members and engages
in activities on behalf of the interests of the industry.
and (3) exemption from monopoly agreements. The AML allows
consensual or concerted action that is not reached for the
purpose of restricting competition or for the sake of a public
interest.
Abuse of the concept of dominant market position
Dominant market position, also known as market dominant
position, is an important concept in anti-monopoly law. It
describes a state that an enterprise or syndicate achieves or has
in the market, which reflects the ability of the enterprise or
syndicate to control the production, price and sales of products in
the relevant product market, geographical market and time
market.
Factors for determining market dominance
The dominant market position mentioned in China's Anti-
Monopoly Law "refers to the market position in which a business
operator has the ability to control the price, quantity, or other
trading conditions of commodities in the relevant market, or to
hinder or influence the ability of other business operators to enter
the relevant market." It can be seen from this that whether an
operator has a dominant market position depends first of all on
whether it has the ability to "control the trading conditions" and
"hinder and influence other business operators" in the relevant
market.
Methods for determining market dominance
Among the criteria for judging market dominance, the
determination of "relevant market" and "enterprise dominance" is
involved. In this regard, paragraph 2 of Article 12 of the Anti-
Monopoly Law states that "the relevant market as used in this Law
refers to the scope and geographical scope of commodities in
which undertakings compete for specific goods or services
(hereinafter collectively referred to as commodities) within a
certain period of time." On this basis, judging a company's
dominance depends on a variety of factors, including market
share. The main method is to investigate the factors that affect the
market dominance of the enterprise, make qualitative and
quantitative analysis of various indicators, and make a conclusion
about whether the enterprise has the dominance and dominance
ability.
Judgment of abuse of market dominance
Abuse of dominant market position refers to the behavior of an
enterprise with a dominant market position that uses its
dominant market position to endanger competition and harm
competitors, social public interests and other private interests.
Article 17, paragraph 1 of the Anti-Monopoly Law clearly
stipulates that business operators with a dominant market
position are prohibited from engaging in the following abuses of a
dominant market position: (1) selling goods at unfairly high prices
or purchasing commodities at unfairly low prices; (2) Selling
goods at a price below cost without justifiable reasons; (3)
refusing to trade with a trading counterparty without justifiable
reasons; (4) Without justifiable reasons, the trading counterparty
can only enter with it
or can only deal with its designated operators; (5) There is no
justifiable reason for tying in the sale of goods, or
attaching other unreasonable trading conditions to the
transaction; (6) Differentiating between trading counterparties
with the same conditions in terms of transaction prices and
other trading conditions without justifiable reasons; (7) Other
abuses of market dominance as determined by the anti-
monopoly law enforcement agency of the State Council.
Meaning of concentration of undertakings
Concentration of undertakings is a broad and vague concept, and
similar concepts include mergers or acquisitions, concentration of
economic power, mergers and acquisitions or mergers and
acquisitions. Its core refers to the integration of assets, business
and personnel between two or more enterprises in a certain way
or means.
Manifestations of concentration of undertakings
China's Anti-Monopoly Law uses the concept of "concentration of
undertakings", although it does not give its definition, but in the first
section
Article 20 provides for three types of concentration of
undertakings by way of enumeration: (1) merger of
undertakings; (2) the business operator obtains control over
other business operators by acquiring equity or assets; (3) The
undertaking obtains control over other undertakings through
contracts or other means, or is able to exert decisive influence
on other undertakings.
Notification of concentration of undertakings
The notification system for concentration of undertakings mainly
includes the time of declaration, the criteria for declaration, the
exceptions to declaration, and the documents and materials to be
declared.
Review of concentration of undertakings
The review of the concentration of undertakings mainly includes
two parts: one is the content of the review, and the other is the
procedure of the review.
Concentrations of undertakings that should be prohibited and
their exclusions
(1) Prohibition of concentration of "substantial reduction of
competition". (2) Exclusions to the prohibition of concentration of
undertakings.
Illegal acts in the course of the concentration of undertakings
(1) Carrying out the act of concentration without reporting to the
anti-monopoly law enforcement agency of the State Council. Article 1
of the Anti-Monopoly Law
Article 21 stipulates: "If the concentration of undertakings meets the
declaration standards prescribed by the State Council, the
undertakings shall do so in advance
Report to the anti-monopoly law enforcement agency of the State
Council, and where the declaration is not made, the concentration
shall not be implemented. ”
(2) Illegal implementation of concentration after declaration.
These acts include: first, the concentration of undertakings
before the decision of the State Council's anti-monopoly law
enforcement agency for preliminary review is made; second, the
conduct of concentration during further investigation by the
anti-monopoly law enforcement agency of the State Council;
third, the act of failing to implement the concentration in
accordance with the restrictive conditions imposed on the
concentration of undertakings by the anti-monopoly law
enforcement agency of the State Council; Fourth, the act of
concentration is carried out after the anti-monopoly law
enforcement agency of the State Council has made a decision to
prohibit the implementation of concentration.
Abuse of administrative power to eliminate or restrict
competition
1. Principles Provided. Abuse of administrative power to eliminate
or restrict competition refers to various acts of government
organs with administrative power and other organizations with
public affairs management functions in accordance with the law
to abuse administrative power to eliminate or restrict
competition.
2. Conduct and its elements. There are various ways of abusing
administrative power to eliminate or restrict competition, and the
Anti-Monopoly Law focuses on the following categories:
(1) Regional blockade. This refers to local governments and other
groups that have the function of managing public affairs in
accordance with the law
Acts of using administrative power to eliminate or
restrict competition for the benefit of the region.
China's Anti-Monopoly Law stipulates three
manifestations of regional blockade:
First, it restricts the free flow of goods between regions.
Second, exclude or restrict bidding and bidding.
Third, foreign investment or the establishment of branches are
excluded or restricted.
(2) Forced transactions. This refers to the use of administrative
power by central government departments, local governments,
and other organizations that have the function of managing
public affairs in accordance with the law to forcibly arrange
market trading activities, restrict and exclude competition, and
hinder fair trade.
(3) Compelling business operators to carry out monopolistic acts
that endanger competition. This refers to the fact that the
administrative manager compels the business operator to
engage in monopolistic behavior that is beneficial to the region
or department against the will of the business operator for the
benefit of the region or department.
(4) Formulating administrative regulations and administrative
orders that contain content that restricts competition. This refers
to the use of administrative power by administrative organs to
include clauses or contents that have the nature of restricting
competition by formulating administrative regulations and rules
or issuing decisions or orders with universal binding force, and
require the counterpart to enforce them in order to achieve the
purpose of restricting competition.
Anti-monopoly regulatory system
1. Anti-monopoly macro coordination body. The Anti-Monopoly
Law stipulates that the State Council shall establish an Anti-
Monopoly Committee to be responsible for organizing,
coordinating and guiding anti-monopoly work, and its main
responsibilities are: (1) to study and formulate relevant
competition policies; (2) Organize surveys, evaluate the overall
competition situation of the market, and publish evaluation
reports; (3) formulating and issuing anti-monopoly guidelines; (4)
Coordinate anti-monopoly administrative law enforcement work;
(5) Other duties as prescribed by the State Council.
2. Anti-monopoly law enforcement agencies. Since March 2018,
the newly established State Administration for Market Regulation
(SAMR) has become the agency responsible for unified anti-
monopoly enforcement, ending the situation of multiple
enforcement by the National Development and Reform
Commission, the State Administration for Industry and Commerce,
the Ministry of Commerce and other departments.
Antitrust Investigation Procedures
1. Initiation of the investigation. The initiation of an investigation
involves the initiation of an investigation into suspected
monopolistic and competitive acts by which entity and in what
manner.
2. Investigative measures. Anti-monopoly law enforcement agencies
may take the following measures to investigate suspected
monopolistic conduct:
(1) Enter the relevant premises for inspection. Inspection of
relevant premises means that the law enforcement personnel of
the anti-monopoly law enforcement agency may enter the
business premises of the business operator under investigation
or other relevant places to conduct on-the-spot searches and
inspections in accordance with the law.
(2) Ask the relevant personnel. Questioning of relevant
personnel means that the law enforcement personnel of the
anti-monopoly law enforcement agency may question the
business operator, interested parties, or other relevant units or
individuals under investigation in accordance with the law, and
require them to explain the relevant circumstances.
(3) Consult and copy relevant information. The law enforcement
personnel of the anti-monopoly law enforcement agency may, in
accordance with the law, obtain relevant documents, agreements,
accounting books, business correspondence, electronic data files,
materials, etc., by means such as inspecting, copying, or requesting
the business operator, interested parties, or other units and
individuals under investigation.
(4) Seizure of relevant evidence. Seizure of relevant evidence
means that when the perpetrator is suspected of major
violations of the law and there is a danger of destroying the
evidence, the law enforcement personnel of the anti-monopoly
law enforcement agency may seal and seize the evidence
materials suspected of monopolistic conduct in accordance with
the law.
(5) Check the bank account of the operator. Inquiry into the
bank account of the business operator means that the law
enforcement personnel of the anti-monopoly law enforcement
agency may, if necessary, make inquiries into the bank accounts
of the business operators in accordance with the law to
understand their property status and profits, and determine
whether they constitute a violation of the law.
Obligations of the Investigator and the Respondent
1. The obligation of the investigator refers to the investigation of
suspected monopolistic behavior by the law enforcement officers of
the anti-monopoly law enforcement agency
The following obligations shall be undertaken in accordance with the
law in the process:
(1) Bear the obligation of confidentiality of trade secrets learned in
the course of law enforcement; (2) Safeguard the stated opinions of
the business operator and interested parties under investigation, and
the facts and reasons put forward by the business operator and
interested parties under investigation
evidence for verification; (3) After investigation and verification
of the suspected monopolistic behavior, if it is found that it
constitutes a monopolistic behavior, a decision shall be made in
accordance with the law and may be announced to the public.
2. Obligations of the person being investigated. The business
operator, interested party, or other relevant units or individuals
under investigation suspected of monopolistic conduct shall bear
the obligation to cooperate in accordance with the law in the
course of the anti-monopoly law enforcement agency's
performance of its investigative duties, and shall not refuse or
obstruct the investigation by the anti-monopoly law enforcement
agency.
Suspension, termination, and resumption of investigations
1. Suspension of investigation means that the anti-monopoly law
enforcement agency may decide to temporarily suspend the
investigation if the business operator under investigation
undertakes to take specific measures to eliminate the
consequences of the act within the time limit approved by the
anti-monopoly law enforcement agency before the anti-monopoly
law enforcement agency has already initiated the investigation
procedure but has not yet concluded.
2. Termination of Investigation. After suspending the
investigation, if the undertaking fulfills its commitment and
eliminates the consequences of the monopolistic act, the anti-
monopoly law enforcement agency may decide to terminate the
investigation, that is, the investigation procedure against the
person under investigation will be concluded.
3. Investigation resumption refers to a procedure whereby the
anti-monopoly law enforcement agency resumes the
investigation after the investigation is suspended and certain
circumstances are provided for by law.
Legal liabilities related to monopoly agreements
1. Administrative Liability. If a business operator violates the
provisions of the Anti-Monopoly Law by reaching and
implementing a monopoly agreement, the anti-monopoly law
enforcement agency shall order it to stop the illegal acts,
confiscate the illegal gains, and impose a fine of between 1% and
10% of the sales of the previous year; If the monopoly agreement
reached has not been implemented, a fine of not more than
500,000 yuan may be imposed. Where a business operator
voluntarily reports to the anti-monopoly law enforcement agency
the circumstances surrounding the conclusion of a monopoly
agreement and provides important evidence, the anti-monopoly
law enforcement agency may, at its discretion, reduce or waive
the punishment of the business operator. The second is the
responsibility of industry associations, if an industry association
violates the provisions of the Anti-Monopoly Law by organizing
business operators in their own industry to reach a monopoly
agreement, the anti-monopoly law enforcement agency may
impose a penalty of less than 500,000 yuan
fines; where the circumstances are serious, the registration
management organs for social groups may revoke registration in
accordance with law. It can be seen that the administrative liability
of monopoly agreements mainly takes the following forms:
(1) Order to stop the illegal act. That is, the operator was ordered to
stop implementing the monopoly agreement.
(2) Confiscation of illegal gains. That is, the illegal income
obtained by the business operator as a result of the
implementation of the monopoly agreement shall be
confiscated.
(3) Cancellation of registration. This is for the implementation of
monopoly agreements by trade associations.
(4) Fines. In the determination of a monopoly agreement, it is
sufficient for the undertaking to carry out the act of reaching the
agreement
If it is found to constitute an illegality, there is no need to consider
the elements of the result.
2. Civil Liability. If a business operator commits monopolistic
conduct and causes losses to others, it must bear the
corresponding legal consequences in accordance with the law.
Article 50 of the Anti-Monopoly Law stipulates that: "Where a
business operator commits monopolistic acts and causes losses
to others, it shall bear civil liability in accordance with the law." ”
Legal liability for abuse of dominant market position
1. Administrative liability for abuse of dominant market position.
According to Article 47 of the Anti-Monopoly Law, if a business
operator violates the provisions of this Law and abuses its
dominant market position, the anti-monopoly law enforcement
agency may order it to stop the illegal acts, confiscate the illegal
gains, and impose a fine of not less than 1% but not more than
10% of the sales of the previous year.
2. Civil liability for abuse of dominant market position. According
to Article 50 of the Anti-Monopoly Law, if a business operator
commits monopolistic acts and causes losses to others, it shall
bear civil liability in accordance with the law.
Legal liability for concentration of undertakings
1. Administrative liability for concentration of undertakings.
Article 48 of the Anti-Monopoly Law stipulates three types of
administrative penalties imposed by the anti-monopoly law
enforcement agency of the State Council for violations of this
Law:
(1) Order to stop the implementation of centralization. Ordering
the suspension of the illegal concentration of undertakings is
the most direct and effective means to prevent and avoid the
adverse consequences of the illegal acts.
(2) Order the disposal of shares or assets within a time limit and
the transfer of business within a time limit. In the case of an
illegal concentration of undertakings that has already been
completed, corresponding measures must be taken to restore
the status quo ante before the concentration of undertakings, so
as to prevent the emergence or strengthening of a dominant
market position due to the concentration of undertakings. When
necessary, it may be compulsorily split the business operators
that have already been concentrated. In the case of a
concentration of undertakings carried out through contracts,
technical control, appointment of senior executives, etc., it shall
be ordered to terminate the contract, revoke the appointment,
or take other necessary measures.
(3) Fines. While taking effective measures to restore the illegally
implemented concentration of undertakings to the pre-
concentration state, the anti-monopoly law enforcement agency
of the State Council may also impose penalties on the
undertakings that illegally carry out the concentration according
to the circumstances
A fine of up to $500,000.
2. Civil liability for concentration of undertakings. If a business
operator commits monopolistic conduct and causes losses to
others, it shall bear the liability for compensation in accordance
with the law in addition to the corresponding administrative
liability.
Legal liability for abusing administrative power to eliminate
or restrict competition
1. Administrative accountability of institutions that violate the law.
Paragraph 1 of Article 51 of the Anti-Monopoly Law stipulates that:
"Where an administrative organ or an organization authorized by
laws or regulations to administer public affairs abuses its
administrative power to eliminate or restrict competition, the
higher authority shall order it to make corrections; The directly
responsible managers and other directly responsible personnel are
to be given sanctions in accordance with law. The anti-monopoly
law enforcement agency may submit a recommendation to the
relevant higher-level authority on handling the matter in
accordance with law. Accordingly, the legal liability for abuse of
administrative power to restrict competition mainly includes the
following aspects:
(1) Order corrections. "Ordering corrections" refers to having a
higher-level organ order corrections for acts that abuse
administrative power to restrict competition.
(2) Individual administrative responsibility. Individual
administrative responsibility refers to the punishment of
managers and other directly responsible personnel who are
directly responsible for abusing administrative power to restrict
competition in accordance with law.
(3) The anti-monopoly law enforcement agency shall make
recommendations to the relevant higher-level authorities on the
handling of the abuse of administrative power to restrict
competition. Due to the particularity of the functions and status
of anti-monopoly law enforcement agencies, the relevant higher-
level authorities should attach importance to their suggestions
based on the facts and the law that require them to be handled
in accordance with law.
2. Regulation of abstract administrative acts. Article 37 of the
Anti-Monopoly Law stipulates that "an administrative authority
shall not abuse its administrative power to formulate regulations
that contain content that excludes or restricts competition." "This
article addresses abstract administrative acts that restrict
competition.
Abstract administrative acts refer to the formulation of universally
binding norms for unspecified persons or things
The behavior of the file.
Legal liability for obstructing anti-monopoly law enforcement
1. Punishment for relevant entities' violations of the obligation to
cooperate. The so-called violation of the obligation to cooperate by
the relevant entity refers to the refusal of the business operator,
interested party or other relevant units or individuals under
investigation to apply to the anti-monopoly
law enforcement agencies provide relevant materials or information, or
provide false materials or information, or conceal, destroy,
Acts of transferring evidence, and other acts of refusing or
obstructing the investigation of anti-monopoly law enforcement
agencies.
2. Penalties for dereliction of duty by staff of anti-monopoly law
enforcement agencies. Article 54 of the Anti-Monopoly Law
stipulates that: "Where a staff member of an anti-monopoly law
enforcement agency abuses his power, neglects his duty, commits
irregularities for personal gain, or divulges trade secrets learned in
the course of law enforcement, which constitutes a crime, he shall
be investigated for criminal liability in accordance with law; where
a crime is not constituted, sanctions are to be given in accordance
with law.
Section 2:
Overview of the
Anti-Unfair
Competition Law:
The Anti-Unfair
Competition Law
The Anti-Unfair Competition Law is a society that regulates the
regulation of unfair competition in the process of market competition
A general term for the legal norms of the relationship.
The so-called acts of unfair competition refer to the conduct of
business operators in violation of legal provisions, disrupting the
order of market competition, and harming the lawful rights and
interests of other business operators or consumers.
Commercial Confusion
Commercial confusion refers to the conduct of business operators
who make false representations, explanations or promises about
their own goods or services by various false means in market
business activities, or improperly use the fruits of others'
intellectual labor to promote their own goods or services, causing
misunderstanding among users or consumers, disrupting market
order, and harming the interests of competitors or consumers in
the same industry.
1. Conduct determination.
According to Article 6 of the Anti-Unfair Competition Law, a business
operator commits one of the following acts, which leads to misleading
identification
If it is another person's goods or has a specific connection with
another person, it is an act of commercial confusion:
(1) Confusion with the product identification of others.
Unauthorized use of marks that are identical or similar to the
names, packaging, decorations, and so forth of goods that have
a certain degree of influence on others, leading people to
mistakenly believe that they are the goods of others or that
there is a specific connection with others, constitutes an act of
unfair competition.
Marks with the following circumstances shall generally be deemed
not to have distinctive features to distinguish the source of the
goods: (1) the generic name, graphics, and model number of the
goods; (2) It only directly indicates the quality, main raw
materials, functions, uses, and weight of the product.
identification of quantities and other characteristics; (3) the shape
that is produced only by the nature of the commodity itself, the
shape of the commodity that is necessary to obtain a technical
effect, and the shape that gives the commodity substantial value;
(4) Other signs that lack distinctive features.
(2) Confusion with another person's name or name. Unauthorized
use of other people's influential enterprise names (including
abbreviations, trade names, etc.), names of social organizations
(including abbreviations, etc.), names (including pen names, stage
names,
Translation of names, etc.), which leads people to mistakenly
believe that it is another person's goods or has a specific
connection with others, constitutes an act of unfair competition.
(3) Confusion with other people's Internet commercial marks.
Pursuant to Article 6 of the Anti-Unfair Competition Law
According to Paragraph 3, unauthorized use of the main body of a
domain name, website name, web page, etc., which has a certain
influence on others, leading people to mistakenly believe that they
are the goods of others or have a specific connection with others,
constitutes an act of unfair competition.
(4) Other acts of commercial confusion. Where business
operators use "influential" marks other than those mentioned
above in the above three circumstances without authorization,
which is sufficient to mislead people into believing that they are
the goods of others or have a specific connection with others, or
misleading the public by using the registered trademarks or
unregistered well-known trademarks of others as trade names in
the name of the enterprise, it may be found to be an act of
commercial confusion.
Commercial bribery
Commercial bribery refers to the act of a business operator
secretly giving property or other benefits to the relevant
personnel of the other party or other relevant persons who can
influence the transaction in order to seek transaction
opportunities or competitive advantages. There are many forms
of commercial bribery. For a long time in China, the phenomenon
of seeking trading opportunities or competitive advantages in the
name of rebates, discounts, commissions, consulting fees,
referral fees, etc. is very common.
False advertising
"False publicity" refers to the use of advertisements or other
methods by business operators to mislead people about the
quality, performance, composition, use, and origin of products.
Selling goods through advertising or other means is the most
common means of promotion in modern society. However, all
kinds of false advertisements and other false propaganda may
disrupt the public and be harmful to the socialist spiritual
civilization; or directly mislead users and consumers to make
wrong consumption decisions, causing a large number of social
problems; or infringe on other business operators, especially in
the same industry
The legitimate interests of the opponent cause chaos in the order of
fair competition. Both the Advertising Law and the Anti-Unfair
Competition Law regulate such acts as illegal acts that must be
prohibited.
Infringement of trade secrets
Trade secrets refer to technical information and business
information that is not known to the public, has commercial
value, and has been kept confidential by the right holder. Trade
secrets are the crystallization of the fruits of the rights holder's
labor, and the right to trade secrets is an intangible property right
owned by the right holder, so it is necessary for the Anti-Unfair
Competition Law to prohibit the infringement of trade secrets as
an act of unfair competition. In China, trade secrets are one of the
objects of intellectual property rights stipulated in the Civil Code.
In any of the following circumstances, it may be found that the
relevant information is known to the public: (1) the information
is common knowledge or industry practice in the field to which it
belongs; (2) The information only involves the size, structure,
materials, and simple combination of components of the
product, and can be directly obtained by relevant personnel in
the field by observing the listed product; (3) The information has
been publicly disclosed in public publications or other media; (4)
The information has been disclosed through public reports,
exhibitions, etc.; (5) The relevant persons in the field can obtain
the information from other public channels.
Improper prize sales
Improper prize sales refers to the conduct of business operators
who actually use deception or other improper means to harm the
interests of users and consumers, or harm the legitimate rights
and interests of other business operators in the name of providing
rewards (including money, in-kind, additional services, etc.) when
selling goods or providing services.
Prize sales are an effective means of promotion, which can be
roughly divided into two ways: one is a bonus prize sale that
rewards all buyers, and the other is a lottery prize sale that
rewards some buyers.
Defamation of goodwill
Defamation of goodwill refers to the act of fabricating or
disseminating false or misleading information to damage the
business reputation and product reputation of competitors,
thereby weakening its competitiveness.
Goodwill is a comprehensive positive evaluation of the reputation of
the market operator by the public.
The main points of defamation of goodwill are as follows: (1) If
the subject of the act is the operator in the market business
activities, and other business operators and units or individuals
who are not business operators are instructed by the business
operators to engage in acts of defamation of goodwill, they may
constitute a joint tortfeasor of unfair competition.
(2) The business operator has committed acts of defamation of
goodwill, that is, fabricating or disseminating false or misleading
information, or disseminating false or misleading information
fabricated by others, damaging the business reputation and
product reputation of competitors.
and (3) the defamatory conduct is directed at one or more specific
competitors.
(4) The purpose of the business operator's slander of other
competitors is to damage the goodwill of the other party, and it
is obvious that its subjective state of mind is intentional.
Acts of unfair competition on the Internet
The Anti-Unfair Competition Law, amended in 2017, adds a
clause prohibiting acts of unfair competition on the Internet in
accordance with the objective needs of anti-unfair competition
in the Internet field, stipulates that business operators shall not
use technical means to engage in acts that affect users' choices
and interfere with the normal operation of other business
operators in the Internet field, and specifically stipulates the
acts that should be prohibited.
