2.2 Chinese Goverment and Regulations (1)

7/29/2019 2.2 Chinese Goverment and Regulations (1)

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The Chinese Government

Government structure Taxation

State-owned enterprises

Subsidies and supports

Government intervention


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Government of China

All power within the government is divided among severalbodies/branch:

political: Communist Party of China

executive: State Council legislative: National Peoples Congress

judicial: Supreme Peoples Court/Procuratorate/

military: Peoples Liberation Army via the CentralMilitary Commission

The primary organs of state power are the National People'sCongress, the President, and the State Council


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Central and local government


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Taxation

Taxes provide the most important

revenue source for the government

Tax is a key economic player of

macro-economic regulation, and greatly

affects China's economic and social

developmentAfter the tax system reform in 1994

and the fine-tuning of it in subsequent

years, China has preliminarily built up

a tax system adaptable to the socialistmarket economy


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Taxation system

State administration of taxation

Local tax bureaus


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Chinese Enterprises Face

Heavy Tax Burden

According to a 2013 report from ChinasMinistry of Finance

Taking various taxes, government funds,

administrative fees, and social security

payments into account, the combinedtax rate for Chinese enterprises has

amounted to around 40%,surpassing

the average level of OECD member

countries

Experts remarked that social security

payments contributed the largest part to

enterprises tax burden, especially for

labor-intensive companies


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China's Superior Economic

Model

Thursday, December 1, 2011


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State-owned

Enterprises

(SOEs)

State-owned Assets Supervision and Administration Commission

Fortune500: http://www.fortunechina.com/fortune500/c/2013-07/08/content_164367.htm

Read the article: State-Owned Enterprises 2013

Author: Gao Xu, from the World Bank
http://www.fortunechina.com/fortune500/c/2013-07/08/content_164367.htmhttp://www.fortunechina.com/fortune500/c/2013-07/08/content_164367.htmhttp://www.fortunechina.com/fortune500/c/2013-07/08/content_164367.htmhttp://www.fortunechina.com/fortune500/c/2013-07/08/content_164367.htm


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However, they have undergone a

dramatic transformation over the

past decade. While their share of

economic output has declined, their

influence has not. In fact, in severalof Chinas most strategic sectors,

state-run firms are sharpening their

management skills and transforming

their operations so they can compete

globally

The Changing Role of

Chinas SOEs

The dominance of the giant SOEs has been

associated with high prices and low efficiency

in many industries


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The state advances as the private

sector retreats Barack Obama has limited ability to shape US economic

policy as a result of the separation of powers.

Not so their Chinese counterparts, who, thanks to the

overarching role of the Communist Party in both government

and business, enjoy almost unrivalled influence over the

countrys direction

More than 1900 of the 2047 listed firms in the countrys two

stock exchanges are majority-owned by the government.

~ from http://www.icis.com/blogs/asian-chemical-connections/2012/11/tackling-the-soes/
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Subsidies in China

Government subsidies in China rose

approximately 23 percent to 13.83

billion dollars in 2012 .

They include cash for research and

development, and environmental

reform, both of which are also heavilysubsidized in the United States.

But policymakers from other countries regard many Chinese

government policies as giving Chinese companies unfaircompetitive advantages. These advantages include a currency

that many analysts believe is under-valued, cheap land sales,

loan rebates, tax breaks, cash hand outs, and subsidies.


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Government and

Trade ProtectionUS Abandons Free Trade with Huawei

By Global Times, 2013-5-15

Huawei's businesses can be found all over the world and

has been locked in intense competition in different

countries. When competitions involve local companies,

governments may show a bias. However, most of them

will exercise restraint in doing so because such actions

violate the rules of free trade.

The US is the largest economy in the world. It was the

strongest promoter of the principle of free trade last

century. However, the US has caused the most trouble in

preventing Huawei from entering its domestic market.

It's not because Huawei's products are not advancedenough, but because the US government eliminates the

possibility of competition between Huawei and its US

peers using the excuse that Huawei may threaten US

information security. Chinese companies have just about

heard every excuse when being kicked out of a market

for security reasons.

Read more at http://www.globaltimes.cn/content/781627.shtml#.UidGsj-d9Io

Cisco Systems and other US tech

companies urged Congress into

investigating Chinese companies Huawei

and ZTE for security concernsPoliticians

are concerned the tech giants will usetheir systems to help expand the Chinese

government's spying networks into the US.

Earlier this week, the US Intelligence

Committee said the duo shouldn't be

allowed to operate in the U.S.

But the only proof of those claims are heldsecret in classified reports.

Trade Protectionism is the economic

policy of restraining trade between states

through methods such as tariffs on

imported goods, restrictive quotas, and a

variety of other government regulations.

This policy contrasts with free trade,

where government barriers to trade arekept to a minimum.
http://www.globaltimes.cn/content/781627.shtmlhttp://www.globaltimes.cn/content/781627.shtmlhttp://www.globaltimes.cn/content/781627.shtmlhttp://www.globaltimes.cn/content/781627.shtmlhttp://www.globaltimes.cn/content/781627.shtmlhttp://www.globaltimes.cn/content/781627.shtml


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Government Subsidies to Consumers

A government-funded project aims

to expand sales of household

electric appliances in the countrys

vast rural areas at prices 13 percent

lower than those in cities.

