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A profile of the Chinese healthcare system

A profile of the Chinese healthcare system

China achieves near-universal coverage through the provision of publicly funded basic medical insurance. The urban employed are required to enroll in an employment-based program, which is funded primarily via employer and employee payroll taxes. Other residents can voluntarily enroll in Urban-Rural Resident Basic Medical Insurance, financed primarily by central and local governments through individual premium subsidies. Local health commissions organize public and private health care organizations to deliver services. The basic medical insurance plans cover primary, specialty, hospital, and mental health care, as well as prescription drugs and traditional Chinese medicine. Deductibles, copayments, and reimbursement ceilings apply. There is no annual cap on out-of-pocket spending. Complementary private health insurance helps cover cost-sharing and coverage gaps.

 

 

How does universal health coverage work?

China largely achieved universal insurance coverage in 2011 through three public insurance programs:

 

 

  • Urban Employee Basic Medical Insurance, mandatory for urban residents with formal jobs, was launched in 1998.
  • The voluntary Newly Cooperative Medical Scheme was offered to rural residents in 2003.
  • The voluntary Urban Resident Basic Medical Insurance was launched in 2007 to cover urban residents without formal jobs, including children, the elderly, and the self-employed.

 

 

In 2016, China’s central government, the State Council, announced that it would merge the Newly Cooperative Medical Scheme and Urban Resident Basic Medical Insurance to expand the risk pool and reduce administrative costs. This consolidation is still underway. The combined public insurance program is now called Urban-Rural Resident Basic Medical Insurance.

 

Because China has a huge population, insurance coverage was increased gradually. In 2011, approximately 95 percent of the Chinese population was covered under one of the three medical insurances. Insurance coverage is not required in China.

 

 

Role of government:

China’s central government has overall responsibility for national health legislation, policy, and administration. It is guided by the principle that every citizen is entitled to receive basic health care services. Local governments — provinces, prefectures, cities, counties, and towns — are responsible for organizing and providing these services.

 

Both national and local health agencies and authorities have comprehensive responsibilities for health quality and safety, cost control, provider fee schedules, health information technology, clinical guidelines, and health equity.

 

 

Role of public health insurance:

In 2018, China spent approximately 6.6 percent of GDP on health care, which amounts to CNY 5,912 billion (USD 1,665 billion). Twenty-eight percent was financed by the central and local governments, 44 percent was financed by publicly funded health insurance, private health insurance, or social health donations, and 28 percent was paid out-of-pocket.

 

Urban Employee Basic Medical Insurance is financed mainly from employee and employer payroll taxes, with minimal government funding. Participation is mandatory for workers in urban areas. In 2018, 316.8 million had employee-based insurance. The base of the employee payroll tax contribution is capped at 300 percent of the average local salary; individual payroll above this level is not taxed. In most provinces, individual tax rates are about 2 percent. Tax rates for employers vary by province. The base for employer contributions is the sum of employees’ payrolls. Workers’ nonemployed family members are not covered.

 

Urban-Rural Resident Basic Medical Insurance covers rural residents and urban, self-employed individuals, children, students, elderly adults, and others. The insurance is voluntary at the household level. In 2018, 897.4 million were covered under the two insurance schemes (the rural plan and the urban nonemployed plan) that make up this program.

 

Urban-Rural Resident Basic Medical Insurance is financed through annual fixed premiums. Individual premium contributions are minimal, and government subsidies for insurance premiums make up the majority of insurer revenues. In regions where the economy is less developed, the central government provides a much larger share of subsidies than provincial and prefectural governments. In more-developed provinces, most subsidies are locally provided (mainly by provincial governments).

 

The few permanent foreign residents are entitled to the same coverage benefits as citizens. Undocumented immigrants and visitors are not covered by publicly financed health insurance.

 

 

Role of private health insurance:

Purchased primarily by higher-income individuals and by employers for their workers, private insurance can be used to cover deductibles, copayments, and other cost-sharing, as well as to provide coverage for expensive services not paid for by public insurance.

 

No statistics are available on the percentage of the population with private coverage. Private health insurance is provided mainly by for-profit commercial insurance companies.