The main points of acts of unfair competition on the Internet are
as follows: (1) The subject of the act is the business operator
who uses the Internet to engage in production and business
activities, including the business operator who provides the
Internet platform (such as trading platforms, information
platforms, social platforms, etc.) and the business operator who
uses the Internet platform of others to provide products
(physical goods, information products, investment products and
services, products, and services). (2) The target of the conduct
is another business operator with which the actor has an actual
or potential competitive relationship on the network. (3) The
characteristics of the conduct are obstructing or destroying the
normal operation of network products or services lawfully
provided by other business operators. The means may be
technical
Technical, commercial, or a combination of the two. These means
may constitute other acts of unfair competition, such as
commercial confusion, false advertising, or defamation of
goodwill.
Administrative supervision system
1. Macro coordination mechanism.
2. Administrative law enforcement agencies.
Supervise and inspect the investigative measures of the
department
Article 13 of the Anti-Unfair Competition Law stipulates that the
supervision and inspection department may take the following
measures to investigate the suspected act of unfair competition: (1)
enter the business premises suspected of acts of unfair competition
to conduct inspections (; 2) Questioning the business operators,
interested parties, and other relevant units and individuals under
investigation, and requesting them to explain the relevant
circumstances or provide other materials related to the conduct
under investigation; (3) Inquire and copy agreements, account
books, bills, documents, records, business correspondence and other
materials related to suspected acts of unfair competition;
(4) Sealing or seizing property related to suspected acts of unfair
competition; (5) Inquire into the bank accounts of business
operators suspected of acts of unfair competition.
Whistleblowing system
Article 16 of the Anti-Unfair Competition Law stipulates that any
unit or individual has the right to report suspected acts of unfair
competition to the supervision and inspection department, and
the supervision and inspection department shall promptly handle
the report in accordance with the law after receiving the report.
Legal liability for violating the Anti-Unfair Competition Law
(—) Types of conduct that violates the Anti-Unfair Competition Law
The Anti-Unfair Competition Law regulates all kinds of competitive
behaviors, and in addition to adjusting the competitive
relationship between business operators, it also involves the
adjustment of the relationship between the supervision and
inspection departments and business operators when exercising
the right to safeguard competition and market management.
Therefore, the following acts are contraventions of the Act:
1. Acts of unfair competition, i.e., the seven types of acts provided for
in Chapter II of the Anti-Unfair Competition Law.
2. Acts that obstruct supervision and inspection, that is, acts of
refusing or obstructing the supervision and inspection
departments from performing their investigation duties in
accordance with the Anti-Unfair Competition Law as provided for
in Article 28 of the Anti-Unfair Competition Law.
3. Violations of this Law by supervision and inspection personnel,
i.e., abuse of power, dereliction of duty, favoritism, or disclosure
of trade secrets learned during the investigation by the staff of
the supervision and inspection department as provided for in
Article 30 of the Anti-Unfair Competition Law.
(2) Legal liability as provided for in the Anti-Unfair Competition Law
1. Civil Liability. In order to protect the legitimate competition
rights of legitimate business operators, Article 17 of the Anti-Unfair
Competition Law stipulates that if a business operator violates the
provisions of this Law and causes damage to others, it shall bear
civil liability in accordance with the law.
2. Administrative Liability. The market supervision and
administration departments at all levels are the supervision and
inspection departments stipulated in the Anti-Unfair Competition
Law, and have administrative law enforcement functions. Each
act of unfair competition provided for in Chapter II of the Law has
corresponding administrative sanctions in Chapter IV.
3. Criminal liability. It is a common practice in the competition
laws of various countries to impose criminal penalties for acts of
unfair competition with serious circumstances.
Chapter II Consumer Law
Section 1: Law on the Protection of Consumer Rights and
Interests
The concept of consumer protection law
The Law on the Protection of Consumer Rights and Interests
regulates the social relations arising from the protection of citizens'
consumer rights and interests
A general term for legal norms.
Who is covered by the Consumer Rights Protection Act
According to Articles 2, 3 and 62 of the Law on the Protection of
Consumer Rights and Interests, the objects to which the Law applies
can be understood from the following three aspects:
1. The Law on the Protection of Consumer Rights and Interests
shall apply to the purchase or use of goods or services by
consumers who need to purchase or use goods or receive
services for daily consumption.
2. Where proprietors provide consumers with the goods they produce
or sell, or provide services, the "Consumer Rights" applies
Protection of Benefits.
3. When farmers purchase and use means of production directly
used in agricultural production, they shall refer to the "Law on
the Protection of Consumer Rights and Interests".
Consumers' Rights
The rights of consumers refer to the sum of the rights enjoyed by
consumers in accordance with the law in consumer activities. The Law
on the Protection of Consumer Rights and Interests establishes 10
independent and interrelated rights for consumers.
1. The right to security. Consumers enjoy personal and property
safety when purchasing and using goods and receiving services
The right not to be harmed.
2. The right to know the truth. Consumers have the right to know
the truth about the goods they buy or use or the services they
receive.
3. The right to choose. Consumers have the right to choose
goods and services independently, including: (1) the right to
independently choose the operators who provide goods or
services; (2) Have the right to choose the variety of goods or
services independently; (3) have the right to decide at their own
discretion whether to purchase any kind of goods or whether to
accept any kind of service; (4) The right to compare, identify and
select goods or services. Proprietors must not interfere in any
way with consumers' exercise of their right to make their own
choices.
4. Right to fair dealing. Fair trade means that the transaction
between the operator and the consumer should achieve a fair
result on the basis of equality.
5. Right to Indemnification. According to Article 11 of the Law on
the Protection of Rights and Interests of Consumers, consumers
have the right to receive compensation in accordance with the
law if they suffer personal or property damage due to the
purchase or use of goods or services.
6. Right of association. Consumers enjoy the right to establish social
organizations to protect their legitimate rights and interests in
accordance with the law.
7. Access to relevant intellectual property rights. Consumers have
access to knowledge about consumption and consumer protection
rights.
8. Right to be respected. Consumers enjoy the right to have their
personal dignity and national customs respected when they
purchase and use goods and receive services.
9. The right to supervise and criticize. Consumers have the right
to supervise goods and services and to protect their rights and
interests.
10. Right to Personal Information. It is also known as consumer
privacy, which refers to the right of consumers to avoid illegal
collection and disclosure of all private information such as name,
gender, occupation, education, residence, contact information,
marital status, kinship, property status, blood type, medical
history, and consumption habits.
Obligations of the operator
In the consumer legal relationship, the consumer's rights are the
obligations of the operator. In order to effectively protect the
rights and interests of consumers and restrain the business
behavior of business operators, the Law on the Protection of
Consumer Rights and Interests not only stipulates the rights of
consumers, but also stipulates the obligations of business
operators.
1. Obligation to operate in accordance with the law and operate in
good faith. Proprietors providing goods and services to consumers
shall comply with the law,
Statutory obligations.
2 Obligation to be supervised. Proprietors shall listen to
consumers' opinions on the goods or services they provide, and
accept consumers' supervision.
3. Obligation to ensure safety. Proprietors shall ensure that the
goods or services they provide meet the requirements for
safeguarding the safety of persons and property.
4. Obligation to provide truthful information. Proprietors shall
truthfully and comprehensively provide consumers with
information on the quality, performance, use, and expiration date
of goods or services, and must not make false or misleading false
publicity.
5. Obligation to indicate the real name and marking. Proprietors shall
indicate their true names and marks.
6. Obligation to issue vouchers or documents. Proprietors
providing goods or services shall issue invoices and other proof
of purchase or service documents to consumers in accordance
with state regulations or commercial practices; Where consumers
ask for invoices or other purchase vouchers or documents,
business operators must issue them.
7. Obligation to Guarantee Quality. The operator is obliged to
guarantee the quality of goods and services.
8. Fulfill the obligation of return, replacement and repair. This
obligation is divided into two types of situations: one is provided by
the operator
In the event that the goods or services do not meet the quality
requirements, if there are national regulations or the agreement of
the parties, the business operator is obliged to handle the return or
replacement in accordance with the requirements of the consumer,
or the repairer requests to perform the obligation of replacement or
repair. Second, regardless of whether the goods provided by the
operator have quality problems, as long as they are sold by the
Internet, television, telephone, mail order, etc., consumers have the
right to return the goods within 7 days from the date of receipt
without giving a reason. This is known as a "no reason to return".
However, the consumer is custom-made
9. Obligation to use the standard clauses correctly. The standard
clauses are unilaterally drafted by the business operator, and the
consumer can only express acceptance or non-acceptance, but
cannot negotiate with them and change the trading conditions of
their contents.
10. The obligation not to infringe on the personality rights of
consumers. Business operators must not insult or slander
consumers, search consumers' bodies or the items they carry,
and must not infringe on consumers' personal freedom.
11. Obligation to respect consumers' freedom of information.
The first is to protect consumers' personal information, mainly in
two aspects: First, when collecting and using consumers'
personal information, the principles of legality, legitimacy and
necessity shall be followed, and the purpose, method and scope
of information collection and use shall be clearly stated, and the
consent of consumers shall be obtained. Second, the personal
information of consumers that has been mastered must be kept
strictly confidential, and must not be disclosed, sold, or illegally
given to others
At the same time, necessary measures shall be taken to ensure
the security of information, and timely remedial information in
the event of information leakage or loss.
The state protects the legitimate rights and interests of
consumers
The State has adopted a series of institutional measures to protect
the legitimate rights and interests of consumers.
1. Consumer participation in the legislative process. The state
shall hear the opinions of consumers, consumer associations, and
other organizations when formulating laws, regulations, rules,
and mandatory standards related to consumer rights and
interests.
2. The use of government functions. In protecting the lawful
rights and interests of consumers, people's governments at all
levels should mainly play two functions: first, the leadership
function, that is, organizing, coordinating, and urging the relevant
administrative departments to do a good job and implement the
duty of protecting the legitimate rights and interests of
consumers; The second is the supervision function, which focuses
on preventing the occurrence of acts that endanger the personal
and property safety of consumers, and promptly stopping acts
that endanger the personal and property safety of consumers.
3. Responsibilities of the relevant administrative departments. All
levels of market regulation department and other relevant
administrative departments shall, in accordance with the
provisions of laws and regulations, and within the scope of their
respective duties, employ measures to protect the lawful rights
and interests of consumers.
4. Duties of the Judiciary. The first is to punish crimes. Relevant
state organs shall, in accordance with the provisions of laws and
regulations, punish illegal and criminal conduct by business
operators that infringe upon the lawful rights and interests of
consumers in the provision of goods and services. The second is
to deal with disputes. The people's courts shall take measures to
facilitate consumers to file lawsuits. Disputes over consumer
rights and interests that meet the requirements for litigation
under the Civil Procedure Law must be accepted and tried in a
timely manner.
Consumer organizations
1. The nature of the consumer organization. Consumers'
associations and other consumer organizations are social
organizations established in accordance with the law to conduct
social supervision of goods and services and to protect the
legitimate rights and interests of consumers. Consumer
organizations are public interest social organizations, and must
not engage in commodity business or for-profit services, and
must not recommend goods and services to consumers by
collecting fees or other methods for profit-making.
2. Responsibilities of consumer organizations. Consumer
associations perform the following public welfare duties: (1) to
provide consumers with consumer information and consulting
services, improve consumers' ability to protect their legitimate
rights and interests, and guide civilized, healthy, resource-saving
and environment-friendly consumption patterns; (2) Participate in
the formulation of laws, regulations, rules and mandatory
standards related to consumer rights and interests; (3)
Participate in the supervision and inspection of goods and
services by relevant administrative departments; (4) Reflect,
inquire and make suggestions to relevant departments on issues
related to the legitimate rights and interests of consumers; (5)
Accept consumer complaints, and investigate and mediate
complaints; (6) Where the complaint involves the quality of goods
and services, a qualified evaluator may be entrusted for
evaluation, and the evaluator shall inform the appraisal opinion;
(7) Supporting the injured consumer to file a lawsuit or filing a
lawsuit in accordance with the Law on the Protection of
Consumer Rights and Interests for acts that harm the legitimate
rights and interests of consumers; (8) Expose and criticize
behaviors that harm the legitimate rights and interests of
consumers through mass media. People's governments at all
levels shall provide necessary funding and other support to
consumer associations in performing their duties.
3. Public interest litigation by consumer organizations. The China
Consumers' Association and the consumer associations
established in provinces, autonomous regions, and municipalities
directly under the Central Government may file lawsuits in the
people's courts against acts that infringe upon the lawful rights
and interests of a large number of consumers.
Dispute Resolution
1. Negotiate a settlement with the operator.
2. Request mediation by consumer associations or other lawfully
established mediation organizations.
3. Lodge a complaint with the relevant administrative department.
4. Request for Arbitration.
5. File a lawsuit with the people's court.
6. Consumer Public Interest Litigation.
A number of special rules for dispute resolution
1. The seller's obligation to pay in advance.
2. Joint and several liability of producers and sellers.
3. When consumers receive services, when their legitimate rights
and interests are damaged, they may claim compensation from the
service provider.
4. The changed enterprise shall still be liable for compensation.
5. Liability of the business license holder and the lessor.
6. Special responsibilities of trade fair organizers and counter
lessors.
7. Responsibilities of the Online Trading Platform Provider.
8. Liability for false advertising or other false advertising.
Legal liability for violating the Consumer Rights Protection
Act
The Law on the Protection of Consumer Rights and Interests, with
its unique value scale, stipulates that consumers enjoy 10 rights
and business operators have 11 obligations, so that the interests
of the originally strong and weak disparities tend to be balanced.
When the rights and interests of consumers cannot be exercised
or are harmed due to reasons attributable to business operators,
the Law on the Protection of Consumer Rights and Interests
stipulates that corresponding measures may be taken to punish
the violators. Chapter 7 of the Law on the Protection of Consumer
Rights and Interests distinguishes between different situations of
acts infringing on the legitimate rights and interests of
consumers, and stipulates that business operators shall bear civil,
administrative and criminal liabilities separately or at the same
time.
Civil Liability
1. General Provisions. In any of the following circumstances,
business operators providing goods or services shall, except as
otherwise provided by the Law on the Protection of Consumer
Rights and Interests, bear civil liability in accordance with the
provisions of other relevant laws and regulations:
(1) The goods or services are defective; (2) It does not have the
performance that the commodity should have and is not
explained when it is sold; (3) It does not meet the commodity
standards indicated on the commodity or its packaging; (4) It
does not conform to the quality condition indicated by the
commodity description, physical samples, etc.; (5) Production
Commodities that have been eliminated by the state or goods
that have become invalid or deteriorated are sold; (6) The
quantity of goods sold is insufficient; (7) The content and cost of
the service violate the agreement; (8) Deliberately delaying or
unreasonably refusing a consumer's request for repair, rework,
replacement, return, replenishment of the quantity of goods,
refund of payment for goods and services, or compensation for
losses; (9) Other circumstances that harm the rights and
interests of consumers as provided for by laws and regulations.
2. Special Provisions. In view of the outstanding problems
existing in practice, the Law on the Protection of Consumer
Rights and Interests also has the following special provisions on
civil liability for infringement of the legitimate rights and interests
of consumers:
(1) Civil liability for personal injury.
(2) Civil liability for infringement of personal dignity and personal
freedom.
(3) Civil liability for property damage.
and (4) punitive damages for the fraudulent acts of the operator.
(5) Aggravated liability for intentional infringement.
(6) Responsibility for the provision of goods or services by way of
advance payment.
(7) Responsibility for return after administrative investigation.
Administrative Responsibility
1. Circumstances in which administrative responsibility should be
assumed. In any of the following circumstances, the business
operator shall bear administrative responsibility: (1) the goods or
services provided do not meet the requirements for ensuring the
safety of persons and property; (2) Doping or adulteration in the
goods, passing off fake goods as genuine, shoddy goods, or passing
off substandard goods as qualified goods; (3) Producing
commodities that have been eliminated by the state or selling
invalid or deteriorated commodities; (4) Falsifying the origin of
goods, forging or fraudulently using the factory name and address
of others, tampering with the production date, forging or
fraudulently using quality marks such as certification marks; (5) The
goods sold should be inspected or quarantined but not inspected or
quarantined, or the results of inspection or quarantine are falsified;
(6) Making false or misleading publicity about goods or services; (7)
Refusal or delay of the relevant administrative department to order
the sale of defective goods or services
measures such as sales, warnings, recalls, harmless treatment,
destruction, or suspension of production or services; (8)
Deliberately delaying or unreasonably refusing a consumer's
request for repair, rework, replacement, return, replenishment of
the quantity of goods, refund of payment for goods and services,
or compensation for losses; (9) Infringing on consumers' personal
dignity, infringing on consumers' personal freedom, or infringing
on consumers' right to have their personal information protected
in accordance with law; (10) Other circumstances provided for by
laws and regulations that shall be punished for harming
consumers' rights and interests.
2. Administrative penalties.
(1) Basis for punishment.
(2) Punishment method
(3) Civil liability takes precedence.
(4) Administrative reconsideration and litigation.
criminal responsibility
Criminal liability shall be pursued in accordance with law for the
following acts in violation of the Law on the Protection of
Consumer Rights and Interests: (1) Business operators provide
goods or services in violation of the provisions of this Law,
infringing on the legitimate rights and interests of consumers,
constituting a crime; (2) Using violence, threats or other methods
to obstruct the staff of the relevant administrative departments
from performing their duties in accordance with the law (if
violence or threats are not used, the public security organs shall
punish them in accordance with the provisions of the "Public
Security Administration Punishment Law"); (3) Dereliction of duty
by employees of state organs or cover-up of business operators'
infringement of the lawful rights and interests of consumers
The section is serious and constitutes a crime.
Section 2: Product Quality Law
Overview of the Product Quality Act
(1) The object of adjustment of the Product Quality Law
The Product Quality Law is a legal norm that adjusts the relationship
between product quality supervision and management and the
relationship between product quality responsibility
A general term for this. The product quality law in a broad sense
includes all laws and regulations that regulate product quality
and product liability relationships. The product quality law in a
broad sense includes all laws and regulations that regulate
product quality and product liability relationships. What we
usually refer to as the Product Quality Law refers to the Product
Quality Law in the narrow sense, which is February 1993
The Product Quality Law was promulgated on
September 22 and came into force on September
1, 1993. (2) The legislative purpose of the
Product Quality Law
Article 1 of the Product Quality Law clearly states the legislative purpose
of the Law, which can be justified in the following aspects
Untie:
1. Strengthen quality supervision and management and improve
product quality.
2. Clarify the responsibility for product quality. In order to
improve the level of product quality, it is necessary to clarify the
responsibilities of each link of development, production and sales
for product quality; To manage and supervise product quality, it
is necessary to distinguish the product quality responsibilities of
relevant government departments, quality inspection
intermediaries and various enterprises.
3. Protect the legitimate rights and interests of consumers and
maintain social and economic order. The fundamental purpose of
strengthening management and clarifying responsibilities is to
protect the legitimate rights and interests of consumers, promote
a virtuous cycle of production, consumption, and reproduction,
and ensure the normal order of the social economy.
Product standards
The concept of the product. The term "product" in the "Product
Quality Law" refers to the product that has been processed and
made for sale. Therefore, articles that are natural and not
intended for sale are not products under the law. Product standard
is the technical regulation of the product, which is the main basis
for judging whether the product is qualified or not. Article 12 of
the Product Quality Law stipulates that the quality of products
shall be inspected and qualified.
The so-called qualified means that the quality of the product
meets the specific indicators specified in the standard. China's
current standards are divided into national standards, industry
standards, local standards and enterprise standards that have
been recorded.
Product quality
Product quality. The International Organization for
Standardization defines product quality as the sum of the
characteristics and other characteristics of a product that meet
the specified or potential needs.
The so-called sum refers to the safety, applicability, reliability,
maintenance, effectiveness, economy and other quality
indicators of the product specified in the standard, which reflects
and represents the quality status of the product.
Product quality responsibility
Product quality responsibility refers to the legal consequences
that should be borne by the producer, seller and person directly
responsible for the product quality in violation of the product
quality obligations stipulated in the Product Quality Law.
In the following three circumstances, it can be determined that the
above-mentioned entities should bear the responsibility for product
quality:
1. Breach of Implied Warranties. The implied warranty obligation
refers to the mandatory requirements of laws and regulations for
product quality, and even if there is a contractual agreement
between the parties, this obligation cannot be exempted or
restricted. It requires that the products produced and sold should
have safety and the performance expected by the general public,
so it is a basic requirement for the intrinsic quality of the product.
2. Breach of express warranty obligations. The express warranty
obligation refers to the explanation or statement made by the
producer or seller to the consumer about the quality of the product
in various public ways. Once the producer or seller clearly indicates
the quality standards on which the product is based and meets in
the above way, an express warranty obligation arises.
3. The product is defective. Product defect refers to the
unreasonable danger that the product endangers the safety of
persons and other people's property; If the product has national
standards and industry standards for protecting human health
and personal and property safety, it means that it does not meet
the standards.
Product quality supervision
(1) The government's macro management of product quality
The Product Quality Law puts forward clear and specific
requirements for the government's macro-management function of
product quality:
1. Strengthen overall planning and organizational leadership.
2. Encouragement and rewards.
3. Use legal means to
strengthen personal
responsibility. (2)
Administrative supervision of
product quality
1. Product quality administrative supervision department.
(1) The market supervision and administration department of the
State Council shall be in charge of the national product quality
supervision.
(2) The functions and powers of the market supervision and
administration department.
2. The main content of the product quality supervision and
management system. According to the provisions of the Product
Quality Law, the product quality supervision and management
system is mainly composed of the following contents:
(1) Product quality spot check system. This system is one of the
basic systems of the state for product quality supervision.
(2) Quality status information release system.
(3) Enterprise quality system certification system and product
quality certification system.
(3) Social supervision of product quality
1. The right of individual citizens to supervise.
2. The right of supervision of social organizations.
3. The public's right to report.
(4) Product quality inspection and certification institutions
1. Product quality inspection institutions refer to statutory
technical institutions that specialize in product quality inspection.
Product quality inspection institutions are divided into two
categories: one is the product quality inspection institute under
the technical supervision department of the government at or
above the county level set up in accordance with the law; The
other type is the institutions authorized to engage in product
quality inspection in accordance with the law.
2. Product quality certification body. Product quality certification work
should be carried out by specialized institutions for our products
Quality certification is done by a dedicated certification board.
3. The basic requirements for product quality inspection and
certification institutions.
(1) Social intermediary institutions engaged in product quality
inspection and certification must be established in accordance
with the law, and shall not have a subordinate relationship or
other interest relationship with administrative organs and other
state organs.
(2) The product quality inspection institution must have the
corresponding testing conditions and capabilities, and can only
undertake product quality inspection after passing the
assessment of the market supervision and management
department of the people's government at or above the
provincial level or its authorized department.
(3) Product quality inspection and certification institutions must
issue inspection results or certification certificates objectively
and impartially in accordance with relevant standards in
accordance with the law.
The producer's obligation to produce the product
The obligations of the producer include the obligation to act and the
obligation not to act.
1. Obligation to act.
(1) The quality of the product shall meet the following
requirements: (1) There is no unreasonable danger that
endangers the safety of persons and property, and there are
national standards and industry standards that shall comply with
the standards. (2) It has the performance that the product
should have, except for the description of the defects in the
performance of the product. (3) Comply with the product
standards indicated on the product or its packaging, and meet
the quality status indicated in the form of product descriptions
and physical samples.
(2) The packaging and product identification shall meet the
following requirements: (1) The identification and packaging
quality of special products (such as fragile, flammable, explosive
goods, toxic, corrosive, radioactive materials, other dangerous
goods, products that cannot be inverted during storage and
transportation, and have other special requirements) must meet
the corresponding requirements, and warning signs or Chinese
warning instructions must be made in accordance with the
regulations. (2) For ordinary products, there should be a
certificate of product quality inspection, with the product name
indicated in Chinese, the name and address of the
manufacturer; Indicate the product specifications, grades, and
main ingredients as needed; For products that are used for a
limited period of time, the date of manufacture and the safe use
period should be indicated
or an expiration date; Products that are improperly used, easily
cause damage to the product itself or may endanger personal
and property safety, shall have warning signs or Chinese warning
instructions.
2. Obligation not to act. These include: (1) not producing products
that are eliminated by the state; (2) Do not forge the place of
origin, do not forge or fraudulently use the name and address of
others; (3) Do not forge or fraudulently use certification marks
and other quality marks; (4) It shall not be adulterated or
adulterated, and shall not be passed off as real or shoddy, and
shall not be passed off as qualified products with substandard
products.