200712

2009

2013

20

6020129

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201212

2.987204

TCL

Sending Home Appliances

to the Countryside


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Government Subsidies to Consumers

The government allocated morethan 6 billion yuan to subsidise

consumer purchases of fuel-saving

cars in 2012

China waives sales taxes on electric

and fuel cell cars (a total of 49models) made domestically

A rebate of up to 60,000 yuan by the central

government is offered to buyers of battery-

powered cars

Shanghai municipal government is offering an

extra subsidy of up to 40,000 yuan and a free

license plate.

Beijing unveils policies for electric vehicles in

2013: a subsidy of up to 120,000 yuan and the

option to obtain license plates without

participating in the citys plate lotterySo there are regional disparities

Subsidies for fuel-saving cars

This battery electric vehicle cost him 140,000yuan, including a tax and insurance. Normally,

such a car costs 200,000 to 300,000 yuan.

G t


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Government

intervention It is regulatory actions taken by a government in order to

affect or interfere with decisions made by individuals, groups,or organizations regarding social and economic matters.

The government announced detailed plans on deepening

economic reform on May 6, 2013 , fulfilling its pledge to cut

government interventions that hinder a more robust growth It has canceled or delegated power to lower levels concerning

133 items that were previously subject to central government

administrative approval

It is reasonable for the government to step

in when the market does not work.


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The Most Expensive Cigarettes

: RMB850/pack: RMB270/pack


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Price cap regulation

200816800/1000/

Prices of imported tabacco:http://www.cu-market.com.cn/hgjj/2010-8-2/1634462.html

i l i d l l i
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price cap regulation and legal issues

caused

200816800/1000/

Prices of imported tabacco:http://www.cu-market.com.cn/hgjj/2010-8-2/1634462.html

P i l ti d l l i
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Price cap regulation and legal issues

caused

2010730

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200020093006806

7001400

20062006

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13%499

2010

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89989

20013881600


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China bans luxury

advertising in Beijing

Beijing has moved to ban billboards promoting a luxurious

lifestyle over concerns that the endless advertisements arereminding people of the wealth gap.

Read more: http://www.telegraph.co.uk/news/worldnews/asia/china/8398097/China-bans-luxury-advertising-in-Beijing.html
http://www.telegraph.co.uk/news/worldnews/asia/china/8398097/China-bans-luxury-advertising-in-Beijing.htmlhttp://www.telegraph.co.uk/news/worldnews/asia/china/8398097/China-bans-luxury-advertising-in-Beijing.htmlhttp://www.telegraph.co.uk/news/worldnews/asia/china/8398097/China-bans-luxury-advertising-in-Beijing.htmlhttp://www.telegraph.co.uk/news/worldnews/asia/china/8398097/China-bans-luxury-advertising-in-Beijing.htmlhttp://www.telegraph.co.uk/news/worldnews/asia/china/8398097/China-bans-luxury-advertising-in-Beijing.htmlhttp://www.telegraph.co.uk/news/worldnews/asia/china/8398097/China-bans-luxury-advertising-in-Beijing.htmlhttp://www.telegraph.co.uk/news/worldnews/asia/china/8398097/China-bans-luxury-advertising-in-Beijing.htmlhttp://www.telegraph.co.uk/news/worldnews/asia/china/8398097/China-bans-luxury-advertising-in-Beijing.htmlhttp://www.telegraph.co.uk/news/worldnews/asia/china/8398097/China-bans-luxury-advertising-in-Beijing.htmlhttp://www.telegraph.co.uk/news/worldnews/asia/china/8398097/China-bans-luxury-advertising-in-Beijing.htmlhttp://www.telegraph.co.uk/news/worldnews/asia/china/8398097/China-bans-luxury-advertising-in-Beijing.htmlhttp://www.telegraph.co.uk/news/worldnews/asia/china/8398097/China-bans-luxury-advertising-in-Beijing.html


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gifts

in anti-corruption push Chinese radio and television stations have

banned advertisements for expensive giftssuch as watches, rare stamps and gold coins,as part of a push by the government to crackdown on extravagance and waste.

Read more: http://www.reuters.com/article/2013/02/06/us-china-tv-corruption-idUSBRE91505N20130206
http://www.reuters.com/article/2013/02/06/us-china-tv-corruption-idUSBRE91505N20130206http://www.reuters.com/article/2013/02/06/us-china-tv-corruption-idUSBRE91505N20130206http://www.reuters.com/article/2013/02/06/us-china-tv-corruption-idUSBRE91505N20130206http://www.reuters.com/article/2013/02/06/us-china-tv-corruption-idUSBRE91505N20130206http://www.reuters.com/article/2013/02/06/us-china-tv-corruption-idUSBRE91505N20130206http://www.reuters.com/article/2013/02/06/us-china-tv-corruption-idUSBRE91505N20130206http://www.reuters.com/article/2013/02/06/us-china-tv-corruption-idUSBRE91505N20130206http://www.reuters.com/article/2013/02/06/us-china-tv-corruption-idUSBRE91505N20130206http://www.reuters.com/article/2013/02/06/us-china-tv-corruption-idUSBRE91505N20130206http://www.reuters.com/article/2013/02/06/us-china-tv-corruption-idUSBRE91505N20130206http://www.reuters.com/article/2013/02/06/us-china-tv-corruption-idUSBRE91505N20130206


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China is banning officials from using public funds to buy

mooncakes, pastries offered as gifts during the Mid-Autumn

Festival, as part of President Xi Jinping's fight against corruption


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Regional ProtectionismTypical methods ofprotectionism are

import tariffs, quotas, subsidies or

tax cuts

2.2 Chinese Goverment and Regulations (1)

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