 

The total value of private health insurance premiums grew by 28.9 percent per year between 2010 and 2015.6 In 2015, private health insurance premiums accounted for 5.9 percent of total health expenditures. The Chinese government is encouraging development of the private insurance market, and some foreign insurance companies have recently entered the market.

 

Services covered: The benefit package is often defined by the local governments. Publicly financed basic medical insurance typically covers:

 

 

  1. inpatient hospital care (selected provinces and cities)
  2. primary and specialist care
  3. prescription drugs
  4. mental health care
  5. physical therapy
  6. emergency care
  7. traditional Chinese medicine.

 

 

A few dental services (such as tooth extraction, but not cleaning) and optometry services are covered, but most are paid out-of-pocket. Home care and hospice care are often not included either. Durable medical equipment, such as wheelchairs and hearing aids, is often not covered.

 

Preventive services, such as immunization and disease screening, are included in a separate public-health benefit package funded by the central and local governments; every resident is entitled to these without copayments or deductibles. Coverage is person-specific; there are no family or household benefit arrangements.

 

Maternity care is also covered by a separate insurance program; it is currently being merged into the basic medical insurance plan.

 

 

Cost-sharing and out-of-pocket spending:

Inpatient and outpatient care, including prescription drugs, are subject to different deductibles, copayments, and reimbursement ceilings depending on the insurance plan, region, type of hospital (community, secondary, or tertiary), and other factors:

 

 

  • Copayments for outpatient physician visits are often small (CNY 5–10, or USD 2–3), although physicians with professor titles have much higher copayments.
  • Prescription drug copayments vary; they were about 50 percent to 80 percent of the cost of the drug in Beijing in 2018, depending on the hospital type.
  • Copayments for inpatient admissions are much higher than for outpatient services.

 

 

There are no annual caps on out-of-pocket spending. In 2018, out-of-pocket spending per capita was CNY 1,186 (USD 262)—representing about 28 percent of total health expenditures.8 A fairly high percentage of out-of-pocket spending is for prescription drugs.

 

The public insurance programs only reimburse patients up to a certain ceiling, above which residents must cover all out-of-pocket costs. Reimbursement ceilings are significantly lower for outpatient care than for inpatient care. For example, in 2018, the outpatient care ceiling was CNY 3,000 (USD 845) for Beijing residents under Urban-Rural Resident Basic Medical Insurance. In comparison, the ceiling for inpatient care was CNY 200,000 (USD 56,338). Annual deductibles have to be met before reimbursements, and different annual deductibles may apply for outpatient and inpatient care.

 

Preventive services, such as cancer screenings and flu vaccinations, are covered by a separate public health program. Children and the elderly have no copayments for these services, but other residents have to pay 100 percent of these services out-of-pocket.

 

People can use out-of-network health services (even across provinces), but these have higher copayments.

 

 

Safety nets:

For individuals who are not able to afford individual premiums for publicly financed health insurance or cannot cover out-of-pocket spending, a medical financial assistance program, funded by local governments and social donations, serves as a safety net in both urban and rural areas.

 

The medical financial assistance program prioritizes catastrophic care expenses, with some coverage of emergency department costs and other expenses. Funds are used mainly to pay for individual deductibles, copayments, and medical spending exceeding annual benefit caps, as well as individual premiums for publicly financed health insurance. In 2018, 76.7 million people (approximately 5.5% of the population) received such assistance for health insurance enrollment, and 53.6 million people (3.8% of the population) received funds for direct health expenses.

 

 

How is the delivery system organized and how are providers paid?

Physician education and workforce:

The number of physicians is not regulated at the national level, and the government is trying to encourage more people to complete medical school. All the medical schools are public. Tuition varies by region, ranging from CNY 5,000 (USD 1,408) to CNY 10,000 (USD 2,816) per year. Tuition is heavily subsidized by the government.

 

To ensure a supply of medical providers in rural or remote areas, China waives tuition and lowers entrance qualifications for some medical students. Medical students who attend these education programs must work in rural or remote areas for at least six years after graduation.