The seller's obligation to produce the product
1. Purchase acceptance obligation. The seller shall establish and
implement the purchase inspection and acceptance system.
2. Obligation to maintain product quality. The seller shall be
responsible for maintaining the quality of the product after the
purchase of the product in order to prevent the product
Deterioration, decay, loss or reduction of service performance,
defects that endanger people and property, etc.
3. Obligations regarding product labeling. When selling products,
the seller shall ensure that the product identification meets the
requirements of the Product Quality Law for product
identification, conforms to the state of acceptance at the time of
purchase, and shall not change, cover or smear the product
identification to ensure the authenticity of the product
identification.
4. Do not violate prohibitive norms. For sellers, the prohibitive norms
stipulated by law are as follows:
(1) Shall not sell products that have been eliminated and stopped
by the state and products that have failed or deteriorated; (2) Do
not forge the place of origin, do not forge or fraudulently use the
name and address of others; (3) Do not forge or fraudulently use
certification marks and other quality marks; (4) It shall not be
adulterated or adulterated, and shall not be passed off as real or
shoddy, and shall not be passed off as qualified products with
substandard products.
Product Liability
(1) The principle of attribution of product liability
The principle of attribution refers to the determination of the grounds
and basis for the perpetrator to bear legal responsibility.
1. Strict liability of producers. If the product is lacking and causes
damage to the person or other people's property, the producer
shall be liable for compensation. At the same time, the Product
Quality Law stipulates the statutory exemption conditions, that
is, if the producer can prove that it has one of the following
circumstances, it shall not be liable for compensation: (1) the
product is not put into circulation;
(2) When the product is put into circulation, the defect causing
the damage does not exist; (3) The level of science and
technology at the time the product is put into circulation and the
existence of defects cannot be discovered.
2. Liability for the fault of the seller. If the product is defective
due to the fault of the seller, causing personal or property
damage to others, the seller shall be liable for compensation.
(2) Compensation for damages
Compensation for damages arising from product liability is
stipulated in Chapter IV of the Product Quality Law. To sum up,
the following problems are mainly solved:
1. The object of the claim for product defect liability. In order to
facilitate the exercise of rights by consumers, the Product Quality
Law gives consumers the right to choose the target of the
lawsuit, and stipulates joint and several liability between
producers and sellers.
2. Scope of Indemnification. (1) Scope of compensation for
personal injury. There are three types of situations: first, if the
victim is injured due to a defective product, the infringer shall
compensate for medical expenses, nursing expenses during
treatment, and loss of income due to lost work; Second, if the
disability is caused, the disabled person shall also be paid the
cost of self-help equipment, living allowance, disability
compensation, and the necessary living expenses of the person
who is supported by the disabled person. Thirdly, if the death of
the victim is caused, funeral expenses, death compensation, and
necessary living expenses for the deceased's supporters during
his lifetime shall be paid.
(2) Scope of compensation for property damage. For the
property loss of the victim due to the defective product, the
Product Quality Law stipulates that the infringer shall restore the
original state or compensate at a discounted price; Where the
victim suffers other major losses as a result, the infringer shall
compensate for the losses.
(3) The statute of limitations and the right to make claims
1. Statute of Limitations. The statute of limitations for claims for
damages caused by product defects is 2 years, calculated from
the time when the parties knew or should have known that their
rights and interests had been harmed.
2. Right to Request. The right to claim damages refers to the
right of the victim to demand compensation from the infringer
when the rights of the right holder are infringed.
Legal liability for violating the Product Quality Law
(1) Liability for product quality
1. The seller's prior responsibility and compensation obligation.
China's "Product Quality Law" is also a product quality
responsibility law. The law stipulates that if the product sold falls
under any of the following circumstances, the seller shall be
responsible for repairing, replacing and returning the product; If
losses are caused to consumers who purchase products, the
seller shall compensate for the losses:
(1) It does not have the performance that the product should
have and has not been explained in advance; (2) It does not meet
the product standards indicated on the product or its packaging;
(3) It does not conform to the quality condition indicated by
product description, physical samples, etc.
2. The seller's right of recourse. If the seller is responsible for
repairing, replacing, returning the goods, or compensating for
losses in accordance with the above provisions, the seller shall
have the right to recover from the producer or the supplier if it is
the responsibility of the producer or the responsibility of other
sellers who provide the products to the seller (hereinafter
referred to as the supplier).
(2) The administrative responsibility of producers and sellers
In order to strengthen the supervision and management of
product quality and eliminate the hidden dangers of product
accidents, Article 49~56 of the Product Quality Law stipulates
that the administrative responsibility of producers and sellers for
violating the Product Quality Law should be assumed. They are as
follows:
1. Violations of the Product Quality Act by producers and sellers.
Where producers or sellers commit any of the following acts, the
market supervision and administration departments shall give
administrative punishments: (1) producing or selling products that
do not meet national or industry standards for protecting human
health and personal and property safety; (2) Doping or
adulteration in the product, passing off the fake as real or shoddy,
or passing off the substandard product as a qualified product; (3)
Producing products that have been eliminated by the state, or
selling products that have been eliminated and stopped by the
state; (4) Selling invalid or deteriorated products, forging the
place of origin, forging or fraudulently using the name or address
of another person's factory, forgery
or fraudulently use various quality marks; (5) The product
identification used does not comply with the provisions of the
law; (6) Refusal to accept product quality supervision and
inspection conducted in accordance with the law; (7)
Concealment, transfer, and sale. Destroying items that have
been sealed or seized in accordance with law.
2. Types of administrative punishments. The types of
administrative penalties include orders to stop illegal acts,
confiscation of illegal gains, fines, and revocation of business
licenses.
(3) The illegal acts and responsibilities of other relevant persons
1. Responsibility to facilitate illegal acts. Anyone who knows or
should know that the products prohibited from being produced or
sold under the provisions of the Law provide them with convenient
conditions such as transportation, custody, warehousing, etc., or
provide counterfeiting technology, shall have their income
confiscated and fined.
2. Responsibilities of Service Operators. Where service operators
use prohibited products for commercial services, they are ordered
to stop using them; Anyone who knows or should know that the
product is a prohibited product shall be punished in accordance
with the penalty provisions of the Act.
Section 3 Food Safety Law
Legislative background and legislative purpose of the Food
Safety Law
Food safety law refers to a series of legal norms that regulate
behaviors related to food safety. Article 1 of the Food Safety Law
states the legislative purpose of the Law: "This Law is enacted in
order to ensure food safety and protect the health and life safety
of the public." "There are two key points here: one is to ensure
food safety, that is, to ensure that the food is non-toxic,
harmless, meets the due nutritional requirements, and does not
cause any acute, subacute or chronic harm to human health.
This is the direct purpose of the Act. The second is to protect the
health and safety of the public. This article reveals the
significance of food safety from the perspective of the public's
basic human rights such as the right to health and the right to
life, and shows the fundamental purpose of "people-oriented" in
China's law.
Scope of application of the Food Safety Law
As a special law regulating food safety-related behaviors, the Food
Safety Law has its specific scope of application. In accordance with
the provisions of paragraph 1 of Article 2 of the Law, the following
activities in the territory of our country shall be subject to the Law:
(1) food production and processing (hereinafter referred to as food
production), food sales and catering services (hereinafter referred
to as food business); (2) production and operation of food
additives; (3) Production and operation of packaging materials,
containers, detergents, disinfectants and tools and equipment
used for food production and operation (hereinafter referred to as
food-related products); (4) Food additives and food-related
products used by food producers and traders; (5) storage and
transportation of food; (6) Safety management of food, food
additives, and food-related products.
Food safety risk detection
1. The object of food safety risk monitoring. The state has established
a food safety risk monitoring system to combat foodborne diseases
Diseases, food contamination and harmful factors in food are
monitored.
2. Institutions that implement food safety risk monitoring. In
accordance with the provisions of the Food Safety Law, the
administrative department of health under the State Council, in
conjunction with the food safety supervision and administration
departments of the State Council, shall formulate and implement
a national food safety risk monitoring plan.
Food safety risk assessment
The food safety risk assessment system refers to the use of
scientific methods to detect and evaluate the biological,
chemical and physical hazards of food and food additives
according to food safety risk monitoring information, scientific
data and relevant information, so as to reveal or predict the risk
of damage to people, and provide a basis for the state to
formulate or revise relevant national food safety standards, put
forward food safety risk warnings and take relevant food safety
measures.
Effectiveness of food safety standards
Food safety standards refer to the mandatory standards that food
producers and operators, food additive producers and operators
and producers and operators of food-related products must
comply with in their business activities formulated by the state in
order to ensure food safety and protect public health.
Food safety standards can be divided into national food safety
standards and local food safety standards. The national food
safety standards refer to those formulated by the administrative
department of health under the State Council in accordance with
statutory powers and legal procedures
The food safety standards reviewed and approved by the National
Food Safety Standards Review Committee. Local food safety
standards refer to the food safety formulated by the health
administrative departments of the people's governments of
provinces, autonomous regions and municipalities directly under
the Central Government in accordance with their statutory powers
and legal procedures, with reference to the relevant national food
safety standards, and reported to the health administrative
department of the State Council for the record
Standard.
National standards for food safety
1. Formulation of national food safety standards. The national
food safety standards shall be formulated and published by the
administrative department of health under the State Council in
conjunction with the food safety supervision and administration
department of the State Council, and the standardization
administrative department of the State Council shall provide the
national standard number.
2. Review of national food safety standards. The national food
safety standards shall be reviewed and approved by the National
Food Safety Standards Review Committee organized by the
administrative department of health under the State Council.
Local standards for food safety
For local specialty foods, if there is no national food safety
standard, the health administrative department of the provincial-
level people's government may formulate and publish local food
safety standards and report to the health administrative
department of the State Council for the record. After the
formulation of the national food safety standard, the local
standard will be abolished.
Corporate standards for food safety
The State encourages food production enterprises to formulate
enterprise standards that are stricter than national or local food
safety standards, which shall be applicable to the enterprise
and shall be reported to the health administrative department
of the provincial people's government for the record.
Safety control system in food production and operation
1. Food production and operation safety standards and negative list
system.
(1) Safety benchmark system. China's Food Safety Law requires
that food production and operation should meet food safety
standards.
(2) Negative list system. China's "Food Safety Law" expressly
prohibits the operation of food and food additives
Pharmaceuticals and food-related products.
2. Food industry licensing system.
(1) Food production and business license system. The state
implements a licensing system for food production and
operation, that is, a market access system.
(2) Food additive production licensing system. Food additives refer to
food additives that improve food quality and color, aroma,
flavor and synthetic or natural added to food for the needs of
preservative, preservation and processing technology
substances, including nutritional fortifiers.
(3) Licensing system for the production of food-related products.
For food-related products with a higher risk such as packaging
materials that come into direct contact with food, the production
license shall be implemented in accordance with the relevant
national regulations on the management of industrial product
production licenses. The production of food-related products
shall comply with laws, regulations and national food safety
standards.
3. Food safety traceability system. Food producers and traders shall, in
accordance with the provisions of the Food Safety Law,
Establish a food safety traceability system to ensure food
traceability.
4. Food safety management system for production and operation
enterprises. The state not only implements a licensing system for
the production and operation of food and food additives, but also
requires enterprises to establish and improve the food safety
management system of their own units
Strengthen the training of food safety knowledge for employees,
equip food safety management personnel, strengthen food
inspection, and engage in food production and business activities in
accordance with the law. Specifically, it includes the following
aspects:
(1) Food producers and traders shall establish and implement a
health management system for employees.
(2) Food production process control system.
(3) Food safety self-inspection system. Food producers and
traders shall regularly inspect and evaluate the food safety
status.
(4) Good production certification system for food enterprises. The
state encourages food production and operation enterprises to meet
the requirements of good life
The production specification requires the implementation of the
hazard analysis and critical control point system to improve the level
of food safety management.
5. Safety and security of edible agricultural products.
6. Safety management of food trading places and consumption
places.
7. Safety management of labels, manuals and advertisements.
8. Regulations on the safety management of special foods.
Food recall system
The food recall system refers to the system whereby food
producers, on their own initiative or under the orders of relevant
state departments, publicly recall and take corresponding
measures to eliminate or reduce food safety hazards in a timely
manner by food producers who have been marketed and do not
meet food safety standards by themselves or ordered by relevant
state departments.
Food recalls can be divided into two types: voluntary recalls and
ordered recalls. Voluntary recall refers to the notice that food
producers take the initiative to stop production, disclose relevant
information, and recall foods that have been put on the market if
they are found to have food that does not meet food safety
standards or that there is evidence that may endanger human
health
Relevant producers, operators and consumers, and record the
recall and notification situation, and eliminate or reduce food
safety hazards in a timely manner.
Ordering a recall refers to the act of ordering a food producer or
trader to recall or stop operating food that does not meet food
safety standards in accordance with the law, and the food safety
supervision and administration department of the people's
government at or above the county level orders it to recall or stop
its operation.
Food inspection system
1. Food inspection agencies and their status. Food inspection
institutions refer to institutions that have obtained food
inspection qualifications and engaged in food inspection activities
in accordance with the relevant national certification and
accreditation regulations.
2. Food inspection institutions and inspectors are responsible for the
system. Food inspection is carried out by an inspector appointed by
the food inspection agency
Immediately.
3. Food inspection activities of different institutions and organizations.
(1) Sampling inspection of food safety administrative supervision
and management departments. The food safety supervision and
administration department of the people's government at or
above the county level shall conduct regular or irregular
sampling inspection of food, and publish the inspection results in
accordance with relevant regulations, and shall not be
exempted from inspection.
(2) Self-inspection. Food production enterprises can inspect the food
they produce on their own, or they can
Entrust a food inspection agency that complies with the provisions of
the Food Safety Law to conduct the inspection.
(3) The third party entrusts the inspection. Food industry
associations and other organizations and consumers can also
entrust food inspection agencies to inspect food as needed.
4. Inspection objection system. If there is any objection to the
inspection conclusion implemented in accordance with the
provisions of the Food Safety Law, the food producer or trader
may submit an application for re-inspection to the food safety
supervision and management department or its higher-level
department that implements the sampling inspection, and the
receiving department shall randomly determine the re-inspection
agency for re-inspection in the published list of re-inspection
institutions. The re-inspection conclusion issued by the re-
inspection agency is the final inspection conclusion.
Food import and export management system
1. Import and export management agencies. The State Entry-Exit
Inspection and Quarantine Department shall supervise and
administer the safety of import and export food.
2. Food import management system.
(1) Safety standards. Imported food, food additives and food-
related products shall comply with China's national food safety
standards.
(2) The guarantee liability of the overseas enterprise and the
audit obligation of the importer. Overseas exporters and
overseas production enterprises shall ensure that the food, food
additives and food-related products exported to China comply
with the provisions of China's Food Safety Law and other
relevant laws and administrative regulations and the
requirements of national food safety standards, and shall be
responsible for the content of labels and instructions.
(3) Filing and registration system for import and export
enterprises. Overseas exporters or agents who export food to
China, and importers of imported food shall file with the national
exit inspection and quarantine department.
(4) Regulations on the administration of prepackaged food. The
Food Safety Law stipulates that imported pre-packaged foods
and food additives shall have Chinese labels; Where there shall
be an instruction manual in accordance with law, there shall
also be a Chinese instruction manual.
(5) Importer's obligation to retain information. The importer shall
establish a record system for the import and sale of food and
food additives, truthfully record the name, specification, quantity,
production date, production or import batch number, shelf life,
name, address and contact information of overseas exporters
and buyers, delivery date, etc., and keep relevant vouchers. The
retention period of records and vouchers shall not be less than
the statutory period.
(6) Early warning and control of food safety risks. Food safety
incidents that occur abroad may have an impact on China, or
serious food is found in imported food, food additives, and food-
related products
In case of security issues, the national entry-exit inspection and
quarantine department shall promptly take risk early warning or
control measures.
and notify the food safety supervision and management, health
administration, and agricultural administrative departments of
the State Council. Departments receiving the notification shall
promptly employ corresponding measures.
3. Food export management system. Export food production
enterprises shall ensure that the exported food meets the
standards or contract requirements of the importing country
(region).
4. Import and export food safety information management
system. The State Entry-Exit Inspection and Quarantine
Department shall collect and summarize the following import and
export food safety information, and promptly report it to relevant
departments, institutions and enterprises
5. Credit management system for import and export enterprises.
The State Department of Exit Inspection and Quarantine shall
implement credit management for importers, exporters and
export food production enterprises of imported and exported
food, establish credit records, and publish them to the public in
accordance with law.
The concept of food safety incidents
Food safety accidents are a general term for all kinds of accidents
caused by food safety problems. Food safety problems usually
include food contamination problems, foodborne diseases, food
poisoning problems, scientific and technological food problems,
food labeling problems, etc., and food safety problems in actual
life are composed of one or more of the above problems. Food
safety incidents defined in the supplementary provisions of the
Food Safety Law refer to "foodborne diseases, food contamination
and other accidents that originate from food and are or may be
harmful to human health".
Countermeasures for handling food safety incidents
The occurrence of food safety accidents will have varying
degrees of negative impact on human health and social life. Early
prevention, targeted treatment, and good aftermath can
minimize the harm. China's food safety accident handling
countermeasures cover various measures from the prevention,
identification and treatment of food safety accidents, forming a
comprehensive and three-dimensional response mechanism.
1. Emergency plan system for food safety accidents. The Food
Safety Law stipulates that the State Council shall organize the
formulation of national emergency plans for food safety
accidents. The local people's government at or above the county
level shall, in accordance with the provisions of relevant laws and
regulations, the emergency plan for food safety accidents of the
people's government at a higher level and the actual situation of
the administrative region, formulate an emergency plan for food
safety accidents in the administrative region, and report it to the
people's government at the next higher level for the record.
2. Food safety accident reporting and notification system. After a
food safety accident occurs, the unit where the accident occurs is
obliged to take immediate measures to prevent the accident
from expanding.
3. Investigation and handling measures. After the occurrence of a
food safety incident, departments at all levels shall respond
quickly and investigate and deal with it according to the
emergency plan and the actual situation.
4. Scope and content of the survey.
(1) Investigation of accident liability. In the event of a food
safety accident, the food safety supervision and management
department of the people's government at or above the level of
a city divided into districts shall immediately conduct an
investigation of the responsibility for the accident in conjunction
with the relevant departments, urge the relevant departments
to perform their duties, and submit an accident responsibility
investigation and handling report to the people's government at
the same level and the food safety supervision and
management department of the people's government at the
next higher level.
(2) Epidemiological investigation. In the event of a food safety
incident, the disease prevention and control institutions at or
above the county level shall carry out sanitary treatment of the
accident site and carry out epidemiological investigation of the
factors related to the accident, and the relevant departments
shall assist.
Regulatory Authority
(1) Food Safety Committee. In order to coordinate the
enforcement of food safety, the Food Safety Law has set up a
national and comprehensive regulatory body, namely the Food
Safety Committee. The committee is a special committee
established by the State Council, and its duties and
responsibilities are prescribed by the State Council.
(2) Other regulatory agencies at all levels. In addition to the
Food Safety Committee, the main regulatory agencies can be
divided into two levels: the food safety supervision and
management, agricultural administration and other departments
at the level of the State Council, and the people's governments
and their functional departments at or above the county level.
The people's governments at all levels exercise regulatory
power in their respective administrative areas in accordance
with their administrative levels.
Supervision and management measures
The food safety supervision and administration department of the
people's government at or above the county level has the right to
take the following measures to supervise and inspect the
compliance of producers and operators with the Food Safety Law:
enter the production and business premises to carry out on-site
inspections; Conduct sampling inspection on the production and
operation of food, food additives, and food-related products;
inspect and copy relevant contracts, bills, account books and other
relevant materials; Sealing and seizing food, food additives, and
food-related products that have evidence proving that they do not
meet food safety standards or that have evidence proving that
there are potential safety hazards, as well as those used for illegal
production and operation; Seal up establishments that illegally
engage in production and business activities.
Credit file system
The food safety supervision and administration department of
the people's government at or above the county level shall
establish a food safety credit file for food producers and traders,
record the issuance of licenses, the results of daily supervision
and inspection, and the investigation and punishment of illegal
acts, etc., and announce them to the public in accordance with
the law and update them in real time; Increase supervision and
inspection of food producers and traders with bad credit records
Check the frequency, and the food producers and traders who
have serious violations may be notified to the investment
authorities, securities regulatory agencies and relevant financial
institutions.
Interview system
1. Interview with potential safety hazards. If there are potential
food safety hazards in the process of food production and
operation, and measures are not taken to eliminate them in a
timely manner, the food safety supervision and management
department of the people's government at or above the county
level may conduct a responsibility interview with the legal
representative or main person in charge of the food producer or
trader. Food producers and traders shall take immediate
measures to rectify and eliminate hidden dangers. Responsibility
interviews and rectifications shall be included in the food safety
credit file of food producers and traders.
2. Departmental accountability interviews. If the food safety
supervision and management department of the people's
government at or above the county level fails to discover the
systemic risk of food safety in a timely manner, and fails to
eliminate the potential food safety hazards in the supervision and
management area in a timely manner, the person at the same
level
The civil government may conduct a responsibility interview with
its principal responsible person. If the local people's government
fails to perform its food safety duties and fails to eliminate major
regional food safety hazards in a timely manner, the people's
government at a higher level may conduct a responsibility
interview with the principal responsible person.
Social supervision
1. General Provisions. The food safety supervision and
administration departments of the people's governments at or
above the county level shall publish the email addresses or
telephone numbers of their respective departments to accept
consultations, complaints, and reports.
2. Supervision of law enforcement personnel. Food producers and
traders, food industry associations, consumer associations, etc.,
if they find that food safety law enforcement personnel have
violated laws and regulations and non-standard law enforcement
behaviors in the process of law enforcement, they may complain
or report to the food safety supervision and management
departments of the people's governments at the same level or at
a higher level or the supervision organs.
legal liability
Legal responsibility for food safety refers to the legal adverse
consequences that enterprises, individuals or other organizations
engaged in food production and operation should bear due to
their violation of the prohibitions of national laws and regulations
on food safety.
Administrative penalties
Food safety administrative punishment is an administrative
sanction applied to the violation of the food safety law by the
relative person under administrative supervision.
Administrative accountability
Administrative accountability is an administrative sanction
given for the inaction and improper conduct of the
administrative supervision subject in the performance of food
safety supervision duties.
Civil Indemnity
1. General Provisions. According to Article 147 of the Food Safety
Law, any person who violates the provisions of the Food Safety
Law and causes damage to persons, property or other damages,
whether civil or administrative, shall be liable for compensation in
accordance with the law. In addition to the Food Safety Law, the
basis for determining liability also includes tort laws and other
relevant provisions of special laws on product quality, protection
of consumer rights and interests, protection of women and
children, etc.
2. Special Provisions. (1) The principle of priority of civil
compensation. (2) Consumer claim option and first responsibility
system. (3) Punitive damages. (4) Liability of third-party
platforms for online transactions.
criminal responsibility
If the provisions of the Food Safety Law are violated and a crime is
constituted, criminal responsibility shall be investigated in
accordance with the law.
Chapter III Banking Law
Section 1 Commercial Banking Law
Overview of commercial banking legislation
China's Commercial Bank Law was passed on May 10, 1995, came into
force on July 1 of the same year, and was amended twice in December
2003 and August 2015. The law consists of nine chapters: General
Provisions, Establishment and Organization of Commercial Banks,
Protection of Depositors, Basic Rules for Loans and Other Operations,
Financial Accounting, Supervision and Management, Receivership and
Termination, Legal Liability, and Supplementary Provisions. Laws directly
related to commercial banks include the Banking Supervision Law, the
Negotiable Instruments Law, the Anti-Money Laundering Law, etc., and
the relevant administrative regulations include the Regulations on the
Administration of Savings, the Regulations on the Real-Name System for
Individual Deposit Accounts, the Regulations on the Abolition of Financial
Institutions, and the Regulations on the Administration of Foreign-funded
Banks. In order to implement the above-mentioned laws and regulations,
the People's Bank of China and the State Council supervise the banking
industry
The management agency has issued a large number of rules and
other normative documents, such as the General Principles of
Loans, the Payment and Settlement Measures, the Measures for
the Administration of Bank Card Business, the Guidelines for
Electronic Payment, the Interim Measures for the Management of
the Basic Personal Credit Information Database, and the
Measures for the Administration of Interbank Lending issued by
the People's Bank of China, and the Guidelines for Internal Control
of Commercial Banks, the Core Indicators for Risk Supervision of
Commercial Banks (for Trial Implementation) and the Interim
Measures for the Monitoring and Assessment of Non-performing
Assets of Commercial Banks issued by the Banking Regulatory
Authority under the State Council Guidelines for Comprehensive
Risk Management of Banking Financial Institutions", etc.
