CBI member, Linklaters has published a detailed summary of what took place across their key practise areas in China during 2018, and what to expect from the PRC over the coming year.
According to William Liu, Linklaters Managing Partner in China: “2018 saw many significant changes in the foreign investment and financial markets regimes in China, accompanied by various regulators tightening their approach to enforcement.” Other developments across Linklaters key practise areas in 2018 and for 2019 include:
Banking:
- Control of local government debt. The Chinese authorities took broad measures to deleverage local governments and state-owned enterprises to clean up hidden debt.
- Restrictions on foreign debt. Insurance groups in particular were reined in from freely providing outbound guarantees for offshore debt, and real estate developers were restricted from using foreign debt towards real estate projects. Capital Markets:
- Shanghai-London Stock Connect. Intensive preparations for the impending link-up between the London and Shanghai stock exchanges were made in the second half of 2018 and are continuing. The scheme will enable issuers in each side’s home market to issue depository receipts in the other market.
- China releases highly anticipated provisional Panda bond guidelines. Foreign issuers have been waiting for further clarity on the steps the Chinese authorities would take to align China’s bond market with the international bond market.
- Chinese regulators encourage banks to issue innovative loss absorbing bonds. Detailed rules and guidance still need to be published, but the People’s Bank of China is encouraging the issue of bonds to replenish capital by financial institutions in the banking industry. Competition:
- Antitrust regulatory activism. 2018 saw a steady increase in the number of merger control cases reviewed by Chinese regulators. Sanctions against a record number of 10 cases for failure to file were imposed
- Corporate:
- Outbound investment. In March and May, respectively, the National Development and Reform Commission published a catalogue of sensitive industries for which outbound investments would be subject to more stringent requirements.
- Foreign investment reform. In July the “negative list” of restrictions on foreign investment were updated. Newly liberalised sectors include, aircraft manufacturing, power grid and gas operation, and by November, international freight forwarding agencies will no longer need to apply for a license from the Ministry of Transport. Financial Regulation:
- Expansion of RMB. Since June, offshore investors who carry out financial investment in the PRC securities markets can hedge their currency risks by entering into derivative transactions with qualified onshore and offshore banks.TMT / Data Privacy:
- Personal data. Voluntary best practise guidelines on the collection, storage, usage and processing of personal data came into effect in May. They require consent from individuals to be obtained in order to collect or process personal data.
- Cybersecurity compliance monitoring. Chinese authorities issue guidelines for the inspection of providers and users of internet services in the PRC. The public security bureau may carry out on-site or remote inspections to ascertain whether cybersecurity responsibilities have been fulfilled.
- Please find the full detailed report here.
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