 

Primary care: Primary care is delivered primarily by:

 

 

  1. Village doctors and community health workers in rural clinics
  2. General practitioners (GPs) or family doctors in rural township and urban community hospitals
  3. Medical professionals (doctors and nurses) in secondary and tertiary hospitals.

 

 

In 2018, there were 506,003 public primary care facilities and 437,636 private village clinics. Village doctors, who are not licensed GPs, can work only in village clinics. In 2018, there were 907,098 village doctors and health workers. Village clinics in rural areas receive technical support from township hospitals.

 

Patients are encouraged to seek care in village clinics, township hospitals, or community hospitals because cost-sharing is lower at these care sites than at secondary or tertiary hospitals. However, residents can choose to see a GP in an upper-level hospital. Signing up with a GP in advance is not required, and referrals are generally not necessary to see outpatient specialists. There are few localities that use GPs as gatekeepers.

 

In 2018, China had 308,740 licensed and assistant GPs, representing 8.6 percent of all licensed physicians and assistant physicians. Unlike village doctors and health workers in the village clinics, GPs rarely work in solo or group practices; most are employed by hospitals and work with nurses and nonphysician clinicians, who are also hospital employees.

 

Nurses and nonphysician clinicians are sometimes employed as care managers or coordinators to assist GPs in treating patients with chronic illnesses or complex needs. Care coordination is generally not incentivized well, although it is always encouraged by health authorities.

 

Fee schedules for primary care in government-funded health institutions are regulated by local health authorities and the Bureaus of Commodity Prices. Primary care doctors in public hospitals and clinics cannot bill above the fee schedule. To encourage nongovernmental investment in health care, China began allowing nonpublic clinics and hospitals to charge above the fee schedule in 2014.

 

Village doctors and health workers in village clinics earn income through reimbursements for clinical services and public health services like immunizations and chronic disease screening; government subsidies are also available. Incomes vary substantially by region. GPs at hospitals receive a base salary along with activity-based payments, such as patient registration fees. With fee-for-service still the dominant payment mechanism for hospitals (see below), hospital-based physicians have strong financial incentives to induce demand. It is estimated that wages constitute only one-quarter of physician incomes; the rest is thought to be derived from practice activities. No official income statistics are reported for doctors.

 

In 2018, 42 percent of outpatient expenses and 28 percent of inpatient expenses, on average, were for prescription drugs provided to patients in hospitals.

 

 

Outpatient specialist care:

Outpatient specialists are employed by and usually work in hospitals. Most specialists practice in only one hospital, although practicing in multiple settings is being introduced and encouraged in China. Specialists receive compensation in the form of a base salary plus activity-based payments, with fee schedules set by the local health authorities and Bureaus of Commodity Prices.

 

Patients have a choice of specialist through their hospital. Outpatient specialists are paid on a fee-for-service basis through the hospitals in which they work, and specialist doctors in the public hospitals cannot bill above the fee schedule.

 

Administrative mechanisms for direct patient payments to providers: Patients pay deductibles and copayments to hospitals for primary care and specialty physician office visits, and for hospital admissions at the point of service. Hospitals bill insurers directly for the remaining covered payment at the same time through electronic billing systems.

 

 

After-hours care:

Because village doctors and health workers often live in the same community as patients, they voluntarily provide some after-hours care when needed. In addition, rural township hospitals and urban secondary and tertiary hospitals have emergency departments (EDs) where both primary care doctors and specialists are available, minimizing the need for walk-in, after-hours care centers. In EDs, nurse triage is not required and there are few other restrictions, so people can simply walk in and register for care at any time. ED use is not substantially more expensive than usual care for patients.

 

Information on patients’ emergency visits is not routinely sent to their primary care doctors. Patients can call 120 or 999 for emergency ambulance services at any time.

 

 

Hospitals:

Hospitals can be public or private, nonprofit or for-profit. Most township hospitals and community hospitals are public, but both public and private secondary and tertiary hospitals exist in urban areas.

 

Rural township hospitals and urban community hospitals are often regarded as primary care facilities, more like village clinics than actual hospitals.

 

In 2018, there were approximately 12,000 public hospitals and 21,000 private hospitals (excluding township hospitals and community hospitals), of which about 20,500 were nonprofit and 12,600 were for-profit.