The basic system of commercial banks
1. Objects of adjustment under the Commercial Banking Law. The
establishment, alteration, takeover and liquidation of all
commercial banks within the territory shall be governed by the
Commercial Bank Law, and the provisions of the Commercial
Bank Law shall apply to the relevant business of commercial
banks handled by postal enterprises, as well as the branches of
foreign-funded commercial banks, Sino-foreign joint venture
commercial banks and branches of foreign commercial banks,
and where laws and administrative regulations provide otherwise,
such provisions shall be followed.
2. The legal status and organizational form of commercial banks.
(1) A commercial bank refers to an enterprise legal person
established in accordance with the conditions and procedures
stipulated in the Commercial Bank Law and the Company Law to
absorb deposits from the public, issue loans, handle settlements
and other businesses, and have independent capacity for civil
rights and civil conduct.
(2) There are two organizational forms of commercial banks: one is a
limited liability company and the other is a company limited by
shares.
3. The operating principles of commercial banks.
(1) The principles of safety, liquidity and efficiency. This is the
most important principle that must be followed in the operation
of commercial banks.
(2) The principle of self-management, self-risk, self-responsibility and
self-restraint.
(3) Carry out credit business in accordance with the
requirements of the national industrial policy and development
policy, and follow the principles of equality, voluntariness,
fairness and honesty in business dealings.
(4) The principle of protecting the interests of depositors.
(5) The principle of independent operation.
(6) The principle of fair competition.
Functions of commercial banks
1. The credit intermediary function is the most basic function of a
commercial bank. Commercial banks concentrate all kinds of idle
money in society through debt business (mainly taking deposits),
and then invest it in various economic sectors through asset
business (mainly loans and investment).
2. The function of payment intermediary, that is, currency
operation, refers to the transfer of the deposit currency on the
debtor's customer's account to the creditor's customer's account
to help the parties to the transaction realize payment and
transfer.
3. The function of credit creation is the most significant feature of
commercial banks that distinguish them from other financial
institutions, commercial banks issue loans on the basis of
absorbing deposits, and on the basis of bill circulation and
transfer settlement, loans are converted into deposits, and in the
case of this deposit is not withdrawn, it increases the source of
funds of commercial banks, which can be converted into loans
again, and finally the entire banking system forms derivative
deposits that exceed the original deposits, which is the credit
creation function of commercial banks.
4. The function of creating financial instruments. Commercial
banks are constantly creating various financial instruments in
their liability business and intermediary business, such as
negotiable certificates of deposit, various financial bonds, bank
checks, promissory notes, bank acceptance bills, letters of credit,
bank guarantees, and other legal documents that can represent a
certain currency.
5. Financial Services Functions. In addition to the asset-liability
business, exchange and settlement business, commercial banks
also have some businesses that basically have no operational
risks, because these businesses are not included in the balance
sheet and do not affect the operating activities of the bank's total
assets and liabilities, so they are called off-balance sheet
business. The types of off-balance sheet business mainly include:
cash management, agency custody, agency leasing, information
consulting business, commercial letter of credit, bank acceptance
bill, standby letter of credit, loan sales and asset securitization
issuance.
The relationship between commercial banks and the People's
Bank of China
Accept the business guidance, inspection and supervision of the
People's Bank of China. Commercial banks shall submit balance
sheets and other statements and other materials to the
competent branches of the People's Bank of China in accordance
with the law, and accept the operational guidance, inspection and
supervision of the People's Bank of China. Commercial banks
handling deposit business must follow the interest rate range
prescribed by the People's Bank of China to determine the
deposit interest rate, deposit deposit reserves with the People's
Bank of China, and follow the regulations of the People's Bank of
China on the management of asset-liability ratio, and maintain a
reasonable asset type and asset term structure.
The relationship between commercial banks and the banking
regulatory authority of the State Council
Commercial banks are subject to the administrative supervision and
management of the banking regulatory authority of the State
Council. The establishment, alteration and termination of a
commercial bank shall be subject to the approval of the banking
regulatory authority of the State Council; The asset-liability ratio of
commercial banks
The regular management system and ordinary business are subject
to the supervision of the banking regulatory authority of the State
Council.
Conditions for the establishment of a commercial bank
1. Have a complete list of articles of association. The articles of
association are the fundamental criteria for stipulating the
company's external operation and internal management of
various rights and capabilities, and it is also the basis for the
company to publicize its rights and capabilities and to regulate
the shareholders and various organs of the company internally.
2. Submit a complete feasibility study report. The feasibility
report shall explain the investor's motivation for establishing the
bank, including the conclusion of the feasibility study on the
financial market, the main business, the design of the internal
organization, the design of the draft articles of association of the
bank, etc.
3. Registered capital that meets the statutory minimum
requirements. 3. Registered capital that meets the statutory
minimum requirements. The establishment of a commercial bank
shall be subject to the approval of the banking regulatory
authority of the State Council, and shall have a paid-in capital
that meets the prescribed minimum registered capital limit (1
billion yuan for national commercial banks with branches, 100
million yuan for urban commercial banks, and 50 million yuan for
rural cooperative commercial banks). The registered capital
should be paid-in capital.
4. Have qualified employees and qualifications. Commercial
banks must have directors and senior management personnel
with professional knowledge and business experience
5. Have a sound organizational structure and management
system. In accordance with the provisions of China's "Company
Law" and "Commercial Bank Law", in accordance with the
standard requirements of limited liability companies and joint-
stock limited companies, commercial banks shall set up the
necessary organizational structures, and the wholly Chinese-
owned commercial banks shall set up boards of supervisors, and
the methods for the formation of the board of supervisors shall
be prescribed by the State Council.
6. Miscellaneous. Business premises, security equipment and
other facilities that meet the requirements of laws and
regulations shall also comply with the regulations of the banking
regulatory authority under the State Council and the People's
Bank of China
Investments by commercial banks
1. Supervision of commercial bank investment. The Commercial
Bank Law stipulates that any entity or individual purchasing more
than 5% of the total shares of a commercial bank shall obtain
prior approval from the banking regulatory authority of the State
Council.
2. Restrictions on the investment behavior of commercial banks.
The "Commercial Bank Law" stipulates that commercial banks
shall not engage in trust investment and securities business
within the territory of China, and shall not invest in real estate for
non-self-use or in non-bank financial institutions and enterprises,
unless otherwise stipulated by the state.
Procedures for the establishment of banking financial
institutions
1. Application for the establishment of banking financial
institutions. The applicant shall fill in the formal application form
and submit the following documents: (1) the draft articles of
association; (2) Qualifications of the directors and senior
management personnel to be appointed;
(3) Capital verification certificate issued by the statutory capital
verification agency; (4) Register of shareholders and their capital
contributions and shares; (5) Credit certificate and relevant
information of shareholders holding more than 5% of the registered
capital; (6) Business policy and plan; (7) Information on business
premises, safety precautions and other facilities related to business;
(8) Other documents and materials prescribed by the banking
regulatory authority of the State Council.
2. Approval. The banking regulatory authority of the State
Council shall issue a business license and make a public
announcement to the applicant for the establishment of a
commercial bank that meets the statutory requirements, and the
approved person shall register with the administrative authority
for industry and commerce and obtain a business license on the
basis of the license.
3. Announcements. The banking regulatory authority of the State
Council shall issue a business license and make a public
announcement to the branch of a commercial bank that has been
approved for establishment, and the branch shall register with
the administrative authority for industry and commerce and
obtain a business license on the basis of the license.
Conditions for the establishment of a branch of a commercial
bank
1. The application shall be submitted by a commercial bank. The
establishment of branches of commercial banks shall be subject
to the approval of the banking regulatory authority of the State
Council, and the establishment of branches of commercial banks
within the territory of China shall not be established according to
administrative divisions, and shall be decided by the head office
of commercial banks on its own in accordance with the needs of
business development.
2. Restrictions on the allocation of funds by branches. When a
commercial bank establishes a branch in China, it shall, in
accordance with the regulations, allocate working capital
commensurate with the scale of its operation, and the total
amount of working capital allocated shall not exceed 60% of the
total capital of the head office.
3. Application documents. The applicant for the establishment of
a branch of a commercial bank shall submit the following
documents and materials to the banking regulatory authority of
the State Council: the application form, the applicant's financial
and accounting statements for the last two years, the
qualification certificate of the senior management personnel to
be appointed, the business policy and plan, the business
premises, security precautions and other facilities related to the
business, and other documents and materials prescribed by the
banking regulatory authority of the State Council.
Changes in commercial banks
If a commercial bank commits any of the following acts, it shall
obtain the approval of the banking regulatory authority under the
State Council: (1) change the name of the bank; (2) Change of
registered capital; (3) Change the location of the head office or
branch; （4）
Adjust the scope of business; (5) Change of shareholders holding
more than 5% of the total capital or total shares; (6) Amend the
Articles of Association; (7) Other changes stipulated by the
banking regulatory authority of the State Council.
When a director or senior manager is replaced, it shall be
reported to the banking regulatory authority of the State Council
for examination of his or her qualifications.
Asset and liability management of commercial banks
1. Principles of asset and liability management. The bank's
income mainly comes from the interest rate spread of deposits,
and the interest rate spread is the comprehensive result of the
bank's asset-liability structure, and the risk is reflected in the size
and change of the interest rate spread. Therefore, banks should
calculate, plan, control and adjust the type and quantity of assets
and liabilities they hold, as well as the total amount and
combination of assets and liabilities to minimize risks and
maximize profits.
2. The content of asset and liability management. The basic
content of asset and liability management refers to the
continuous adjustment of the bank's assets and liabilities in
terms of term, structure, method, quantity and interest rate
according to the changes in the financial situation, so as to
reduce operational risks and increase profit opportunities, and
achieve the operation and management objectives of bank
safety, liquidity and efficiency.
3. Project management of loans.
(1) Principles and review of loans: The General Principles of
Loans of the People's Bank of China require all commercial banks
to implement a system of separation of examination and loan
examination and approval and graded examination and approval
for credit business. What to review: purpose of borrowing, ability
to repay, repayment method. Carry out pre-loan investigation,
loan review and post-loan inspection for loan projects.
(2) For loan guarantees, commercial banks shall conduct a
substantive review of the guarantor's ability to repay, the
ownership and value of the collateral and pledge, and provide
effective guarantees to the rest of the borrowers, except for a
small number of borrowers with good credit standing. In order to
prevent artificial credit risks, the Commercial Bank Law
stipulates that loans to related parties of banks shall not be in
the form of credit loans.
(3) Continuously review and follow up the management of the
lack and performance of the terms of the loan contract,
including the type, purpose, amount, interest rate, repayment
period, repayment method, liability for breach of contract and
other matters agreed by both parties.
4. Liability management. The way of liability management is
mainly to make up for the withdrawal of deposits with short-term
borrowing, maintain the balance of working capital, and use
borrowing funds to meet the increased demand for borrowing,
assets and liabilities are increased, increase profitable assets by
expanding liabilities, and obtain profits other than bank capital,
the focus of liability management is to realize the rationalization
of the liability structure under the premise of safety, on this basis,
the organization absorbs the diversification of funds and the
continuous innovation of debt instruments, increases the amount
of liabilities, and increases the cash flow that can be used as
assets.
Asset-liability ratio management
1. The content of the implementation of asset-liability ratio
management.
2. Monitoring indicators for the management of the asset-liability ratio
of commercial banks.
Risk management in commercial banks
1. The concept of commercial bank risk.
2. Comprehensive risk management framework.
Business rules for commercial banks
The business of commercial banks can be broadly divided into
three categories: asset business, liability business and
intermediary business. Among them, the asset business and the
liability business are called on-balance sheet business in finance,
and the intermediate business is called off-balance sheet business.
The on-balance sheet business is mainly deposit and loan
business. In addition, the issuance of financial bonds, interbank
lending, trade financing, bill financing, financial leasing, issuance
of fixed-income wealth management products, overdraft and other
businesses are also on-balance sheet businesses.
(1) Deposit and loan business
When handling deposit business, commercial banks shall adhere
to the principle of "voluntary deposits, free withdrawals, interest-
bearing deposits, and confidentiality for depositors" for individual
depositors, and shall adhere to the principle of maintaining
confidentiality for customers and protecting the rights and
interests of customers for unit depositors, and shall have the
right to refuse inquiries from any unit or individual (except as
otherwise provided by laws and administrative regulations) or
freeze or deduct funds (except as otherwise provided by law).
Commercial banks shall stipulate the interest rate on deposits
and guarantee the payment of the principal and interest on
deposits.
(2) Intermediary businessIntermediary business refers to the
business activities in which a commercial bank makes use of its
advantages in technology, information, institutional network,
capital and reputation, does not use or makes less use of the
bank's assets, and acts as an intermediary to handle receipt and
payment, consultation, agency, guarantee, custody and other
entrusted matters for customers, and provides various financial
services and charges a certain fee.
Takeover of commercial banks
1. Conditions for takeover.
(1) When a credit crisis has occurred or is likely to occur in a
commercial bank, seriously affecting the interests of depositors,
the banking regulatory authority of the State Council may decide
to take over the commercial bank. The main manifestations of
the credit crisis are that commercial banks are unable to cope
with depositors' withdrawals, unable to pay off debts that are
due, and interbank refusal to lend funds, and the general refusal
of original customers and the market to provide their services. If
a commercial bank has any of the above circumstances, it can be
regarded as having a credit crisis.
(2) Takeover of a commercial bank refers to taking necessary
measures against the commercial bank being taken over to
protect the interests of depositors and restore the normal
operating capacity of the commercial bank.
2. Procedures for taking over commercial banks. (1) The decision
to take over a commercial bank. When the banking regulatory
authority of the State Council considers that a commercial bank
has a credit crisis or is about to have a credit crisis, it may
decide to take over the commercial bank and organize its
implementation. and (2) the legal consequences of taking over a
commercial bank. From the date of commencement of the
takeover, the takeover organization shall replace the original
management of the bank, exercise the operation and
management power of the commercial bank, and take over the
organization
The composition shall be designated by the banking regulatory
authority of the State Council, and the creditor's rights and debts
of the commercial bank to be taken over shall not change as a
result of the takeover.
3. Termination of the takeover of a commercial bank.
Under any of the following circumstances, the receivership shall
be terminated: (1) the period specified in the receivership
decision expires or the receivership is extended as decided by
the banking regulatory authority of the State Council; (2) before
the expiration of the receivership period, the commercial bank
has resumed its normal operating capacity; (3) Before the
expiration of the receivership period, the commercial bank is
merged or declared bankrupt in accordance with the law.
Termination of commercial banks
Commercial banks are terminated as a result of dissolution,
revocation and declaration of bankruptcy, and the termination of
commercial banks has a significant impact on the financial market
and a major stake in the interests of creditors. Therefore,
commercial banks are not allowed to terminate at their own
discretion, but must obtain the approval of the banking regulatory
authority of the State Council and handle the matter in
accordance with the provisions of the Commercial Bank Law, the
Company Law and other laws and regulations.
Liquidation of commercial banks
1. Liquidation of division, merger and dissolution.
(1) Conditions for dissolution. If a commercial bank needs to be
dissolved due to division, merger or the reasons for dissolution
stipulated in the articles of association, it shall submit an
application to the banking regulatory authority of the State
Council, together with the reasons for the application for
dissolution and a creditor's rights and debts repayment plan for
the payment of the principal and interest of the deposit, and
shall be dissolved after approval by the banking regulatory
authority under the State Council.
(2) Dissolution proceedings. Where a commercial bank is
dissolved, it shall establish a liquidation group in accordance
with the law, and the members of the liquidation group shall be
designated by the banking regulatory authority of the State
Council, and the liquidation group shall conduct the liquidation
and promptly repay the individual's savings deposit principal
and interest and other debts in accordance with the established
liquidation plan, and then repay other debts of the bank. The
banking regulatory authority of the State Council supervises the
liquidation process and has veto power over major matters of
liquidation.
2. Commercial banks are revoked. If a commercial bank is
revoked due to the revocation of its business license, the banking
regulatory authority under the State Council shall, in accordance
with the law, promptly organize the establishment of a liquidation
team for liquidation, and promptly repay the principal and
interest of the deposit in accordance with the repayment plan,
and the procedures shall be the same as those for dissolution
and liquidation.
3. Bankruptcy of commercial banks.
(1) Pre-bankruptcy administrative rescue. If a commercial bank
has major operational risks, the banking regulatory authority
under the State Council may take administrative rescue
measures such as takeover and trusteeship. During the period of
administrative rescue, the banking regulatory authority of the
State Council may apply to the people's court for suspension of
civil litigation or enforcement proceedings in which the bank is
the defendant or person subject to enforcement.
(2) Commencement of bankruptcy proceedings. If a commercial
bank has a cause of bankruptcy as stipulated in Article 2 of the
Enterprise Bankruptcy Law, the bank may apply to the people's
court for bankruptcy with the consent of the banking regulatory
authority of the State Council, or the banking regulatory authority
of the State Council may apply to the people's court for
bankruptcy of the bank.
(3) Management of bankrupt banks. If a commercial bank is declared
bankrupt, the people's court shall organize the State Council bank
Industry supervision and management institutions and other relevant
departments and relevant personnel shall establish a liquidation
group to carry out liquidation.
(4) Bankruptcy liquidation order. When a commercial bank goes
bankrupt and liquidates, after paying the liquidation expenses,
the wages owed to the employees and the labor insurance
premiums, it gives priority to the payment of the principal and
interest of the personal savings deposits, and the remaining
bankruptcy estate after that is used to pay taxes and ordinary
creditor's rights in turn.
Legal liability for violating the Commercial Banking Law
(1) Legal Liability for Infringement of the Interests of DepositorsIn
any of the following circumstances, if a commercial bank causes
property damage to a depositor or other customer, it shall bear
the interest for delayed performance and other civil liabilities: (1)
Delay or refuse to pay the principal and interest of the deposit
without reason; (2) Violating the provisions of settlement
business such as bill acceptance, not cashing, not receiving and
paying into the account, pressing bills, pressing bills, or returning
bills in violation of regulations; (3) Illegally inquiring, freezing, or
deducting personal savings deposits or unit deposits; (4) Violating
the provisions of the Commercial Bank Law and causing other
damage to depositors or other customers.
(2) Evading the legal responsibility of the banking regulatory
authority of the State Council
1. In any of the following circumstances, a commercial bank shall
be ordered to make corrections by the banking regulatory
authority of the State Council, and if it has illegal gains, it shall
confiscate the illegal gains, and if the illegal gains are more than
500,000 yuan, it shall be fined not less than 1 time but not more
than 5 times the amount of the illegal gains; where there are no
unlawful gains or the unlawful gains are less than 500,000 RMB, a
fine of between 500,000 and 2,000,000 RMB is to be given; where
the circumstances are particularly serious or corrections are not
made within the time limit, they may be ordered to suspend
business for rectification or have their business licenses revoked;
If a crime is constituted, criminal responsibility shall be pursued in
accordance with law: (1) the establishment of a branch without
approval; (2) Failure to approve the division or merger without
approval or failure to submit approval for changes in violation of
regulations; (3) Raising or lowering interest rates in violation of
regulations or using other improper means to absorb deposits and
issue loans; (4) Leasing or lending business licenses; (5) Buying
and selling foreign exchange without approval or acting as an
agent; (6) Buying and selling government bonds or issuing or
trading financial bonds without approval;
(7) Engaging in trust investment and securities business in
violation of state regulations, investing in real estate for non-
self-use, or investing in non-bank financial institutions and
enterprises; (8) The conditions for granting credit loans or
guaranteed loans to related parties are better than those of
similar loans to other borrowers.
2. In any of the following circumstances, a commercial bank shall be
ordered to make corrections by the banking regulatory authority of
the State Council and shall be punished concurrently
a fine of between 200,000 and 500,000 RMB; where the
circumstances are particularly serious or corrections are not made
within the time limit, they may be ordered to suspend business for
rectification or have their business licenses revoked; If a crime is
constituted, criminal liability shall be investigated in accordance
with law: (1) refusing or obstructing the inspection and
supervision of the banking regulatory authority of the State
Council; (2) Providing false or concealed financial accounting
reports, statements and statistical statements; (3) Failure to
comply with the capital adequacy ratio, asset liquidity ratio, loan
ratio of the same borrower and other regulations of the banking
regulatory authority of the State Council on the management of
asset-liability ratio.
(3) Evading the legal responsibility of the People's Bank of China
supervision
1. Penalties for commercial banks. In any of the following
circumstances, the People's Bank of China shall order a
commercial bank to make corrections, and if it has illegal gains,
the illegal gains shall be confiscated, and if the illegal gains are
more than 500,000 yuan, a fine of between 1 and 5 times the
illegal gains shall be imposed; where there are no unlawful gains or
the unlawful gains are less than 500,000 RMB, a penalty of 50 is
imposed
a fine of between 10,000 and 2,000,000 RMB; If the
circumstances are particularly serious or corrections are not
made within the time limit, the People's Bank of China may
recommend that the banking regulatory authority under the
State Council order the suspension of business for rectification
or revoke its business license
Proven; If a crime is constituted, criminal responsibility shall be
pursued in accordance with law: (1) handling foreign exchange
settlement or sale without approval;
(2) Issuing or trading financial bonds in the inter-bank bond market
or borrowing money overseas without approval;
(3) Interbank lending in violation of regulations. In any of the
following circumstances, the People's Bank of China shall order a
commercial bank to make corrections and impose a fine of not
less than 200,000 yuan but not more than 500,000 yuan; If the
circumstances are particularly serious or corrections are not
made within the time limit, the People's Bank of China may
recommend that the banking regulatory authority under the
State Council order the suspension of business for rectification
or revoke its business license; If a crime is constituted, criminal
responsibility shall be pursued according to law: (1) refusing or
obstructing the inspection and supervision of the People's Bank
of China; (2) Providing false or concealed financial accounting
reports, statements and statistical statements; (3) Failure to
deposit reserve funds in accordance with the proportion
prescribed by the People's Bank of China.
2. Penalties imposed on the management of commercial banks.
Article 89 of the Commercial Bank Law stipulates that if a
commercial bank violates the provisions of this Law, the banking
regulatory authority of the State Council may, in different
circumstances, cancel the qualifications of the directors and
senior managers directly responsible for a certain period of time
or even for life, and prohibit the directors, senior managers and
other persons directly responsible from engaging in banking work
for a certain period of time or even for life. If the conduct of a
commercial bank does not constitute a crime, the directors,
senior managers and other persons directly responsible shall be
given a warning and fined not less than 50,000 yuan but not more
than 500,000 yuan.
(4) Legal liability for infringing on the rights of commercial banks
Any institution or individual who commits any of the following
acts, the circumstances or consequences are serious and
constitute a crime, will be investigated for criminal liability in
accordance with law: (1) Establishing a commercial bank without
the approval of the banking regulatory authority of the State
Council, or illegally absorbing deposits from the public or
absorbing deposits from the public in disguise; (2) Forging,
altering, or transferring commercial bank business licenses; (3)
The borrower obtains the loan by fraudulent means; (4) The staff
of a commercial bank takes advantage of his position to solicit or
accept bribes, embezzle, misappropriate, or embezzle the funds
of the bank or customers, derelict his duties, and divulge state
secrets and commercial secrets.
Section 2 Banking Supervision Law
Peculiarities of the Law on Banking Supervision and
Supervision
1. Absorb and learn from the advanced concepts and legislative
experience of international banking supervision. The provisions of
the Banking Supervision Law are designed to draw heavily on the
best practices in banking supervision set out in the Basel
Committee on Banking Supervision's Core Principles for Effective
Banking Supervision, other guidance documents issued by the
Basel Committee, and the legal systems of the banking industry
in the United States, the United Kingdom, Germany, Japan, South
Korea, Singapore and other countries.
2. Formulate scientific regulatory measures. The Banking
Supervision Law provides appropriate authorization for regulators
to use regulatory tools and measures, and provides the
necessary legal support for the implementation of effective
supervision.
3. Regulate regulatory powers. The Banking Supervision Law
strengthens the internal supervision mechanism of regulators,
stipulating that regulators shall establish a supervision and
management responsibility system and an internal supervision
system. It also puts forward a series of requirements for the staff
of regulatory agencies, such as having corresponding
professional knowledge and business experience; shall act in
accordance with the law, be fair and honest, and shall not take
advantage of their position to seek improper benefits, and shall
not concurrently hold positions in financial institutions and other
enterprises; shall bear the corresponding confidentiality
obligations; Wait a minute.
4. Stipulate the procedures for supervision. The Banking Supervision
and Administration Law exercises regulatory powers and takes
measures against regulatory authorities
Regulatory measures set out procedural requirements and
supervisory constraints.
5. Coordinate external regulatory mechanisms. The Banking
Supervision Law stipulates that the auditing and supervision
organs of the State Council shall exercise external supervision
over banking regulators in accordance with the law; At the same
time, the regulatory authorities are required to disclose the
supervision and management procedures, enhance the
transparency of regulatory work, and accept the supervision of
the public.
6. Stipulate the legal responsibilities of the banking supervision
institution of the State Council. The Banking Supervision Law
stipulates the corresponding legal responsibilities for the
performance of duties and obligations, the exercise of
supervisory powers, and the adoption of regulatory measures by
regulatory authorities.
The nature of the Law on Banking Supervision
The purpose of the Banking Supervision Law is to strengthen the
supervision and management of the banking industry, standardize
the supervision and management behavior, prevent and resolve
banking risks, protect the legitimate rights and interests of
depositors and other customers, and promote the healthy
development of the banking industry
China's banking supervision is closer to international best practices,
and the transformation from compliance supervision to risk
supervision is realized, so as to improve the effectiveness of China's
banking supervision.
The object of banking supervision and management
1. Banking financial institutions. Banking financial institutions
refer to commercial banks, urban credit cooperatives, rural credit
cooperatives and other financial institutions established within
the territory of the People's Republic of China that absorb
deposits from the public, as well as policy banks. This is the main
object of banking supervision and management.
2. Other financial institutions. Financial asset management
companies, trust and investment companies, finance companies,
financial leasing companies and other financial institutions
established with the approval of the banking regulatory authority
of the State Council established within the territory of the
People's Republic of China.
3. Financial institutions established overseas. Financial
institutions established overseas with the approval of the banking
regulatory authority of the State Council and the overseas
business activities of the first two types of financial institutions.
Objectives of Banking Supervision
The objective of banking supervision and management is to
promote the lawful and sound operation of the banking industry
and maintain public confidence in the banking industry. At the
same time, banking supervision and management should protect
fair competition in the banking industry and enhance the
competitiveness of the banking industry.
Principles of Banking Supervision and Supervision
(1) The principles of law, openness, fairness and efficiency.
(2) The principle of independence, the banking supervision
institution and its personnel engaged in supervision and
management work shall perform their supervision and
management duties in accordance with the law and shall be
protected by law. Local governments, government departments
at all levels, social groups, and individuals must not interfere.
(3) The principle of synergy, the banking regulatory institution
under the State Council shall establish a supervision and
management information sharing mechanism with the People's
Bank of China and other financial regulatory institutions under
the State Council, so that they can carry out effective
supervision of the banking industry and the financial market
within their respective areas of responsibility.
Regulatory Authority
(1) Institutional setup
Paragraph 1 of Article 2 of the Banking Supervision Law stipulates that
"the banking regulatory authority of the State Council shall be
responsible for the supervision and administration of banking financial
institutions and their business activities throughout the country." ”
In accordance with the provisions of the Banking Supervision Law,
the banking regulatory institution of the State Council shall
establish dispatched agencies as necessary for the performance
of their duties, and exercise unified leadership and management
over them.
(2) Institutional operation
The Banking Supervision Law sets out the following basic
requirements for the operation of the banking supervision institution
of the State Council:
(1) The banking supervision institution of the State Council shall
make public the supervision and management procedures and
establish a supervision and management responsibility system
and an internal supervision system. (2) Local governments and
relevant departments at all levels shall cooperate and assist
banking regulatory institutions in their supervision and
management activities such as handling the risks of banking
financial institutions and investigating and dealing with relevant
financial violations. (3) The auditing, supervision and other
organs of the State Council shall supervise the activities of the
banking supervision institution of the State Council in
accordance with the provisions of the law.
(3) Basic norms for employees
The Banking Supervision Law establishes the following basic norms for
the employees of banking supervision institutions:
(1) Should have professional knowledge and business work experience
suitable for their position. (2) Dedication to duty,
Handle matters in accordance with the law, be fair and honest,
and must not take advantage of their position to seek improper
benefits, and must not concurrently hold positions in financial
institutions and other enterprises. (3) Keep state secrets, and
have the responsibility to keep secrets for the banking financial
institutions and parties under their supervision and management.
Supervisory and management responsibilities
(1) The scope of regulatory duties
1. Establish regulations. The banking regulatory authority of the State
Council shall formulate and issue a review in accordance with laws
and administrative regulations
Rules and rules for the supervision and management of banking
financial institutions and their business activities.
2. Approve the organization of financial institutions. The banking
regulatory authority of the State Council shall, in accordance with
the conditions and procedures prescribed by laws and
administrative regulations, examine and approve the
establishment, alteration, termination and business scope of
banking financial institutions.
3. Review the shareholders of financial institutions. The banking
regulatory authority of the State Council shall be responsible for
examining the shareholders' sources of funds, financial status,
capital replenishment capacity and creditworthiness when
accepting an application for the establishment of a banking
financial institution, or when a banking financial institution
changes its shareholders whose total capital or total shares reach
more than the prescribed proportion.
4. Review the financial products of financial institutions. The banking
regulatory authority of the State Council shall impose regulations on
banking financial institutions
The business varieties within the scope of business shall be reviewed
and approved or filed in accordance with the regulations.
5. Regulate market access in the banking sector. Without the
approval of the banking regulatory authority of the State Council,
no unit or individual may establish a banking financial institution
or engage in the business activities of a banking financial
institution.
6. Stipulate the qualifications of senior executives of financial
institutions. The banking supervision institution of the State
Council shall administer the qualifications of directors and senior
managers of banking financial institutions.
7. Formulate rules for prudent business operation. The banking
regulatory authority of the State Council shall, in accordance with
laws and administrative regulations, formulate rules for the
prudent operation of banking financial institutions, including risk
management, internal control, capital adequacy ratio, asset
quality, loss reserves, risk concentration, related party
transactions, asset liquidity, etc.
8. Guide and supervise the activities of self-regulatory organizations
in the banking industry.
9. International cooperation. The banking supervision institution
of the State Council shall carry out international exchange and
cooperation activities related to banking supervision and
administration.
(2) Performance of regulatory duties
1. Provisions on the time limit for examination and approval. The
banking regulatory institution under the State Council shall, within
the prescribed time limit, make a written decision on whether to
approve or disapprove the following applications: If the decision is
not approved, the reasons shall be stated: (1) the establishment
of a banking financial institution, within 6 months from the date of
receipt of the application documents; (2) The change and
termination of banking financial institutions, as well as the
business scope and the increase in business varieties within the
scope of business, within 3 months from the date of receipt of the
application documents; (3) Review the qualifications of directors
and senior management within 30 days from the date of receipt
of the application documents.
2. Off-site supervision regulations. The banking supervision
institution shall conduct off-site supervision of the business
activities and risk status of banking financial institutions,
establish a supervision and management information system for
banking financial institutions, and analyze and evaluate their risk
status.
3. On-site inspection regulations. The banking supervision
institution shall conduct on-site inspections of the business
activities and risk status of banking financial institutions.
4. Regulatory provisions on consolidation. The banking supervision
institution under the State Council shall implement mergers and
acquisitions of banking financial institutions
Table supervision and management.
5. Accept the advice of the People's Bank of China. The banking
regulatory authority under the State Council shall reply to the
People's Bank of China's proposal to inspect banking financial
institutions within 30 days of receiving the proposal.
6. Financial regulatory rating system and risk early warning
mechanism. The banking supervision institution of the State
Council shall establish a rating system for the supervision and
management of banking financial institutions and a risk early
warning mechanism, and determine the frequency, scope and
other measures to be taken for on-site inspections of banking
financial institutions according to their rating and risk status.
7. Emergency reporting responsibility system. The banking
supervision institution under the State Council shall establish a
system of responsibility for the discovery and reporting of
banking emergencies.
8. Emergency handling system. The banking regulatory institution
under the State Council shall, in conjunction with the People's
Bank of China, the financial department of the State Council and
other relevant departments, establish a banking emergency
handling system, formulate a banking emergency handling plan,
clarify the handling institutions and personnel and their
responsibilities, disposal measures and disposal procedures, and
timely and effectively handle banking emergencies.
9. Unified statistical system. The banking supervision institution
of the State Council shall be responsible for uniformly compiling
the statistical data and statements of banking financial
institutions nationwide and publishing them in accordance with
relevant state regulations.
Regulatory management measures
(1) Mandatory information disclosure
1. Obtain financial information. The banking supervision
institution shall have the right to require the banking financial
institutions to submit balance sheets, income statements and
other financial accounting and statistical statements, operation
and management materials, as well as audit reports issued by
certified public accountants in accordance with the requirements
of performing their duties.
2. On-site inspection. In accordance with the requirements of
prudential supervision, the banking regulatory institution may
take the following measures to conduct on-site inspections: (1)
enter banking financial institutions for inspection; (2) Ask the staff
of banking financial institutions and ask them to explain the
relevant inspection matters; (3) Consult and copy the documents
and materials related to the inspection matters of the banking
financial institutions, and seal the documents and materials that
may be transferred, concealed or damaged; (4) Inspect the
system of banking financial institutions using electronic
computers to manage business data. In order to regulate on-site
inspections, the Banking Supervision Law also stipulates that,
firstly, on-site inspections shall be approved by the person in
charge of the banking regulatory institution. Secondly, during the
on-site inspection, there shall be no less than 2 inspectors, and
legal documents and inspection notices shall be presented; Fewer
inspectors than
2 or fail to show legal documents and inspection notice, banking
financial institutions have the right to refuse to inspect.
3. Inquiry system. According to the needs of performing their
duties, the banking supervision institution may conduct
supervision and management talks with the directors and senior
managers of the banking financial institutions, and require the
directors and senior managers of the banking financial
institutions to explain the business activities and major matters
of risk management of the banking financial institutions.
4. Information disclosure system. The banking regulatory
institution shall order the banking financial institutions to
truthfully disclose to the public information such as financial and
accounting reports, risk management status, changes in
directors and senior management personnel, and other major
matters in accordance with regulations.
(2) Compulsory rectification system
If a banking financial institution violates the rules of prudent
operation, the banking regulatory authority of the State Council
or its provincial-level dispatched agency shall order it to make
corrections within a specified period of time; If the correction is
not made within the time limit, or if the behavior seriously
endangers the sound operation of the banking financial institution
and harms the legitimate rights and interests of depositors and
other customers, the following measures may be taken with the
approval of the person in charge of the banking regulatory
institution under the State Council or its provincial-level
dispatched agency, depending on the circumstances: (1) order
the suspension of part of the business and stop the approval of
the establishment of new business; (2) restricting the distribution
of dividends and other income; (3) restricting the transfer of
assets; (4) order the controlling shareholder to transfer equity or
restrict the rights of the relevant shareholder; (5) Ordering the
adjustment of directors and senior management personnel or
restricting their rights;
(6) Stop approving the addition of branches.
(3) Takeover, reorganization and revocation
1. Reasons for Receivership, Reorganization and Revocation. If a
banking financial institution has or is likely to have a credit crisis,
seriously affecting the legitimate rights and interests of
depositors and other customers, the banking regulatory authority
under the State Council may, in accordance with the law, take
over the banking financial institution or promote the
reorganization of the institution, and the takeover and
reorganization of the institution shall be carried out in
accordance with the relevant laws and the provisions of the State
Council.
2. Measures for takeover, reorganization and revocation. Where
a banking financial institution is taken over, reorganized or
revoked, the banking regulatory authority under the State
Council shall have the right to require the directors, senior
managers and other staff members of the banking financial
institution to perform their duties in accordance with the
requirements of the banking regulatory institution under the
State Council.
(4) Freezing accounts
With the approval of the person in charge of the banking
regulatory institution of the State Council or its provincial-level
dispatched agency, the banking regulatory institution shall have
the right to inquire into the accounts of banking financial
institutions and their staff members and related actors suspected
of financial violations; For those suspected of transferring or
concealing illegal funds, they may apply to the judicial authorities
to freeze them with the approval of the person in charge of the
banking regulatory institution.
Legal liability for violating the Banking Supervision and
Administration Law
(1) Legal liability of the staff of the CBRC
Paragraph 1 of Article 43 of the Banking Supervision Law stipulates
that if a person engaged in supervision and management of a
banking supervision institution falls under any of the following
circumstances, he shall be given an administrative sanction in
accordance with the law; If a crime is constituted, criminal
responsibility shall be investigated in accordance with the law: (1)
Violating the provisions of the review and approval of the
establishment, alteration, and termination of banking financial
institutions, as well as the scope of business and business varieties
within the scope of business; (2) Conduct on-site inspections of
banking financial institutions in violation of regulations; (3) Failure
to report emergencies in accordance with Article 28 of the Banking
Supervision Law; (4) Violating regulations to inquire into accounts or
apply for freezing funds; (5) Violating the provisions of the banking
financial institutions to take measures or penalties; (6) Conducting
an investigation against a relevant entity or individual in violation of
Article 42 of the Banking Supervision Law; (7) Other acts of abuse
of power or dereliction of duty.
(B) the legal responsibility of banking financial institutions
1. Legal liability for violating market access regulations. Article
44 of the Banking Supervision Law stipulates that the banking
regulatory authority of the State Council shall ban the
establishment of a banking financial institution without
authorization or the illegal business activities of a banking
financial institution; where a crime is constituted, criminal
responsibility is pursued in accordance with law; if it does not
constitute a crime, the banking regulatory authority of the State
Council shall confiscate the illegal gains, and if the illegal gains
are more than 500,000 yuan, a fine of not less than 1 time but
not more than 5 times the amount of the illegal gains shall be
imposed; where there are no unlawful gains or the unlawful gains
are less than 500,000 RMB, a fine of between 500,000 and
2,000,000 RMB is to be given.
2. Legal liability for violating business control regulations. Article
45 of the Banking Supervision Law stipulates that if a banking
financial institution falls under any of the following circumstances,
the banking regulatory authority of the State Council shall order it
to make corrections, and if it has illegal gains, it shall confiscate
the illegal gains, and if the illegal gains are more than 500,000
yuan, it shall be fined not less than 1 time but not more than 5
times the illegal gains; where there are no unlawful gains or the
unlawful gains are less than 500,000 RMB, a fine of between
500,000 and 2,000,000 RMB is to be given; where the
circumstances are particularly serious or corrections are not made
within the time limit, they may be ordered to suspend business for
rectification or have their business licenses revoked; If a crime is
constituted, criminal responsibility shall be pursued in accordance
with law: (1) the establishment of a branch without approval; (2)
Unauthorized change or termination; (3) Engaging in unapproved
or unfiled business activities in violation of regulations; (4) Raising
or lowering deposit interest rates or loan interest rates in violation
of regulations.
3. Legal liability for breach of the duty of honest operation and
prudent management. Article 46 of the Banking Supervision Law
stipulates that if a banking financial institution falls under any of
the following circumstances, the banking regulatory authority of
the State Council shall order it to make corrections and impose a
fine of not less than 200,000 yuan but not more than 500,000
yuan; where the circumstances are particularly serious or
corrections are not made within the time limit, they may be
ordered to suspend business for rectification or have their
business licenses revoked; If a crime is constituted, criminal
responsibility shall be pursued in accordance with law: (1) the
appointment of directors or senior managers without
qualification examination; (2) Refusing or obstructing off-site
supervision or on-site inspections; (3) Providing false or
concealed documents, reports and other documents and
materials; (4) Failure to disclose information in accordance with
regulations; (5) Serious violation of prudent business rules; (6)
Refusal to implement the measures provided for in Article 37 of
the Banking Supervision Law.
4. Legal liability for breach of the obligation to submit financial
information. Article 47 of the Banking Supervision Law stipulates
that if a banking financial institution fails to provide statements,
reports and other documents and materials in accordance with the
regulations, the banking regulatory institution shall order it to
make corrections, and if it fails to make corrections within the time
limit, it shall be fined not less than 100,000 yuan but not more than
300,000 yuan.
5. Complementary Sanctions. Article 48 of the Banking
Supervision Law stipulates that if a banking financial institution
violates laws, administrative regulations and relevant state
regulations on banking supervision and administration, the
banking supervision institution may impose penalties in addition
to the provisions of Articles 44 to 47 of the Banking Supervision
Law
Distinguish between different circumstances and take the
following measures: (1) order banking financial institutions to
give disciplinary sanctions to the directors, senior managers and
other directly responsible personnel; (2) If the behavior of a
banking financial institution does not constitute a crime, the
directors, senior managers and other directly responsible
persons who are directly responsible shall be given a warning
and fined not less than 50,000 yuan but not more than 500,000
yuan; (3) Revoke the qualifications of directly responsible
directors and senior managers for a certain period of time to life,
and prohibit directly responsible directors, senior managers and
other directly responsible personnel from engaging in banking
work for a certain period of time or even for life.
Chapter IV
Section 1
of the
Fiscal and
Taxation
Law Tax
Law
Subject to adjustment under the tax law
The object of adjustment of the tax law is the tax relationship.
Tax relationship is a general term for various social relations that
occur in the tax activities of relevant subjects. The basic structure
of the tax relationship is the relationship between the state and
the taxpayer, and its essence is the process in which the state
uses public power to transfer a part of the property owned by the
private subject to the state for free in order to realize public
financial revenue.
The concept of tax law
Taxation is the money or kind levied by the State on natural and
legal persons who meet the statutory requirements for taxation
by virtue of political power and in accordance with the procedures
prescribed by law in order to fulfill its functions.
Tax legal relations
1. The concept of tax legal relations. The legal relationship of
taxation is confirmed and regulated by the legal norms of
taxation, and the social relationship with the content of rights
and obligations occurs between the state and the taxpayer. One
of the legal relations of taxation
The subject of the tax law relationship is always the state, and
both parties have unilateral rights and obligations of the subject
of the tax legal relationship, and the tax law relationship arises
on the basis of the acts or facts specified in the tax law of the
taxpayer.
2. Elements of the legal relationship of taxation. The elements of
the tax legal relationship include: (1) The subject of the tax legal
relationship, also known as the subject of the tax law, refers to
the parties who enjoy rights and assume obligations in the tax
legal relationship, mainly including the state, the tax collection
authority, the taxpayer and the withholding agent. (2) The
content of the tax legal relationship refers to the rights and
obligations enjoyed by the subject of the tax legal relationship,
mainly including the rights and obligations of taxpayers and the
rights and obligations of the tax collection authorities. (3) The
object of the tax legal relationship refers to the object to which
the rights and obligations of the subject of the tax legal
relationship are directed, mainly including money, physical
objects and behaviors.
Constituent elements of tax law
The constituent elements of the tax law refer to the basic
elements necessary to constitute the tax law, mainly including the
subject of the tax law, the object of taxation, the tax base, the tax
item, the tax rate, the tax reduction, the place of tax payment, the
time of tax payment and the liability of the tax law.
VAT Law
(1) The concept of value-added tax
Value-added tax (VAT) is a kind of turnover tax that takes the added
value of goods and services in all aspects of circulation as the object
of taxation.
(2) The basic content of the VAT Law
1. Taxpayers of VAT. Taxpayers of VAT are units and individuals
that sell goods or processing, repair and repair services
(hereinafter referred to as labor services), sales services,
intangible assets, immovable property and imported goods within
the territory of the People's Republic of China. VAT taxpayers are
divided into one-share taxpayers and small-scale taxpayers.
2. Scope of VAT. The scope of VAT levy includes: (1) goods; (2)
taxable services;
(3) sales of services, intangible assets, real estate; (4) Imported
goods.
3. The basis of VAT. The taxpayer sells goods, services, intangible
assets, immovable property or provides the goods, services,
intangible assets, immovable property
The taxable basis for taxable services is its sales amount, and the
taxable basis for imported goods is the specified component taxable
value.
4. VAT rate. According to Article 2 of the Provisional Regulations
on VAT, the VAT rate is divided into four tiers: the basic rate of
17%; a low tax rate of 11%; a low tax rate of 6%; Zero-rated.
Excise Tax Act
(1) The concept of consumption tax
Consumption tax is a tax levied on the turnover of specific consumer
goods.
(2) The basic content of the Consumption Tax Law
1. Taxpayers of excise tax. The taxpayers of consumption tax are
units and individuals that produce, entrust the processing and
import of taxable consumer goods within the territory of China.
2. Consumption tax is subject to taxation. Consumption tax is levied
on taxable consumer goods, mainly with high energy consumption
and high consumption
pollution and high-end consumer goods. At present, the scope of
taxable consumer goods is determined by the State Council
3. The tax base of consumption. The tax base of consumption tax is
sales or quantity sold. Sales are sold by taxpayers
The full price charged to the purchaser for the sale of taxable
consumer goods and the additional expenses.
4. The rate of consumption tax. Consumption tax shall be
calculated by means of ad valorem rate or quantity fixation, and
proportional tax rate and fixed tax rate shall be adopted
respectively for different consumer goods. For the specific tax
rates and tax amounts, please refer to the consumption tax
items and tax rates (tax amounts) table attached to the
Provisional Regulations on Consumption Tax.
5. Tax deduction for consumption tax. Taxpayers are exempt
from consumption tax on the export of taxable consumer goods;
Except as otherwise provided by the State Council.
Corporate Income Tax Law
The Enterprise Income Tax Law came into force on 1 January 2008.
Since then, China has implemented a unified income tax law, a
unified tax rate, a unified pre-tax deduction scope and standards, and
a unified preferential tax policy for domestic and foreign-funded
enterprises.
The concept of corporate income tax
Enterprise income tax is a tax that takes the net income of an
enterprise within a certain period of time as the object of taxation.
Taxpayers of corporate income tax
(1) The concept of enterprise income tax
Within the territory of the People's Republic of China, enterprises
and other organizations that obtain income (hereinafter
collectively referred to as enterprises) are taxpayers of enterprise
income tax.
(2) Taxpayers of enterprise income tax
Within the territory of the People's Republic of China, enterprises
and other organizations that obtain income (hereinafter
collectively referred to as enterprises) are taxpayers of enterprise
income tax. Sole proprietorships and partnerships are excluded.
Enterprises are divided into resident enterprises and non-resident
enterprises. Resident enterprises refer to enterprises established
in China in accordance with the law, or established in accordance
with the laws of foreign countries (regions) but with actual
management institutions in China. "Non-resident enterprises"
refer to enterprises established in accordance with the laws of a
foreign country (region) and whose actual management is not in
China, but which have established an institution or place in China,
or enterprises that have not established an institution or place in
China, but have income derived from China.
The object of corporate income tax
Corporate income tax is levied on all kinds of taxable income
obtained by enterprises. The total income obtained by an
enterprise from various sources in monetary and non-monetary
forms is the total income. Including: (1) revenue from the sale of
goods;
(2) Provision of labor income; (3) income from the transfer of
property; (4) Equity investment income such as dividends and
bonuses; (5) interest income; (6) rental income; (7) royalty
income; (8) Receiving income from donations; (9) Other income.
The following incomes in the total revenue are non-taxable
income: (1) fiscal appropriations; (2) Administrative fees and
government funds collected in accordance with the law and
included in financial management; (3) Other non-taxable income
as stipulated by the State Council.
The rate of corporate income tax
The corporate income tax rate is 25%, and the applicable tax
rate is 20% for non-resident enterprises that have not
established an institution or place in China, or if they have
established an institution or place but the income obtained has
no actual connection with the establishment or place they have
established.
Corporate income tax payable income tax calculation
The total income of an enterprise in each tax year is the taxable
income after deducting non-taxable income, tax-exempt income,
various deductions and allowable losses of previous years.