 

The National Health Commission directly owns some hospitals in Beijing, and national universities (directly administrated by the Ministry of Education) also own affiliated hospitals. Local government health agencies in each province may have a similar structure and often own provincial hospitals.

 

Hospitals are paid through a combination of out-of-pocket payments, health insurance compensation, and, in the case of public hospitals, government subsidies. These subsidies represented 8.5 percent of total revenue in 2018.

 

Although fee-for-service is the dominant form of provider payment, diagnosis-related group (DRG) payments, capitation, and global budgets are becoming more popular for inpatient care in selected areas. Pay-for-performance is rare. Local health authorities set fee schedules, and doctors’ salaries and other payments are included in hospital reimbursements. There are no special allowances for the adoption of new technologies.

 

 

Mental health care:

Diagnosis, treatment, and rehabilitation of mental health conditions is provided in special psychiatric hospitals and in the psychology departments of tertiary hospitals. Patients with mild illnesses are often treated at home or in the community clinics; only severely mentally ill patients are treated in psychiatric hospitals. Mental health care is not integrated with primary care.

 

Outpatient and inpatient mental health services are covered by both public health insurance programs (Urban Employee Basic Medical Insurance and Urban-Rural Resident Basic Medical Insurance). In 2018, there were 42 million mental health patient visits to special psychiatric hospitals; on average, one psychiatrist treated 4.7 patients per day.

 

Long-term care and social supports: Long-term care and social supports are not part of China’s public health insurance.

 

In accordance with Chinese tradition, long-term care is provided mainly by family members at home. There are very few formal long-term care providers, although private providers (some of them international entities) are entering the market, with services aimed at middle-class and wealthy families. Family caregivers are not entitled to financial support or tax benefits, and long-term care insurance is virtually nonexistent; expenses for care in the few existing long-term care facilities are paid almost entirely out-of-pocket.

 

The government has designated 15 cities as pilot sites for long-term care insurance, with the aim of developing a formal national policy framework by 2020. Local governments often provide some subsidies to long-term care facilities.

 

On average, conditions in long-term care facilities are poor, and there are long waiting lists for enrollment in high-end facilities. Formal long-term care facilities usually provide housekeeping, meals, and basic services like transportation, but very few health services. Some, however, may coordinate health care with local township or community hospitals.

 

Governments encourage the integration of long-term care with other health care services, particularly those funded by private investment. There were 3.8 million beds for aged and disabled people in 2016. Some hospice care is available, but it is normally not covered by health insurance

 

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Source: The Commonwealth Fund

 

Legal system of the PRC related to Busin...

Legal system of the PRC related to Business debt

In China, the courts are divided into the Supreme People’s Court, the High People’s Courts, the Intermediate People’s Courts and the Basic People’s Courts. Generally, the Basic People’s Courts have jurisdiction as courts of first instance over civil cases. The Intermediate People’s Courts have jurisdiction as courts of first instance over civil cases that have major impacts on the area under their jurisdiction. The High People’s Courts have jurisdiction as courts of first instance over civil cases that have major impact on the areas under their jurisdiction. The Supreme People’s Court has the right to give interpretation of questions concerning specific applications of laws and decrees in judicial proceedings.

 

 

Supreme People’s Court

High People’s Courts

Intermediate People’s Courts

Basic People’s Courts

 
 

Required documents

The following conditions must be met when a lawsuit is filed:

  •   The plaintiff must be a citizen, legal person or any organisation that has a direct interest in the case.
  •   There must be a definite defendant.
  •   There must be a specific claim or claims, facts and a cause or causes for the suit.
  •   The name, gender, age, ethnic status, occupation, work unit and home address of the parties must be provided. If the parties are legal persons or any other organisations, their names, addresses and the names and posts of the legal representatives or the principal heads must be provided.
  •   The evidence and its source, as well as the names and home addresses of the witnesses, must be provided. Original documents do not need to be provided.

 

When a lawsuit is filed, copies of statements as well as other evidence will be provided depending on the number of defendants in court.