Reasonable expenses actually incurred by the enterprise in
connection with the acquisition of income, including costs,
expenses, taxes, losses and other expenses, are allowed to be
deducted in the calculation of taxable income.
Calculation of corporate income tax payable
The taxable income of an enterprise is multiplied by the
applicable tax rate, and the balance after deducting the tax
amount reduced and credited in accordance with the provisions
of the Enterprise Income Tax Law on tax incentives, is the tax
payable.
Corporate income tax incentives
The state will give preferential enterprise income tax to industries
and projects that are supported and encouraged to develop.
The following income of an enterprise is tax-exempt income: (1)
interest income from treasury bonds; (2) Equity investment
income such as dividends and bonuses between eligible resident
enterprises; (3) Establish institutions and places in China
of non-resident enterprises obtain dividends, bonuses and other
equity investment income from resident enterprises that are
actually related to the institution or the market; and (4) the
income of eligible nonprofit organizations.
The following income of an enterprise can be exempted or
reduced from enterprise income tax: (1) income from engaging
in agriculture, forestry, animal husbandry and fishery projects;
(2) Income from the investment and operation of public
infrastructure projects supported by the state; (3) Income from
engaging in qualified environmental protection, energy
conservation and water conservation projects; (4) Eligible
income from technology transfer; (5) Income as stipulated in
Paragraph 3 of Article 3 of the Enterprise Income Tax Law.
Withholding of corporate income tax at source
The income tax payable by non-resident enterprises on the income
specified in paragraph 3 of Article 3 of the Enterprise Income Tax Law
shall be withheld at source, with the payer as the withholding agent.
The tax is withheld by the withholding agent from the amount paid or
due each time it is paid or due and payable.
Special tax adjustments for corporate income tax
If the business dealings between an enterprise and its related
parties do not comply with the arm's length principle and reduce
the taxable income or income of the enterprise or its related
parties, the tax authorities have the right to adjust it in
accordance with reasonable methods. The costs incurred by an
enterprise and its related parties in jointly developing or
transferring intangible assets, or jointly providing or receiving
services, shall be apportioned in accordance with the arm's
length principle when calculating the taxable income (the
principle followed by parties to a transaction without a related
relationship in conducting business transactions in accordance
with the arm's length transaction price and business practices).
Collection and management of corporate income tax
Except as otherwise provided by tax laws and administrative
regulations, resident enterprises shall be registered in the place where
the enterprise is registered as the place of tax payment;
However, if the place of registration is overseas, the place of taxation
shall be the place where the actual management agency is located.
Resident enterprises are among them
If a business establishment without legal personality is established
within the territory of the country, the enterprise income tax shall be
calculated and paid in a consolidated manner.
Personal Income Tax Law
(1) The concept of individual income tax
Individual income tax is a tax that is levied on an individual's income.
(2) The basic content of the Individual Income Tax Law
1. Taxpayers of individual income tax. According to the current
Individual Income Tax Law, there are two types of individual
income tax payers. The first is a resident individual, that is, an
individual who has a domicile in China, or does not have a
domicile, and has resided in China for a total of 183 days in a tax
year. Individual income tax shall be paid in accordance with the
law on income obtained by resident individuals from within and
outside China. The second is a non-resident individual, that is, an
individual who has no domicile and does not reside in China, or
who has no domicile and has resided in China for less than 183
days in a tax year. Non-resident individuals are subject to
individual income tax on their income derived from within the
territory of China in accordance with the law. The tax year begins
on January 1 and ends on December 31 of the Gregorian
calendar. The so-called "domicile in China" refers to habitual
residence in China due to household registration, family and
economic interests.
2. The object of individual income tax. Individual income tax is levied
on taxable income, including:
(1) Income from wages and salaries; (2) Income from
remuneration for labor services; 3) Income from author's
remuneration; (4) royalty income; (5) business income; (6)
Income from interest, dividends and bonuses; (7) Income from
property lease; (8) Income from the transfer of property; (9)
Incidental gains.
3. The scope of taxable personal income. (1) Income from wages
and salaries refers to the wages, salaries, bonuses, year-end
salary increases, labor dividends, allowances, subsidies and other
income related to the position or employment obtained by an
individual as a result of his or her position or employment. (2)
Income from remuneration for labor services refers to the income
obtained by individuals engaged in labor services, including
income obtained from design, decoration, installation, drawing,
laboratory testing, testing, medical treatment, law, accounting,
consulting, lecturing, translation, review, calligraphy and
painting, sculpture, film and television, audio and video
recording, performance, performance, advertising, exhibition,
technical services, introduction services, brokerage services,
agency services and other labor services. (3) Author's
remuneration refers to the publication and distribution of works
by individuals in the form of books, newspapers and periodicals
table and the income obtained. (4) Income from royalties refers to
the income obtained by individuals from the use of patent rights,
trademark rights, copyrights, non-patented technologies and other
concessions; The income obtained from providing the right to use
the copyright does not include the income from author's
remuneration. (5) Business income refers to: (1) the income
obtained by individual industrial and commercial households
engaged in production and business activities, and the income
derived from the production and operation of sole proprietorship
enterprises and partnership enterprises registered in China by
investors and individual partners of sole proprietorship enterprises
and partnership enterprises; (2) Income obtained by individuals
engaged in school-running, medical treatment, consulting and
other paid service activities in accordance with the law; (3) Income
obtained by individuals from contracting or leasing operations of
enterprises and institutions, as well as subcontracting and
subleasing them; (4) Income obtained by individuals engaged in
other production and business activities. (6) Income from interest,
dividends and bonuses refers to the income from interest,
dividends and bonuses obtained by individuals from owning
creditor's rights and equity. (7) Income from property lease refers
to the income obtained by individuals from leasing immovable
property, machinery and equipment, vehicles and vessels, and
other property. (8) Income from property transfer refers to the
income obtained by individuals from the transfer of securities,
equity, property shares in partnerships, immovable property,
machinery and equipment, vehicles and ships, and other property.
(9) Accidental income refers to the income of individuals who win,
win, win lottery, and other incidental natures. Where it is difficult
to define the taxable income items for the income obtained by an
individual, the competent taxation department of the State Council
shall determine it.
Vehicle and Vessel Tax Law
(—) Taxpayers of vehicle and vessel tax
In China, vehicles and vessels specified in the Schedule of Items and Rates
of Vehicle and Vessel Tax attached to the Vehicle and Vessel Tax Law (to:
hereinafter referred to as vehicles and vessels)
is the owner or manager of the vehicle and
vessel tax. (2) The object of taxation of vehicle
and vessel tax
According to the Taxable Items and Rates of Vehicle and Vessel Tax,
the vehicle and vessel tax is levied on passenger cars, commercial
vehicles (passenger cars, trucks), trailers, other vehicles (special
operation vehicles, wheeled special mechanical vehicles),
motorcycles and ships (motor vessels, yachts).
(3) Reduction or exemption of vehicle and vessel tax
Derailed vessels are exempt from vehicle and vessel tax: (1)
fishing and breeding vessels; (2) Vehicles and ships for the
exclusive use of the military and armed police forces; (3) Police
vehicles and vessels; (4) National comprehensive fire and rescue
vehicles and national comprehensive fire and rescue special ships
with special license plates for emergency rescue; (5) Vehicles and
vessels of foreign embassies and consulates in China,
representative offices of international organizations in China and
their relevant personnel who shall be exempt from tax in
accordance with the law.
Overview of the tax collection and management system
1. The concept of the tax collection and management law. The
Law on the Administration of Tax Collection, referred to as the
Law on the Administration of Tax Collection, is a general term for
the legal norms that regulate the social relations that occur in the
process of tax collection and tax administration by the tax
collection authorities.
2. The purpose of the Tax Administration Law. The objectives of the
Tax Administration Law include: (1) strengthening the administration
of tax collection;
(2) standardize the collection and payment of taxes; (3)
Guarantee national tax revenues; (4) to protect the legitimate
rights and interests of taxpayers; (5) Promote economic and
social development.
3. Scope of application of the Tax Administration Law. The collection
and administration of all kinds of taxes levied by the tax authorities
in accordance with the law,
The Tax Administration Law is applicable.
4. Taxpayer Rights. Taxpayer rights include: (1) the right to
information. Taxpayers and withholding agents have the right to
learn from the tax authorities about the provisions of national
tax laws and administrative regulations, as well as the tax
payment procedures
Preamble. (2) The right to secrecy. Taxpayers and withholding
agents have the right to request the tax authorities to make
payments
The information of taxpayers and withholding agents is confidential.
The tax authorities shall be taxpayers and withholding agents in
accordance with the law
The situation is confidential. The confidentiality of taxpayers and
withholding agents refers to taxpayers and withholding agents
Trade Secrets and Personal Privacy. Tax violations of taxpayers and
withholding agents are not within the scope of confidentiality.
(3) The right to apply for reduction, exemption and tax refund. (4) The
right to make a statement and the right to make a defense.
Taxpayers, withholding obligations
The person has the right to make a statement and defend
against the decision made by the tax authorities. (5) The right to
apply for administrative reconsideration, file an administrative
lawsuit, and request state compensation. (6) The right to accuse
and report. Taxpayers and withholding agents have the right to
accuse and report violations of law and discipline by tax
authorities and tax personnel. All units and individuals have the
right to report violations of tax laws and administrative
regulations. The organ receiving the report and the organ
responsible for the investigation shall maintain the
confidentiality of the informant. (7) Right to reward. The tax
authorities shall reward the whistleblower in accordance with
the regulations. (8) Right to request recusal. When tax personnel
verify the tax payable, adjust the tax quota, conduct tax
inspections, impose tax administrative penalties, or handle tax
administrative reconsiderations, they shall recuse themselves
from any of the following relationships with taxpayers,
withholding agents, their legal representatives, or directly
responsible persons: (1) husband and wife; (2) lineal
consanguinity; (3) collateral blood relationship within three
generations; (4) close kinship; and (5) other interests that may
affect the impartial enforcement of the law.
Tax management
Tax administration is the basic link in the tax collection and
administration process, which mainly includes three systems: tax
registration, account book and voucher management and tax
declaration.
1. Tax registration, also known as tax registration, refers to a
system whereby taxpayers register in writing with the in-charge
tax authorities within the statutory period for major changes that
occur before the commencement of business, the closure of
business or other production and operation periods. Tax
registration can be divided into business registration, change
registration and cancellation registration.
(1) Business registration system. Enterprises, branches and
places engaged in production and business operations set up by
enterprises in other places, individual industrial and commercial
households and public institutions engaged in production and
business operations (hereinafter referred to as taxpayers
engaged in production and business operations) shall, within 30
days from the date of obtaining the business license, apply to
the tax authorities for tax registration with the relevant
certificates.
(2) Change and cancellation of registration system. Taxpayers
engaged in production and business operations shall change the
content of their tax registration within 30 days from the date of
change of registration by the administrative authority for
industry and commerce or within 30 days of filing a change with
the industrial and commercial bank
Before applying for cancellation of registration, the administrative
authority shall apply to the tax authorities for the alteration or
cancellation of tax registration with the relevant certificates.
(3) The system for the use of tax registration certificates.
Taxpayers shall use tax registration certificates in accordance
with the provisions of the competent taxation department of the
State Council.
(4) The management system for tax registration of outgoing
business. Taxpayers engaged in production and business
operations who go to other counties (cities) to temporarily engage
in production or business activities shall report to the tax
authorities at the place of business for inspection and registration
and accept tax administration with a copy of the tax registration
certificate and the tax administration certificate of the business
activities filled out by the local tax authorities.
2. Account book voucher management. The management system
of account books and vouchers includes the system of setting up
account books and vouchers, the financial accounting system,
the text management of account books and vouchers, the invoice
management system, the tax control device system and the
custody system of account books and vouchers.
(1) The setting of account books and vouchers. Taxpayers
engaged in production and business operations shall, within 15
days from the date of obtaining a business license or incurring
tax liability, set up account books in accordance with the
relevant provisions of the state.
(2) Financial accounting system. Taxpayers engaged in
production and business operations shall, within 15 days from
the date of receipt of the tax registration certificate, submit their
financial and accounting systems or financial and accounting
treatment measures to the in-charge taxation authorities for the
record.
(3) Text management of account books and vouchers. Account
books, accounting vouchers and statements shall be in Chinese.
Ethnic autonomous areas may use one of the ethnic languages
commonly used in the area at the same time. Foreign-invested
enterprises and foreign enterprises can use one foreign
language at the same time.
(4) Invoice management system. The tax authorities are the
competent authorities for invoices, and are responsible for the
management and supervision of invoice printing, purchasing,
issuance, acquisition, storage, and cancellation of invoices.
(5) Tax control device system. According to the needs of tax
collection and management, the state actively promotes the use
of tax control devices. Taxpayers shall install and use tax control
devices in accordance with regulations, and shall not damage or
alter tax control devices without authorization.
(6) The custody system of account books and vouchers. Account
books, accounting vouchers, statements, tax payment vouchers,
invoices, export vouchers and other relevant tax-related
materials shall be legal, true and complete.
3. Tax returns. Tax declaration is a system in which taxpayers
submit written reports on tax matters to the tax authorities in
accordance with the time limit and content prescribed by law. It
includes the system, including the method, deadline, and content
of tax returns.
Tax collection
Tax collection is the core content of the tax collection and
management system, including the basic system of tax collection,
the tax reduction and exemption system and the tax collection
guarantee system.
1. The basic system of tax collection mainly includes the subject
system, the tax collection period system, the tax refund system,
The system for determining the amount of tax payable, the system
for tax warehousing and the system for the service of documents.
(1) The system of levy subjects. The subject of taxation is the
tax authorities, tax personnel and units and personnel entrusted
by the tax authorities in accordance with laws and
administrative regulations, and no other units or individuals shall
carry out tax collection activities.
(2) The tax collection period system mainly includes the tax payment
period of the taxpayer and the tax collection period of the tax subject.
The tax collection period is mainly reflected in the supplementary
levy period and the recovery period of the tax collection authority.
(3) Tax refund system. If the taxpayer pays the tax in excess of
the tax payable, the tax authorities shall refund it immediately
after discovering it; If the taxpayer discovers the tax within 3
years from the date of settlement and payment, it may request
the tax authorities to refund the overpaid tax and add interest on
the bank deposit for the same period, and the tax authorities
shall refund it immediately after timely verification; If it involves
withdrawal from the state treasury, it shall be returned in
accordance with the provisions of laws and administrative
regulations on the management of the state treasury.
(4) The system for determining the amount of tax payable. The
determination of the tax payable is generally determined by the
tax collection authorities according to the taxpayer's tax
declaration, and the tax authorities have the right to verify and
adjust when the taxpayer declares falsely or fails to file a tax
return.
(5) Tax warehousing system. The state and local taxation
authorities shall, in accordance with the scope of tax collection
and administration prescribed by the state and the budget level
of the taxpayer treasury, pay the collected taxes into the state
treasury.
(6) Document service system. The tax authorities shall directly
deliver the tax documents to the recipient.
2. Tax reduction and exemption system. Taxpayers may apply for tax
reduction and exemption in accordance with the provisions of laws
and administrative regulations.
3. Tax collection guarantee system, including tax preservation
system, tax enforcement system and other guarantee systems.
(1) Tax preservation system, including ordering the payment of taxes
within a time limit, freezing deposits, seizing and seizing property,
systems such as tax subrogation and revocation.
(2) Tax enforcement system. If a taxpayer or withholding agent
engaged in production or business operation fails to pay or
release the tax within the prescribed time limit, or the tax
guarantor fails to pay the guaranteed tax within the prescribed
time limit, the tax authorities shall order the taxpayer to pay the
tax within the prescribed time limit, and if the tax fails to pay
within the time limit, the tax authorities may take compulsory
enforcement measures with the approval of the director of the
tax bureau (branch) at or above the county level.
(3) Other tax protection systems, mainly including the tax
priority system, the tax guarantee system and the departure tax
clearance system.
Tax checks
The tax inspection system is a safeguard system in the tax
collection and administration system, which mainly includes the
items of tax inspection, the obligations of taxpayers in tax
inspection and the rights and obligations of tax authorities in tax
inspection.
Section 2
Auditing
LawThe
Concept of
Auditing
Law
Auditing refers to the audit institutions in accordance with the law,
independent inspection of the audited unit's accounting vouchers,
accounting books, accounting statements and other financial
revenues and expenditures, financial revenues and expenditures
related information and assets, to supervise financial revenues and
expenditures, financial revenues and expenditures true, legal, and
efficient activities. Audit Law is a general term for the legal norms
that regulate the auditing relationship. The current audit law mainly
includes the Audit Law and the Regulations for the Implementation
of the Audit Law.
Scope of adjustment of the Audit Act
The State implements an audit and supervision system. Adhere to
the leadership of the Communist Party of China over audit work, and
build a centralized, unified, comprehensive, authoritative and
efficient audit and supervision system. The State Council and local
people's governments at or above the county level shall establish
auditing organs. The financial revenues and expenditures of the
departments of the State Council and the local people's
governments at all levels and their departments, the financial
revenues and expenditures of state-owned financial institutions,
enterprises and institutions, and other financial revenues and
expenditures that shall be audited in accordance with the provisions
of the "Audit Law" shall be subject to audit supervision in accordance
with the provisions of the law. Audit institutions in accordance with
the relevant financial revenues and expenditures, financial revenues
and expenditures of laws, regulations and other relevant provisions
of the State for audit evaluation, within the scope of statutory
authority to make audit decisions.
Basic Principles of the Audit Act
The basic principles of the Audit Law include the principle of
legality, the principle of objectivity and impartiality, the principle
of seeking truth from facts, the principle of honesty and integrity,
and the principle of confidentiality.
Audit Institutions
1. The State Council and local people's governments at or above
the county level shall establish auditing institutions. The State
Council has set up an Audit Office to take charge of auditing work
throughout the country under the leadership of the Premier of
the State Council.
2. The auditing organs of the people's governments of provinces,
autonomous regions, municipalities directly under the Central
Government, cities divided into districts, autonomous prefectures,
counties, autonomous counties, cities not divided into districts,
and municipal districts shall be responsible for the auditing work
within their respective administrative areas under the leadership
of the governor, the chairman of the autonomous region, the
mayor, the governor, the county head, the district head, and the
audit organ at the next higher level. at the local level
Audit institutions at the same level of the people's Government
and the higher level of audit institutions responsible for and
report work, audit business at the higher level of audit institutions
leadership.
Auditors
Auditors should have professional knowledge and professional
ability that are compatible with the audit work they are engaged
in. According to the needs of the work, the audit institution may
hire personnel with professional knowledge related to audit
matters to participate in the audit work.
Audit Terms of Reference
1. Audit institutions at the same level of departments (including
directly subordinate units) and subordinate government budget
implementation and final accounts
and other financial revenues and expenditures, audit and
supervision.
2. Under the leadership of the Premier of the State Council, the
Audit Office shall audit and supervise the implementation of the
central budget, the draft final accounts and other financial
revenues and expenditures, and submit a report on the audit
results to the Premier of the State Council. Under the leadership
of the provincial governor, the chairman of the autonomous
region, the mayor, the governor, the county magistrate, the
district head, and the audit organ at the next higher level, the
local auditing organs at all levels shall audit and supervise the
implementation of the budget, the draft final accounts, and other
financial revenues and expenditures, and submit a report on the
audit results to the people's government at the same level and
the auditing organ at the next higher level.
3. The National Audit Commission shall audit and supervise the
financial revenues and expenditures of the Central Bank.
4. The auditing institutions shall audit and supervise the financial
revenues and expenditures of the state's public institutions and
other public institutions that use financial funds.
5. Audit institutions on state-owned enterprises, state-owned
financial institutions and state-owned capital holding or dominant
position of enterprises, financial institutions, assets, liabilities,
profits and losses, as well as other financial revenues and
expenditures, audit supervision. In addition to financial
institutions, in the case of major financial interests of the state, in
order to safeguard the national economic security, with the
approval of the State Council, the National Audit Office may
conduct special audit investigation or audit.
6. Audit institutions on government investment and government
investment-based construction projects budget implementation
and final accounts, other major public works related to national
interests and public interests of the fund management and use
of construction and operation, audit supervision.
7. Audit institutions audit and supervise state-owned resources and
state-owned assets.
8. Audit institutions shall audit and supervise the financial
revenues and expenditures of social insurance funds, national
social security funds, social donation funds and other public
funds managed by government departments and other units
entrusted by the government.
9. Audit institutions shall audit and supervise the financial
revenues and expenditures of international organizations and
foreign government aid and loan projects.
10. According to the approved audit project plan, the audit institution
can be implemented on the audited unit
Conduct audit and supervision of major national economic and social
policy measures.
11. In addition to the audit matters stipulated in the Audit Law,
audit institutions shall audit matters that shall be audited by
other laws and administrative regulations in accordance with
the Audit Law and relevant laws
Fulfillment of audit duties
1. Comprehensive audit and special audit.
2. Special audit investigation.
3. Notification of risks and hidden dangers.
4. Determination of audit jurisdiction.
5. Guidance and supervision.
6. Audit verification.
Access to information
Access to information. Audit institutions have the right to require
the audited unit to provide financial and accounting information
in accordance with the provisions of the audit institutions, as well
as financial revenues and expenditures, financial revenues and
expenditures-related business, management and other
information, including electronic data and related documents.
Information Sharing
Information Sharing. The national government affairs information
system and data sharing platform shall be open to audit institutions
in accordance with regulations. The electronic data and other
materials obtained by the audit institutions through the
government affairs information system and the data sharing
platform can be full
If it is sufficient, it shall not be required to be provided repeatedly by
the audited unit.
Audit checks
Audit checks. When auditing, audit institutions have the right to
inspect the audited unit's financial, accounting information and
financial revenues and expenditures, financial revenues and
expenditures, management and other information and assets,
and have the right to inspect the security, reliability and economy
of the audited unit's information system, and the audited unit
shall not refuse.
Investigation and evidence collection
Investigation and evidence collection. When auditing institutions,
they have the right to investigate the relevant units and
individuals on the relevant issues of audit matters, and obtain
relevant supporting materials. Relevant units and individuals
should support and assist the work of the audit institutions,
truthfully reflect the situation to the audit institutions, and
provide relevant supporting materials.
Account Inquiries
Account Inquiries. With the approval of the person in charge of
the audit institution of the people's government at or above the
county level, the audit institution has the right to inquire into the
accounts of the audited unit in the financial institution. Audit
institutions have evidence to prove that the audited unit violates
the provisions of the State to transfer public funds to other units,
individuals in the financial institution account, by the people's
Government at or above the county level audit machine
With the approval of the principal responsible person, the
relevant responsible person has the right to inquire about the
deposits of relevant units and individuals in financial institutions
related to audit matters.
Preservation measures
Preservation measures. When auditing institutions, the audited
unit shall not transfer, conceal, tamper with, destroy financial,
accounting information and financial revenues and expenditures,
financial revenues and expenditures related to business,
management and other information, shall not transfer, conceal,
deliberately destroy the assets held in violation of state
regulations.
Corrective Actions
Corrective Actions. Audit institutions that the audited unit
implemented by the higher authorities, units on financial revenues
and expenditures, financial revenues and expenditures of the
provisions of conflict, administrative regulations, should be
recommended to the relevant competent authorities, units
corrected; The relevant competent authorities and units do not
correct, the audit institutions shall be submitted to the competent
organs and units to deal with them in accordance with the law.
Bulletin announcement
Bulletin announcement. Audit institutions may report to the
relevant government departments or publish the results of the
audit to the public. Audit institutions to report or publish audit
results, should keep state secrets, work secrets, business secrets,
personal privacy and personal information, compliance with laws,
administrative regulations and the relevant provisions of the State
Council.
Departmental synergy
Departmental synergy. Audit institutions to carry out audit and
supervision duties, may request public security, finance, natural
resources, ecology and environment, customs, taxation, market
supervision and management and other organs to assist.
Relevant organs shall cooperate in accordance with law.
Audit process
1. The program starts. Audit institutions according to the
approved audit project plan to determine the audit matters to
form an audit team, and should be in the implementation of the
audit 3 days ago, to the audited unit to serve the audit notice; In
case of special circumstances, with the approval of the person in
charge of the audit institution of the people's government at or
above the county level, the audit can be carried out directly with
the audit notice.