 

 

Legal dunning procedure

When a creditor requests payment of a debt or recovery of negotiable instalments from a debtor, they may, if the following requirements are met, apply to a Basic People’s Court that has jurisdiction for an order of payment.

  •   No other debt disputes exist between the creditor and the debtor
  •   The order of payment can be served on the debtor.

 

 

China are the most credit-averse country with less than 40% of the business-to-business transactions made on credit.

The debtor will, within 15 days after receipt of the order of payment, clear off their debts or submit to the people’s court their dissent in writing. If the debtor has neither dissented from nor complied with the order of payment within 15 days, the creditor may apply to the people’s court for execution. The order of payment is effective only when the debtor has failed to submit a dissent in writing within 15 days. Once such a dissent is submitted, the order of payment will be terminated and the creditor will take action.

 

 

Lawsuit

A lawsuit can only be initiated by a creditors.

Generally, a civil lawsuit brought against a citizen will be under the jurisdiction of the people’s court in the area where the defendant lives. If the place of the defendant’s address is different from that of the defendant’s usual residence, the lawsuit will be under the jurisdiction of the people’s court of the place of the defendant’s habitual residence.

A civil lawsuit brought against a legal person or any other organisation will be under the jurisdiction of the people’s court of the place where the defendant has their domicile. A lawsuit brought on a contract dispute will be under the jurisdiction of the people’s court at the place where the defendant has their domicile or where the contract is

 

 

Appeal

If a party disagrees with a judgment made by a local people’s court at first instance, the party has the right to lodge an appeal with the immediate superior people’s court within 15 days from the date when the written judgment was served. When filing an appeal, a petition for the purpose will be submitted. The content of the appeal petition will include the names of the parties, the names of the legal persons and their legal representatives or names of other organisations and their principal heads, the name of the people’s court where the case was originally tried, the file number of the case and the cause of action, and the claims of the appeal and the reasons.

 

 

Expected time frame

When a case is tried according to a summary procedure, the people’s court will conclude the trial within three months from the date of entering it on its trial docket. When a case is handled according to an ordinary procedure, the people’s court will conclude the case within six months from the date of accepting it. When an extension of the period is necessary under special circumstances, a six-month extension may be allowed subject to the approval of the president of the court. Further extension, if needed, will be reported to the people’s court at a higher level for approval. The case on appeal will be concluded within three months after being docketed by the people’s court.

 

 

Interest and costs in the legal phase

Interest and costs in the legal phase can be claimed as well with the same rate set by the People’s Bank of China, plus 30% to 50% (the Reply of Supreme People’s Court on the Calculation Standard of Late Payment Penalty).

 

 

Enforcement of debt

The parties concerned must comply with legally effective judgments or written orders in civil cases. If a party refuses to do so, the other party may apply to the people’s court for execution, or the judge may refer the matter to the execution officer for enforcement. All fees arising from the enforcement will be borne by the debtor, and the applicant does not have to pay such fees.

Enforcement in movable property and immovable property
If the debtor subjected to execution fails to fulfil the obligations according to the execution notice and the obligations specified in the legal document, the people’s court will be empowered to make inquiries with the banks, credit cooperatives or other units that deal with saving into the accounts of the debtor and will be empowered to freeze or transfer deposits. If the debtor subjected to execution fails to fulfil the obligations specified in the legal document, the people’s court will be empowered to seal up, freeze, sell by public auction or sell off part of the property of the debtor for the fulfilment of their obligations.

 

 

Costs

Any party filing a civil lawsuit will pay the court costs according to the rules. In most cases, the litigation fees are borne by the losing party.

 

 

Expected time frame

The time frame for enforcement is usually less than six months, but it can be extended when necessary after being approved by the president of the court.

 

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70MW floating solar farm, a world first...

70MW floating solar farm, a world first.

Chinese state-owned developer CECEP has completed a 70MW floating solar project - the largest in the world - at a former coal-mining area of Anhui Province, China, in collaboration with French floating solar specialist Ciel & Terre.

 

 

China is the world's top investor in renewable energy, having committed $698 billion (£551.4bn) in renewables capacity between 2010 and the first half of 2019 according to a UN-backed report. However, this project will soon be overtaken. Rival developers Three Gorges New Energy have already partially connected a 150 megawatt floating solar farm, also in Anhui, which will be the world's largest when fully commissioned.