2. Audit investigations. Auditors conduct audits by reviewing
financial and accounting materials, consulting documents and
materials related to audit matters, inspecting cash, physical
goods, negotiable securities and information systems, and
investigating relevant units and individuals, and obtaining
supporting materials. When conducting investigations to relevant
units and individuals, auditors shall be no less than 2 people, and
present their work certificates and copies of audit notices.
3. Audit report. After the audit team conducts an audit on the
audit matters, it shall submit the audit report of the audit team to
the audit institution. Before the audit report of the audit team is
submitted to the audit institution, the opinions of the audited unit
shall be sought. The audited unit shall, within 10 days from the
date of receipt of the audit report of the audit team, send its
written opinion to the audit team. The audit team shall submit the
written opinion of the audit unit to the audit institution.
4. Audit decisions. Audit institutions in accordance with the
procedures prescribed by the Audit Commission to the audit team
of the audit report to review, and the audited unit on the audit
report of the audit team put forward comments together with the
study, issued audit institutions
audit report.
5. Change or revocation of decisions. Higher-level audit
institutions believe that the audit decisions made by lower-level
audit institutions violate the relevant provisions of the State, may
instruct lower-level audit institutions to change or revoke, and if
necessary, can also directly make a decision to change or revoke.
Liability for violations of the audited unit
1. Obstruction of audit behavior. The audited unit violates the
provisions of the Audit Law, refuses or delays to provide
information related to audit matters, or the information provided
is untrue and incomplete, or refuses or obstructs inspection,
investigation and verification of the relevant circumstances, the
audit institution shall order corrections, and may circulate
criticism and give warnings; and where corrections are refused,
legal responsibility is to be pursued in accordance with law.
2. Transfer concealment. The audited unit violates the provisions
of the Audit Law, transfers, conceals, tampers with, destroys
financial, accounting information and financial revenues and
expenditures, financial revenues and expenditures, management
and other information, or transfers, conceals, deliberately
destroys the assets held in violation of state regulations, audit
institutions believe that the directly responsible for the person in
charge and other directly responsible personnel shall be
punished according to law, shall be made to the audited unit to
deal with the proposal, or transferred to the supervisory organs
and the relevant competent authorities, units for processing, the
relevant organs, The unit shall notify the audit institution in
writing of the results; where a crime is constituted, criminal
responsibility is pursued in accordance with law.
3. Illegal income and expenditure. Violations of budgets or other
financial revenues and expenditures by departments at the same
level (including directly subordinate units) and lower-level
governments or other violations of state regulations.
4. Refusal to turn in. Audit institutions shall be ordered to pay the
amount that shall be handed over by the audited unit in
accordance with the law, the audited unit refuses to implement,
the audit institutions shall be notified to the relevant competent
authorities, units, the relevant competent authorities and units
shall, in accordance with the provisions of the relevant laws and
administrative regulations, withhold or take other measures, and
inform the audit institutions in writing of the results.
5. Refusal to make corrections. The audited unit shall, in
accordance with the prescribed time to rectify the problems
found in the audit, the rectification report to the audit institution,
at the same time to the people's Government at the same level
or the relevant competent authorities, units, and in accordance
with the provisions of the public. Where corrections are refused
or are falsified during rectification, legal responsibility is to be
pursued in accordance with law.
6. Retaliation and framing. Retaliation against the auditors shall
be punished in accordance with the law; where a crime is
constituted, criminal responsibility is pursued in accordance with
law.
7. Administrative accountability. The financial revenue and
expenditure of the audited unit, financial revenue and
expenditure in violation of the provisions of the State, the audit
institutions believe that the person in charge and other persons
directly responsible for the punishment shall be given sanctions
in accordance with the law, shall be proposed to the audited unit,
or transferred to the supervisory authorities and the relevant
competent authorities, units for processing, the relevant organs,
units shall be notified in writing of the results of the audit
institutions.
8. Criminal Accountability. If the financial revenue and expenditure
of the audited unit violates the provisions of laws and
administrative regulations, and constitutes a crime, criminal
responsibility shall be investigated in accordance with law.
Auditors' liability for violations
Auditors who abuse their powers, twist the law for personal gain,
derelict their duties, or leak or illegally provide to others the state
secrets, work secrets, commercial secrets, personal privacy and
personal information that they know shall be punished in
accordance with law; where a crime is constituted, criminal
responsibility is pursued in accordance with law.
Chapter V Land Law
and Real Estate
LawSection 1 Land
Management Law
Overview of the Land Administration Act
The objects of adjustment of the land system include land civil
relations and land administrative relations.
In China, the system for adjusting civil land relations includes the
land ownership system, the land use right system, and the land
circulation system.
The land administrative relationship is embodied in the public
established by the state in the use of government functions for the
rational use of land resources
Policy and administrative order.
The functions of land management are, first, to serve the civil
relationship of land, that is, to protect land rights and maintain the
order of land circulation; The second is to realize the public
interest on the land, that is, to protect land resources, and
cooperate with the implementation of legal systems such as
ecological environmental protection, natural resource protection,
urban and rural construction planning, and land taxation.
The Land Administration Law is the basic law for land administration.
The principle of public ownership of land
The principle of public ownership of land. China practices socialist
public ownership of land, that is, ownership by the whole people
and collective ownership by the working masses. All people, that
is, the state. China's land management system is a rule system
and governance system for the sustainable development of land
resources established for sustainable social and economic
development under the premise of socialist public ownership of
land, relying on the property rights structure of land ownership
and land use rights, and through the role of market mechanism
and government management.
The principle of rational use of land
The principle of rational use of land. China regards the rational use
of land and the effective protection of cultivated land as its basic
national policy, and requires governments at all levels to adopt
measures, make comprehensive plans, strictly manage land
resources, protect and develop land resources, and put a stop to
illegal occupation of land.
Principles of land use control
The principle of land use control, the Land Management Law
divides land into three categories according to its use: (1)
agricultural land, which refers to land directly used for
agricultural production, including cultivated land, forest land,
grassland, farmland water use land, aquaculture water surface,
etc.; (2) Construction land refers to the land for the construction
of buildings and structures, including land for urban and rural
residential and public facilities, industrial and mining land, land
for transportation and water conservancy facilities, land for
tourism, land for military facilities, etc.;
(3) Unused land refers to land other than agricultural land and
construction land. China implements a land use control system,
the state formulates an overall land use plan, stipulates land
use, strictly restricts the conversion of agricultural land into
construction land, controls the total amount of construction land,
and implements special protection for cultivated land. Units and
individuals using land must use land in strict accordance with
the purposes determined in the overall land use plan.
Overview of land ownership
Land ownership is the right of the state or peasant collectives to
occupy, use, benefit from and dispose of the land owned by them in
accordance with the law.
The effect of land ownership extends to the surface and the air
above it and the underground space below. The State has the right
to dispose of the aerial and underground space of collective land
beyond the scope required for its use, provided that the legitimate
rights and interests of the landowners and users are protected.
Currents, seas and mineral deposits belong to the state. Forests,
mountains, grasslands, wastelands, and tidal flats belong to the
state, except for those that are collectively owned by law.
State land ownership
State land ownership belongs to all the people of the People's
Republic of China. The ownership of state-owned land is exercised
by the State Council on behalf of the state. Local people's
governments may exercise ownership of State-owned land within
the scope authorized by the State Council. The people's
government has the right to plan, manage, develop, protect and
establish land use rights and other usufructuary rights in respect
of state-owned land. State land ownership is non-transferable.
The land in the urban area of the city is owned by the state. Land
in rural areas and on the outskirts of cities shall be owned by
peasant collectives, except as provided by law for the State;
Homesteads, self-cultivated land, and self-cultivated mountains
belong to peasant collectives.
Collective land ownership
Peasant collectives have the right to directly use the land they
own, set up land use rights, obtain land income and maintain
ownership rights. Except as expropriated by the State in
accordance with law and permitted by law, collective land
ownership may not be transferred. When collectively owned land
is expropriated in accordance with the law, the owner is entitled
to compensation.
Land owned by peasant collectives belongs to all members of the
collective organization. Major matters concerning the exercise of
collective land ownership shall be decided by the collective
members in accordance with legal procedures.
Overview of land use rights
State-owned land and land owned by peasant collectives may be
designated for use by units or individuals in accordance with law.
The right to use land is a usufructuary right in civil law. Land use
right holders enjoy the right to occupy, use and benefit from
state-owned or collectively-owned land in accordance with
prescribed purposes, and have the right to transfer or otherwise
lawfully dispose of their land use rights and interests in
accordance with law. At the same time, the owner of the land use
right has the obligation to protect, manage and rationally use the
land.
Land use rights are divided into state-owned land use rights and
collective land use rights according to the source of rights, and
agricultural land use rights and construction land use rights
according to their use. According to the source of rights, the right
to use agricultural land is divided into the right to use state-
owned agricultural land and the right to contract land
management. The right to use construction land is divided into
the right to use state-owned construction land and the right to
use collective construction land according to the source of rights.
Agricultural land use rights
1. Contracting and acquisition of agricultural land use rights.
Cultivated land, forest land, grassland, and other land used for
agriculture in accordance with the law owned by peasant
collectives and owned by the state in accordance with the law
shall be contracted by means of household contracting within the
rural collective economic organizations, and barren mountains,
barren ditches, barren hills, barren beaches, and so forth that are
not suitable for household contracting may be contracted by
means of bidding, auction, and public consultation, and engaged
in planting, forestry, animal husbandry, and fishery production.
2. Development and acquisition of agricultural land use rights.
Where the development of state-owned barren mountains,
wastelands, or barren beaches for which the right of use has not
been determined, for planting, forestry, animal husbandry, or
fishery production, it may be determined to be for long-term use
by development units or individuals upon the approval of the
people's government at or above the county level in accordance
with law.
The right to use construction land
1. The right to use state-owned construction land. According to
the principle of paid use of state-owned land, the construction
unit shall pay the state-owned land in accordance with the
standards and methods prescribed by the State Council through
transfer, lease and other paid methods
The state-owned land use right shall be obtained after paying the land
use right transfer fee and other land use fees and other expenses.
2. The right to use land for collective construction. The owner of
the land may transfer the land to units or individuals for use by
means of transfer, lease, etc., and shall sign a written contract
specifying the land boundary, area, construction period, use
period, land use, land use, planning conditions, and other rights
and obligations of both parties. Where the right to use land for
collective management construction is established in accordance
with these provisions, it shall be subject to the consent of more
than two-thirds of the members of the villagers' meeting or more
than two-thirds of the villagers' representatives of the members
of the collective economic organization.
3. The right to use rural homesteads. Rural homestead land is a
special collective construction land used to ensure the residence
of rural villagers.
Circulation of state-owned construction land
Circulation of state-owned construction land. The transfer,
exchange, contribution, donation or mortgage of the right to use
state-owned construction land shall be governed by the
provisions of the Law on the Administration of Urban Real Estate
and other laws.
Circulation of land for collective management
Circulation of land for collective management. The right to use
land for collective business construction acquired through
transfer or other means may be transferred, exchanged,
contributed, donated or mortgaged, except as otherwise provided
by laws and administrative regulations or otherwise agreed in a
written contract signed by the land owner or land use right
holder.
Land Use Master Plan
The overall land use planning refers to the overall arrangement
and layout of land development, utilization, governance and
protection made by the people's governments at all levels in a
certain planning area in accordance with the requirements of the
national economic and social development plan, land
consolidation and resource and environmental protection, land
supply capacity and the demand for land for various
constructions, and is the basis for the state to implement land use
control.
Territorial spatial planning
In 2013, the Central Committee of the Communist Party of
China put forward the requirement of "establishing a spatial
planning system, delineating the boundaries of production,
living and ecological space development control, and
implementing use control", and China began to promote the
upgrading process of the "multi-plan integration" system that
integrates the spatial planning of the main functional area, land
use planning, and urban and rural planning into a unified
territorial spatial planning.
Planning and management supporting system
1. The State shall establish a land survey system. The competent
departments of natural resources of the people's governments at
or above the county level shall, in conjunction with the relevant
departments at the same level, conduct land surveys, and assess
land grades on the basis of the results of land surveys, planned
land uses, and uniform standards formulated by the State.
Landowners and users shall cooperate with the investigation and
provide relevant information.
2. The State shall establish a land statistics system. The
statistical agencies and departments in charge of natural
resources of the people's governments at or above the county
level shall conduct land statistical surveys in accordance with the
law, and regularly publish land statistical data; The land area
statistics jointly released by the people's governments at all
levels are the basis for the preparation of overall land use plans
by the people's governments at all levels.
3. The State shall establish a national land management information
system to dynamically monitor land use.
Basic policies for cultivated land protection
1. Maintain the total amount of cultivated land.
The State protects cultivated land and strictly controls the
conversion of cultivated land into non-cultivated land. Where
cultivated land is occupied with approval for non-agricultural
construction, the unit occupying cultivated land shall be
responsible for reclaiming cultivated land equivalent to the
quantity and quality of the cultivated land occupied in
accordance with the principle of "how much is occupied, how
much is reclaimed"; Where there are no conditions for
reclamation or the cultivated land does not meet the
requirements, the cultivated land reclamation fee shall be paid in
accordance with the provisions of the province, autonomous
region, or municipality directly under the Central Government,
and the special funds shall be used for the reclamation of new
cultivated land.
2. Improve the quality of cultivated land.
People's governments at all levels shall take measures to guide crop
rotation and fallow in accordance with local conditions, improve soil,
increase soil fertility, maintain drainage and irrigation engineering
facilities, and prevent land desertification, salinization, soil erosion,
and soil pollution.
3. Expand the increase of cultivated land.
The State encourages units and individuals to develop unused land
in accordance with the overall land use plan and on the premise of
protecting and improving the ecological environment and
preventing soil erosion and land desertification; Where it is
suitable for development as agricultural land, priority shall be
given to the development of agricultural land. The State protects
the lawful rights and interests of developers in accordance with
law.
Government responsibility system for cultivated land
protection
In order to implement the requirements for cultivated land
protection in the overall land use plan, the people's governments
of provinces, autonomous regions and municipalities directly
under the Central Government shall strictly implement the overall
land use plan and the annual land use plan, and take measures to
ensure that the total amount and quality of cultivated land within
their respective administrative areas are not reduced.
Permanent basic farmland protection system
1. Demarcation of permanent basic farmland. The State
implements a permanent basic farmland protection system. The
following cultivated land shall be classified as permanent basic
farmland in accordance with the overall land use plan and shall be
strictly protected: (1) cultivated land in the production bases of
grain, cotton, oil, sugar and other important agricultural products
approved and determined by the competent department of
agriculture and rural affairs under the State Council or the local
people's government at or above the county level; (2) Cultivated
land with good water conservancy and soil and water
conservation facilities, transformation plans are being
implemented, and medium and low-yield fields that can be
transformed and high-standard farmland that has been built; (3)
vegetable production base; (4) Experimental fields for agricultural
research and teaching; (5) The State Council stipulates that it
shall be classified as permanent
Other cultivated land for a long time as basic farmland. The
permanent basic farmland designated by all provinces,
autonomous regions, and municipalities directly under the Central
Government shall generally account for more than 80 percent of
the cultivated land within their respective administrative areas,
and the specific proportion shall be prescribed by the State
Council.
2. Protection of permanent basic farmland. After permanent basic
farmland has been demarcated in accordance with law, no unit or
individual may occupy or change its use without authorization. It
is indeed difficult to avoid permanent basic farmland in the
selection of sites for key national energy, transportation, water
conservancy, military facilities and other key construction
projects, and if it involves the conversion of agricultural land or
land expropriation, it must be approved by the State Council.
Examination and approval system for the conversion of
agricultural land
If the construction occupies land and involves the conversion of
agricultural land into construction land, the approval procedures for
the conversion of agricultural land shall be handled. The approval
permissions are divided as follows:
1. Where permanent basic farmland is converted into construction
land, it shall be approved by the State Council.
2. Where agricultural land other than permanent basic farmland
is converted into construction land, it is divided into two
situations: (1) within the scope of the scale of construction land
for cities, villages and market towns determined in the overall
land use plan, and for the implementation of the plan, it shall be
approved by the organ that originally approved the overall land
use plan or the organ authorized by it in batches according to
the annual land use plan in accordance with the provisions of
the State Council; Within the scope of the approved conversion
of agricultural land, the land for specific construction projects
may be approved by the people's governments of cities and
counties. (2) Outside the scope of the scale of construction land
for cities, villages and market towns determined in the overall
land use plan, it shall be approved by the State Council or the
people's governments of provinces, autonomous regions and
municipalities directly under the Central Government authorized
by the State Council.
Land expropriation system
Where the state really needs to expropriate land owned by peasant
collectives for the sake of the public interest, it may collect land from
peasant collectives
All land shall be expropriated. Land expropriation shall be carried out
by the Government in accordance with the conditions and
procedures prescribed by law.
1. Conditions for land acquisition.
Land expropriation must be genuinely necessary for the public
interest.
2. Land requisition approval.
The examination and approval authority for land expropriation is
divided into two levels: the State Council and the provincial people's
government.
3. Preliminary work for land acquisition application.
If the local people's government at or above the county level
intends to apply for land expropriation, it shall carry out a survey
of the current situation of the land to be expropriated and a social
stability risk assessment, and shall include the scope of
expropriation, the current status of the land, the purpose of
expropriation, the compensation standard, the resettlement
method and social security in the township (town) and village
where the land to be expropriated is located. Announcement shall
be made within the scope of the villager group for at least 30
days, and the opinions of the rural collective economic
organizations and their members, villagers' committees and other
stakeholders shall be heard.
4. Land requisition compensation.
(1) General requirements. Fair and reasonable compensation shall be
given for the expropriation of land to protect the original land of the
land-expropriated farmers
There is no reduction in living standards and long-term livelihood
security.
(2) Compensation for farmland expropriation. Land expropriation
shall, in accordance with the law, timely and full payment of
land compensation, resettlement subsidies and compensation
for rural villagers' houses, other above-ground attachments and
seedlings, and arrange social security expenses for land-
expropriated farmers.
(3) Compensation for expropriation of non-agricultural land.
Expropriation of land other than agricultural land, above-ground
attachments, seedlings, etc
The compensation standards shall be formulated by provinces,
autonomous regions and municipalities directly under the Central
Government.
(4) Social security. The local people's governments at or above
the county level shall include land-expropriated farmers in the
corresponding social security systems such as pensions.
Construction land use management
1. Management of state-owned construction land. If the
construction unit uses the state-owned land, it shall use the land
in accordance with the provisions of the paid use contract such
as the transfer of land use rights or the provisions of the approval
document for the allocation of land use rights; If it is truly
necessary to change the construction use of the land, it shall be
subject to the consent of the competent department of natural
resources of the relevant people's government and reported to
the people's government that originally approved the land for
approval.
2. Management of collective construction land. (1) Commercial
construction land. Where a rural collective economic organization
uses the construction land determined in the overall land use plan
of a township (town) to set up an enterprise, or jointly establishes
an enterprise with other units or individuals in the form of land use
right shareholding, joint venture, etc., it shall submit an application
to the competent department of natural resources of the local
people's government at or above the county level with the relevant
approval documents, and the local people's government at or above
the county level shall approve it in accordance with the approval
authority provided by the province, autonomous region or
municipality directly under the Central Government. (2) Public
welfare construction land. Where land is required for the
construction of public facilities and public welfare undertakings in
townships (towns) and villages, an application shall be submitted to
the competent department of natural resources of the local people's
government at or above the county level upon examination and
approval by the township (town) people's government, and the
approval authority provided by the provinces, autonomous regions
and municipalities directly under the Central Government shall be
approved by the local people's government at or above the county
level.
3. Temporary land management. Where the construction of
construction projects and geological exploration require the
temporary use of state-owned land or land owned by farmers'
collectives, it shall be approved by the competent department of
natural resources of the people's government at or above the
county level.
Supervision and inspection organs
The competent departments of natural resources of the people's
governments at or above the county level shall supervise and
inspect violations of land management laws and regulations.
Violations of laws and regulations on the management of rural
homesteads shall be supervised and inspected by the competent
departments of agriculture and rural affairs of the people's
governments at or above the county level.
Supervision and inspection measures
When performing their duties of supervision and inspection, the
supervision and inspection organs have the right to take the
following measures: (1) require the inspected units or individuals
to provide documents and materials related to land rights for
inspection or copying;
(2) Require the inspected unit or individual to make an
explanation on issues related to land rights; (3) Entering the site
of the land illegally occupied by the inspected unit or individual to
conduct surveys; (4) Order units or individuals who illegally
occupy land to stop violating land management laws and
regulations.
Investigation and punishment of illegal acts
Illegal conduct discovered by supervision and inspection organs in the
course of supervision and inspection work shall be investigated and
dealt with in accordance with the following two types of circumstances:
(1) Where a state functionary's illegal conduct shall be punished
in accordance with law, it shall be dealt with in accordance with
law; and where they do not have the authority to handle it, they
shall transfer it to the Supervision Organs or relevant organs for
disposition in accordance with law. (2) If the land violation
constitutes a crime, the case shall be transferred to the relevant
authorities and criminal responsibility shall be investigated in
accordance with the law; where a crime is not constituted, an
administrative punishment shall be given in accordance with
law.
Legal liability for violating the land management law
1. Legal responsibility for obstructing the order of land circulation.
(1) Where land is bought or sold or illegally transferred in other
forms, the competent department of natural resources of the
people's government at or above the county level shall
confiscate the illegal gains; Those who change agricultural land
into construction land without authorization in violation of the
overall land use plan shall demolish the newly built buildings
and other facilities on the illegally transferred land within a time
limit and restore the land to its original state, and if it conforms
to the overall land use plan, confiscate the newly built buildings
and other facilities on the illegally transferred land, and may
also impose a fine; The directly responsible managers and other
directly responsible personnel are to be given sanctions in
accordance with law; where a crime is constituted, criminal
responsibility is pursued in accordance with law.
(2) Where the land owned by the farmers' collectives is used for
non-agricultural construction by way of transferring, transferring
the right to use or leasing without authorization, or in violation
of the provisions of the Land Management Law, the land for
collective management construction is handed over to units or
individuals for use by means of transfer, lease, etc., the
competent department of natural resources of the people's
government at or above the county level shall order it to make
corrections within a time limit, confiscate the illegal gains, and
impose a fine.
2. Legal liability for violating the order of property rights.
(1) Anyone who illegally occupies land without approval or by
fraudulent means to obtain approval by deception, shall be
ordered by the competent department of natural resources of
the people's government at or above the county level to return
the illegally occupied land, and if the agricultural land is
changed into construction land without authorization in violation
of the overall land use plan, the newly built buildings and other
facilities on the illegally occupied land shall be demolished
within a time limit, and the land shall be restored to its original
state
Fines may be imposed concurrently for newly constructed
buildings and other facilities on occupied land; The directly
responsible managers and other directly responsible personnel of
units that illegally occupy land shall be punished in accordance
with law; where a crime is constituted, criminal responsibility is
pursued in accordance with law. If the amount of land is occupied
in excess of the approved amount, the excess land shall be
punished as illegal occupation of land.
(3) Where it is ordered to demolish the newly built buildings and
other facilities on the illegally occupied land within a time limit,
the construction unit or individual must immediately stop the
construction and demolish it on its own; For those who continue
construction, a penalty decision shall be made
The authorities have the power to stop it. Where the construction unit
or individual refuses to accept the administrative punishment decision
ordering demolition within a set period of time,
may file a lawsuit with the people's court within 15 days from the
date of receipt of the decision to order demolition within a time
limit; Where they do not prosecute and do not dismantle it on
their own at the end of the time limit, the organ that made the
penalty decision shall apply to the people's court for compulsory
enforcement in accordance with law, and the costs shall be borne
by the offender.
(4) If the party who recovers the right to use state-owned land in
accordance with the law refuses to hand over the land, refuses
to return the land at the expiration of the temporary use of the
land, or does not use the state-owned land in accordance with
the approved purpose, the competent department of natural
resources of the people's government at or above the county
level shall order the return of the land and impose a fine.
3. Legal responsibility for violating the order of cultivated land
protection.
(1) Occupying cultivated land to build kilns or graves, or building
houses, digging sand, quarrying, mining, taking soil, etc., on
cultivated land without authorization, destroying planting
conditions, or causing desertification or salinization of land due
to land development, the competent departments of natural
resources and agriculture and rural affairs of the people's
governments at or above the county level shall, in accordance
with their duties, order corrections or rectification within a set
period of time, and may also impose a fine; where a crime is
constituted, criminal responsibility is pursued in accordance with
law.
(2) Where the obligation of land reclamation is refused, the
competent department of natural resources of the people's
government at or above the county level shall order it to make
corrections within a time limit; If the correction is not made
within the time limit, it shall be ordered to pay a reclamation
fee, which shall be used exclusively for land reclamation, and a
fine may be imposed.
4. Legal responsibility for violating the order of land expropriation.
(1) Units or individuals who do not have the right to approve the
expropriation or use of land illegally approve the occupation of
land, and those who illegally approve the occupation of land
beyond the approval authority shall not be approved for use in
accordance with the overall land use plan
land, or in violation of the procedures prescribed by law to
approve the occupation or expropriation of land, the approval
documents are invalid, and the person in charge and other
persons directly responsible for illegally approving the
expropriation or use of land shall be punished in accordance with
law; where a crime is constituted, criminal responsibility is
pursued in accordance with law. Land illegally approved or used
shall be recovered, and if the relevant parties refuse to return it,
it shall be punished as illegal occupation of land. Where the
expropriation or use of land is illegally approved, causing losses
to the parties, they shall be liable for compensation in
accordance with law.
(2) If the land acquisition compensation fees and other related
expenses of the expropriated land unit are embezzled or
misappropriated, and a crime is constituted, criminal
responsibility shall be investigated in accordance with law;
where a crime is not constituted, sanctions are to be given in
accordance with law.
5. Legal responsibility for violating the land administrative order.
Where the staff of the competent departments of natural
resources and the competent departments of agriculture and rural
affairs neglect their duties, abuse their powers, or twist the law for
personal gain, and a crime is constituted, criminal responsibility
shall be pursued in accordance with law; where a crime is not
constituted, sanctions are to be given in accordance with law.
Settlement of land ownership disputes
Land ownership disputes. Including land ownership disputes and
land use rights disputes. Land ownership disputes may arise
between collective organizations, or between state-owned units
and collective organizations.
According to the provisions of the Land Administration Law, there
are three levels of settlement of land ownership disputes: (1) the
parties negotiate and settle them. (2) If the negotiation fails, the
people's government shall handle it. Among them, disputes
between units shall be handled by the people's governments at or
above the county level, and disputes between individuals and
between individuals and units shall be handled by the people's
governments at the township level or the people's governments at
or above the county level. (3) If a party is dissatisfied with the
disposition decision of the relevant people's government, it may
file a lawsuit with the people's court within 30 days from the date
of receipt of the notice of the disposition decision.
Section 2
Overview of
the Urban and
Rural Planning
Law
The Urban and Rural Planning Law is a law enacted to strengthen the
management of urban and rural planning, coordinate the spatial
layout of urban and rural areas, improve the living environment, and
promote the comprehensive, coordinated and sustainable
development of urban and rural economy and society. The Act was
enacted in October 2007
Enacted on April 28, 2015, and amended twice on April 23, 2019. The
Act came into force at the same time as repealing the Town Planning
Act enacted in 1989. This marks the transformation of China's planning
legislation from an urban-rural dual system to an urban-rural overall
planning system. Since then, China has implemented a unified urban
and rural planning and management system; The Law must be
complied with in the formulation and implementation of urban and rural
plans and for construction activities carried out in planning areas.
The "Urban and Rural Planning Law" emphasizes that the
formulation and implementation of urban and rural planning should
follow the principles of overall planning of urban and rural areas,
rational distribution, land conservation, intensive development and
planning before construction, improve the ecological environment,
promote the conservation and comprehensive utilization of
resources and energy, protect cultivated land and other natural
resources and historical and cultural heritage, maintain local
characteristics, ethnic characteristics and traditional features,
prevent pollution and other public hazards, and meet the needs of
regional population development, national defense construction,
disaster prevention and mitigation, public health and public safety.
The law requires that construction activities carried out in the
planning area shall comply with the provisions of laws and
regulations on land management, natural resources and
environmental protection.
Urban and rural planning
The so-called urban and rural planning includes urban system
planning, urban planning, town planning, township planning and
village planning. Urban planning and town planning are divided into
general planning and detailed planning. Detailed planning is divided
into regulatory detailed planning and construction detailed planning.
Detailed planning is divided into regulatory detailed planning and
construction detailed planning.
planning area
The so-called planning area refers to the built-up area of cities,
towns and villages, as well as the area that must be controlled by
planning due to the needs of urban and rural construction and
development. The specific scope of the planning area shall be
delineated by the relevant people's governments in the overall
urban planning, town planning, township planning and village
planning organized and compiled, in accordance with the level of
urban and rural economic and social development and the needs
of overall urban and rural development.
Formulation of urban and rural planning
The State Council organizes the preparation of a national urban
system plan; The people's governments of provinces and
autonomous regions shall organize the preparation of provincial
urban system plans; The people's government of the city
organizes the preparation of the overall urban plan; The county
people's government organizes the preparation of the overall
plan of the town where it is located; The town people's
government organizes the preparation of the town's overall plan.
Among them, provincial, municipal, and county-level regulations
Implementation of urban and rural planning
(1) Basic requirements
Local people's governments at all levels shall, in accordance with
the level of local economic and social development, act within
their means, respect the wishes of the masses, and organize the
implementation of urban and rural planning in a planned and
step-by-step manner. The Urban and Rural Planning Law sets
forth a series of basic requirements for urban and rural
construction and development.
(2) Recent construction planning
The people's governments of cities, counties and towns shall, in
accordance with the overall urban plan, the overall town plan, the
overall land use plan and the annual plan, as well as the national
economic and social development plan, formulate a plan for the
near future construction and submit it to the examination and
approval authority for the overall plan for the record.
(3) Construction planning permission
The construction planning permission system is an important system
for urban and rural planning management.
(4) Changes in construction plans
The construction planning permission made by the competent
department of urban and rural planning in accordance with the law
has strict legal effect, and any person
It cannot be changed at will.
(5) Temporary construction planning and management
Temporary construction in a city or town planning area shall be
subject to the approval of the competent department of urban
and rural planning of the city or county people's government.
Temporary construction shall not be approved if it affects the
implementation of the recent construction plan or the regulatory
detailed plan, as well as transportation, city appearance, safety,
etc. Temporary structures shall be dismantled within the
approved period of use.
(6) Verification and supervision and inspection
The competent departments of urban and rural planning of local
people's governments at or above the county level shall, in
accordance with the provisions of the State Council, verify
whether the construction projects meet the planning conditions.
Without verification or verification does not meet the planning
conditions, the construction unit shall not organize the
completion acceptance. The construction unit shall, within 6
months after the completion and acceptance, submit the
relevant completion acceptance materials to the competent
department of urban and rural planning.
Revision of urban and rural planning
In any of the following circumstances, the organization and
preparation organ may revise the provincial urban system plan,
the overall urban plan, and the overall town plan in accordance
with the prescribed authority and procedures: (1) the urban and
rural plan formulated by the people's government at a higher
level is changed, and the request for revision of the plan is
proposed; (2) The adjustment of administrative divisions really
requires the revision of the plan;
(3) It is necessary to revise the plan for major construction
projects approved by the State Council; (4) It is assessed that it is
necessary to revise the plan; (5) Other circumstances in which
the examination and approval authority of urban and rural
planning deems that the plan should be revised. Before the
amendment, the organization and preparation organ shall
summarize the implementation of the original plan and report to
the original examination and approval authority; If the revision
involves the mandatory content of the overall urban plan or the
overall town plan, a special report shall be submitted to the
original examination and approval authority, and the revision plan
can only be prepared after approval. The revised provincial urban
system plan, urban overall plan, and town overall plan shall be
submitted for approval in accordance with the approval
procedures for planning preparation.
Section 3 Urban
Real Estate
Management Law:
Overview of the
Urban Real Estate
Management Law
The Urban Real Estate Management Law was enacted on July 5, 1994
and amended three times on August 30, 2007, August 27, 2009 and
August 26, 2019. This law is the basic code of conduct for obtaining the
right to use land for real estate development within the scope of China's
urban planning areas, engaging in real estate development, real estate
transactions and implementing real estate management.
Assignment of land use rights
The transfer of land use rights refers to the act of the state
transferring the state-owned land use rights (hereinafter referred
to as the land use rights) to the land users within a certain number
of years, and the land users pay the land transfer fees to the state.
The transfer of land use rights must comply with the overall land
use plan, urban planning and annual construction land plan.
Allocation of land use rights
The allocation of land use rights refers to the act of handing over the
land to the land user for use after the land user has paid
compensation, resettlement and other fees, or handing over the land
use to the land user for use free of charge, with the approval of the
law of the people's government at or above the county level.
Collective land circulation within urban planning areas
In accordance with the reform decision of the Central Committee
of the Communist Party of China to "establish a unified urban and
rural construction land market", in order to connect with the
revision of the Land Management Law and remove the legal
obstacles to the entry of collective construction land into the
market, Article 9 of the Urban Real Estate Management Law in
2019 amended the provision that "collective land in urban
planning areas must first be expropriated and state-owned before
it can be transferred", adding "except as otherwise provided by
law".
Real estate development system
Real estate development is generally an investment, development
and construction activity on land and above-ground buildings. In
China, according to the provisions of the Urban Real Estate
Management Law, real estate development refers to the
construction of infrastructure and housing on land that has obtained
the right to use state-owned land in accordance with the law.
(2) Real estate development project management
The Urban Real Estate Management Law stipulates the following
aspects:
1. Development planning requirements. Real estate development
must strictly comply with the Town and Country Planning Law,
and it is the detailed planning in the urban planning that is
directly legally binding on real estate development projects.
2. Requirements for the use of development land use rights and
development periods. Where the land use right is obtained by
way of transfer for real estate development, the land must be
developed in accordance with the land use and development
period agreed in the land use right transfer contract.
3. Develop security requirements. The design and construction of
real estate development projects must comply with the relevant
national standards and norms; The real estate development
project can be delivered only after the completion of the
experience and the acceptance of the experience.
(3) Management of real estate development enterprises
1. The concept and classification of real estate development
enterprises.
Real estate development enterprises, i.e. so-called real estate
developers or developers, in accordance with the Urban Real Estate
Management Law
It is an enterprise engaged in real estate development and operation
for the purpose of profit.
Real estate development enterprises can be divided into real estate
development franchise enterprises, concurrent enterprises and
project companies.
2. Conditions for the establishment of real estate development
enterprises. The establishment of a real estate development
enterprise shall meet the following conditions:
(1) It has its own name and organizational structure.
(2) Have a fixed place of business.
(3) Have registered capital in accordance with the regulations of the
State Council.
(4) There are sufficient professional and technical personnel.
(5) Other conditions stipulated by laws and administrative
regulations.
3. Procedures for the establishment of real estate development
enterprises. The establishment of a real estate development
enterprise shall go through the following procedures:
(1) An application shall be made to the market regulation
department for establishment and registration.
(2) Within one month after receiving the business license, the real
estate development enterprise shall file with the department
prescribed by the local people's government at or above the
county level where the registration authority is located.
4. The ratio of registered capital to total investment of real estate
development enterprises shall comply with relevant national
regulations.
5. If a real estate development enterprise develops real estate in
phases, the amount of investment in phases shall be
commensurate with the scale of the project, and the funds shall
be invested in the project construction on schedule in
accordance with the provisions of the land use right transfer
contract.
An overview of the real estate transaction regime
1. Classification of real estate transactions.
(1) According to the different forms of transactions, it can be divided
into real estate transfer, real estate mortgage and real estate
leasing.
(2) According to the different land rights in the object of the
transaction, it can be divided into the transaction of state-owned
land use right and its above-ground real estate and the
transaction of collective land use right and its above-ground real
estate. The former can be further classified according to the
nature of the assignment or allocation of land use rights.
(3) According to the degree of restriction on the object of the
transaction, it can be divided into restricted transactions (such as
transactions on the allocation of land use rights and their above-
ground properties, transactions with welfare housing and the
land use rights they occupy, etc.) and non-restricted transactions
(such as commercial housing transactions).
(4) According to the different conditions of the transaction
object, it can be divided into simple land use right transaction,
real estate option transaction and real estate current right
transaction.
2. General rules for real estate transactions. Real estate transactions
should follow these general rules:
(1) The real estate right and the land property right are traded
together. When real estate is transferred or mortgaged, the
ownership of the house and the land use right within the scope
occupied by the house shall be transferred and mortgaged at
the same time.
(2) Undertaking of rights and obligations. In the case of real
estate transactions, the rights and obligations specified in the
land use right transfer contract shall be transferred accordingly;
In a real estate transaction, the rights and obligations of the
former right holder on the real estate shall be undertaken to the
latter right holder in accordance with the law or in accordance
with the contract.
(3) Real estate price appraisal. China has just established a
market mechanism, and has not yet formed a reasonable and
completely market-oriented real estate price system, and the
composition of real estate prices is complex, and it is difficult to
properly determine without professional appraisal, so the law
stipulates that the real estate price appraisal system shall be
implemented in real estate transactions.
(4) Declaration of real estate transaction price. When
transferring real estate, the owner of real estate rights shall
truthfully declare the transaction price to the department
prescribed by the local people's government at or above the
county level, and shall not conceal or make false declarations.
(5) Registration in accordance with the law. The parties to the
transfer or mortgage of real estate shall handle the change of
ownership or mortgage registration in accordance with the law,
and the parties to the housing lease shall go through the lease
registration and filing in accordance with the law.
Real estate transfer
The transfer of real estate refers to the transfer of real estate by the
owner of real estate through sale, gift or other legal means
The act of transferring property to another person.
1. General prohibition on the transfer of real estate. The following
real estate shall not be transferred: if the land use right is
obtained by way of transfer, it does not meet the statutory
conditions; Judicial and administrative organs make rulings or
decisions to seal up or otherwise restrict real estate rights in
accordance with law; recovering the right to use land in
accordance with law; co-ownership of real estate without the
written consent of the other co-owners; The ownership is
disputed; Failure to register and receive a certificate of ownership
in accordance with law; Other circumstances where laws and
administrative regulations prohibit transfer.
2. General conditions and procedures for the transfer of real
estate. For the transfer of real estate, the transferor shall hold a
legally obtained certificate of land use right; If the house has been
completed at the time of the transfer of real estate, the house
ownership certificate shall also be held. The transferred real
estate rights should belong:
3. Transfer of land use rights. In order to prevent land users from
simply speculating on land, speculating on land, and inflating
land prices, the Urban Real Estate Management Law stipulates
that if the land use right is obtained by way of transfer, the
corresponding conditions shall be met when transferring the real
estate.
Real estate mortgages
Real estate mortgage is an act in which the mortgagor provides
the mortgagee with a guarantee for the performance of debts in a
way that does not transfer possession of its legal real estate.
When the debtor fails to perform its obligations, the mortgagee
has the right to be repaid in priority with the price obtained from
the auction of the mortgaged real estate in accordance with the
law.
1. Mortgageable real estate. According to the theory of mortgage
right, only the property that the mortgagor has the right to
dispose of, which can be circulated according to law and has
independent exchange value, can become the object of
mortgage. The Urban Real Estate Management Law stipulates
that the following two types of real estate can be mortgaged:
(1) The ownership of the house obtained in accordance with the law
together with the right to use the state-owned land within the scope
occupied by the house.
The land use rights referred to here include two types of state-owned
land use rights: the transfer and the allocation of state-owned land
use rights.
(2) The right to use state-owned land acquired by way of
transfer. This type of land use right can become the object of
mortgage alone when there is no above-ground house or the
above-ground house is not completed, while the allocated land
use right can only become the object of mortgage together with
the above-ground house.
2. Procedure. When creating a real estate mortgage, the mortgagor
and the mortgagee shall sign a written mortgage contract
The person concerned shall go to the immovable property
registration authority for mortgage registration with the certificate of
land use right and the certificate of house ownership.
3. Mortgage of real estate on the allocated land. The land use
right obtained by way of allocation shall not be simply
mortgaged, but if there is real estate on the land, the mortgage
of the real estate shall be accompanied by the mortgage of the
allocated land use right occupied by the house.
4. Added disposal of above-ground objects. After the real estate
mortgage contract is signed, the new houses on the land are not
mortgaged property.
Housing rental
Housing lease is the act of the owner of the house as the lessor
renting his house to the lessee, and the lessee pays rent to the
lessor.
Pre-sale and mortgage of commercial housing
1. Pre-sale of commercial housing. The pre-sale of commercial
housing refers to the pre-sale of the off-plan property by the real
estate developer (pre-purchaser) to the buyer (pre-purchaser),
and the pre-purchaser pays the house price according to the pre-
sale contract; After the completion and acceptance of the off-
plan house, it will be handed over to the buyer for possession
and use, and the pre-seller shall be responsible for transferring
the ownership of the house and the land use right it occupies to
the real estate sale form under the name of the pre-purchaser. 2.
Mortgage of commercial housing. Commercial housing mortgage
generally refers to the mortgage borrower who is unable or
unwilling to pay the house payment in a lump sum and has
connected it with the developer
All rights and interests under the pre-sale or sale contract of
commercial housing signed are used as security for loans to
commercial banks.
Overview of the property service management system
1. Property service management refers to the activities of the
owner through the selection of property service enterprises, and
the owners and property service enterprises in accordance with
the property service contract to repair, maintain and manage the
housing and supporting facilities and equipment and related
sites, and maintain the environmental sanitation and related
order in the property management area.
2. Property service management model, there are welfare
management model and market-oriented management model.
Market-oriented management model
It can be divided into entrusted service type and self-management
type.
3. The content of property service management is mainly the
management and maintenance of things and the management
and service of people. These include:
(1) Routine public management and services.
(2) Targeted special services.
The subject of the legal relationship of property services
1. The owner is the owner of the property. According to the
status of the ownership of the property they own, they can be
divided into independent owners and differentiated owners.
Independent ownership is a typical form of traditional real estate
ownership, and the right form of owners in modern property
areas is generally differentiated ownership.
2. Owners' General Meeting and Owners' Committee. The general
meeting of owners is composed of all owners in the property
management area.
3. Property service management enterprises are economic
entities with legal person status that implement professional,
enterprise-oriented and socialized management services for
property.
Property service contracts
1. The property service contract is a contract in which the
property service provider provides the owner with property
services such as the maintenance of the building and its ancillary
facilities, the management and maintenance of environmental
sanitation and related order, and the owner pays the property
fee. Property service providers include property service
enterprises and other managers.
2. The content of the property service contract generally includes
service items, service quality, service fee standards and
collection methods, the use of maintenance funds, the
management and use of service rooms, service period, service
handover and other terms.
Sale of commercial housing
The term of the pre-property service contract can be agreed;
However, if the property service contract signed by the owners'
committee and the property management enterprise takes effect
before the time limit expires, the previous property service
contract shall be terminated.
Pre-property services
Pre-property service refers to the property service provided by
the construction unit (developer) instead of the future owner
before and during the sale of the real estate development project
(before the owner and the general meeting of owners select and
hire the property service enterprise), and sign a property service
entrustment contract with the property management service
enterprise.
Section 4
Registration of
Immovable
Property:
Overview of
Immovable
Property
Registration
Immovable property registration refers to the act of the
immovable property registration authority recording in the
immovable property register in accordance with the law on
statutory matters such as the ownership and change of
immovable property rights.
Subject to real estate registration
The term "immovable property" in the immovable property
registration refers to land, sea areas, houses, forests and other
fixtures. The State implements a unified registration system for
immovable property.
The rights that can enter the immovable property registry
include: (1) collective land ownership; (2) Ownership of buildings
and structures such as houses; (3) ownership of forests and trees;
(4) The right to contract and manage cultivated land, forest land,
grassland and other land; (5) the right to use construction land;
(6) the right to use the homestead; (7) the right to use the sea
area; (8) easements; (9) mortgage; (10) Other immovable
property rights that need to be registered by law.
Types of immovable property registrations
The registration of immovable property includes registration of
first time, registration of alteration, registration of transfer,
registration of cancellation, registration of correction, registration
of objections, registration of advance notice, registration of
seizure, etc. All these registrations must follow the principles of
strict management, stability and continuity, and convenience for
the masses.
Immovable property registration agency
The competent department of land and resources under the State
Council shall be responsible for guiding and supervising the
registration of immovable property nationwide. A department
designated by the local people's government at or above the
county level shall be the immovable property registration
authority of the administrative region, which shall be responsible
for the registration of immovable property and shall accept the
guidance and supervision of the competent department of
immovable property registration of the people's government at a
higher level.
Immovable property register
The immovable property register is the basis for the ownership
and content of property rights. Strictly regulating the
management of registers is conducive to protecting the
legitimate rights and interests of real estate rights holders. The
registration authority shall set up a unified register to indicate the
natural condition of the immovable property, the ownership
status and other relevant matters, and clarify the medium form of
the register and the custody and preservation obligations of the
registration authority.
Immovable property registration procedures
(1) Application for registration. Where an application for
registration of immovable property is made for sale, creation of
mortgages, etc., both parties shall jointly apply. In any of the
following circumstances, the parties may apply unilaterally: (1)
the immovable property that has not yet been registered applies
for registration for the first time; (2) Inheritance, acceptance of
bequest to obtain real estate rights;
(3) the establishment, alteration, transfer or extinction of
immovable property rights in effective legal documents of the
people's courts and arbitration commissions or effective
decisions of the people's governments; (4) The name or title of
the right holder or the natural condition changes, and the
application for change of registration is made; (5) The
immovable property is lost or the right holder gives up the right
to the immovable property and applies for cancellation of
registration; (6) An application for correction of registration or
opposition to registration; (7) Other circumstances where laws
and administrative regulations provide that a unilateral
application may be made by the parties. Relevant materials
shall be submitted in accordance with regulations when applying
for registration.
(2) Acceptance of registration. After receiving the application for
registration, the immovable property registration authority shall, in
different circumstances, handle it by means such as accepting it
and notifying it in writing, not accepting it and notifying it to
supplement and correct it, and not accepting it and informing it to
apply to other institutions. If the immovable property registration
authority fails to inform the applicant in writing on the spot that it
will not be accepted, it shall be deemed to have accepted the
application.
Real estate registration information platform
In order to strengthen the sharing and protection of registration
information, the competent department of land and resources
under the State Council shall take the lead in establishing a
unified basic platform for the management of real estate
registration information, and the information of registration
agencies at all levels shall be incorporated into the unified basic
platform to achieve real-time information sharing
Sharing of real estate registration information
First of all, the information related to real estate registration
should be shared with the approval information and transaction
information of the housing and urban-rural construction,
agriculture, forestry, marine and other departments in real time.
The immovable property registration authority can share the
information obtained through real-time exchange and sharing,
and shall not require the applicant for immovable property
registration to submit it repeatedly. Second, the departments of
land and resources, public security, civil affairs, finance, taxation,
industry and commerce, finance, auditing, statistics and other
departments shall strengthen the exchange and sharing of
information related to real estate registration, and at the same
time have the obligation to keep the real estate registration
information confidential.
Real estate registration information inquiry
First of all, the right holder and interested party have the right to
inquire into and copy the immovable property registration
materials in accordance with the law, and the immovable property
registration authority shall provide them. Second, the relevant
state organs may, in accordance with the provisions of laws and
administrative regulations, inquire into and reproduce the
immovable property registration materials related to the
investigation and handling of the matter.
Legal liability for registration of immovable property
In any of the following circumstances, the perpetrator shall be liable
for compensation: (1) Registration with the immovable property
registration authority
Mistakenly causing harm to others, or the parties providing false
materials to apply for registration causing harm to others;
(2) The staff of the immovable property registration agency
conducts false registration, destroys or forges the immovable
property register, modifies the registration items without
authorization, or has other acts of abuse of power or dereliction
of duty, causing damage to others; (3) Forging or altering real
estate ownership certificates or real estate registration
certificates, or buying, selling, or using forged or altered real
estate ownership certificates or real estate registration
certificates, causing damage to others; (4) The immovable
property registration authority, the immovable property
registration information sharing unit and its staff, or the unit or
individual that inquires about the immovable property
registration information violates state regulations by leaking the
immovable property registration materials or registration
information, or using the real estate registration materials and
registration information to carry out improper activities, causing
damage to others.