 

 

The project, spread across 13 separate islets on an area of 140 hectares, was completed in late 2018, with grid-connection, tests and commissioning carried out this month at the project site in the Lianghuai mining subsidence area, Yongqiao District, Suzhou City.

 

 

EPC services were provided by China Energy Conservation Solar Technology and the China Energy Engineering Group Shanxi Electric Power Design Institute. A brand new 18km 110V overhead line was also built for the grid connection of the plant, which is expected to generate up to 77,693MWh of electricity in its first year, equivalent to the power consumption of nearly 21,000 households. While the complete facility in Anhui is said to currently be the largest floating PV plant on the same reservoir in the world, nearby, China-based firm Three Gorges New Energy has already partially connected a 150MW floating PV project to the grid, which will become the largest plant globally once fully commissioned.

 

 

Equipment

The CECEP system was built using Ciel & Terre's Hydrelio floats, which are locally produced to minimize emissions, optimise logistics costs and offer local employment. The project uses monocrystalline modules from Chinese manufacturer LONGi Solar, as confirmed by a C&T spokesperson to PV Tech. Central inverters have also been put on stilt platforms on the shoreline of the quarry lake so as not to interfere with neighbouring farm activity. Concrete poles support the electrical installation and 1,500 helical anchors were used for the project and buried at an 8-15 metre-depth to match the water body.

 

 

Ciel & Terre has already supplied its floating structure solution to GCL's 32MW FPV plant in Anhui province. It has also recently supplied a 9.8MW PV project featuring rooftop and floating elements in Cambodia.

 

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Source: Tom Kenning, for PVTech.

PRC Cyberspace Security Law

PRC Cyberspace Security Law

The Cyber Security Law is the first national-level legislation establishing principles for the protection of the People’s Republic of China’s cyberspace security and the law is intended to address, amongst others, the need to control China’s critical information infrastructure (CII) and its data. The law focuses on the security challenges facing information infrastructure in a range of critical sectors, such a telecommunications, energy, transportation and finance and addresses unlawful cyber activities including illegally obtaining or selling personal information, disseminating malicious software or prohibited information, and online fraud.

 

 

The PRC Cybersecurity Law generally imposes obligations on three types of entities: 1. network operators; 2. critical information infrastructure operators; and 3. providers of network products and services.

 

 

Network Operators

The PRC Cybersecurity Law imposes a range of cybersecurity obligations on “network operators,” which are defined as owners and administrators of networks and network service providers. A “network” is defined as any system comprising computers or other information terminals and related equipment for collection, storage, transmission, exchange, and processing of information. On its face, the term network operator could broadly be interpreted to encompass any company that uses a network to do business in China despite not having a physical presence in China.

 

 

Generally, network operators must:

  • Develop internal security management systems and procedures, appoint personnel responsible for network security, and implement network security protection responsibility.
  • Adopt measures to prevent viruses, network attacks, network intrusions, and other threats to network security.
  • Monitor and record network activity and security incidents, and store network logs for at least six months.
  • Implement measures to classify, back up, and encrypt data.
  • Network operators must also provide “technical support and assistance” to law enforcement authorities to safeguard national security and investigate crimes. The term “technical support” is not formally defined, and it remains to be seen whether this includes providing backdoor and decryption assistance for encrypted data. To the extent it does, it will permit government access to data stored and potentially to data transferred (such as data in motion) in the PRC.

 

 

Critical Information Infrastructure Operators

Critical information infrastructure (CII) operators are defined as entities providing services that, if lost or destroyed, would endanger China’s national security, economy, or public interest. The PRC Cybersecurity Law lists public communication and information services, energy, finance, transportation, water conservation, public services, and e-government as examples of CII.

 

 

CII operators are subject to the same cybersecurity requirements applicable to network operators as outlined above. CII operators must also sign security and confidentiality agreements with their suppliers of network products and services, and evaluate cybersecurity and other potential risks at least once a year.

 

 

Providers of Network Products and Services

Providers of network products and services must comply with relevant national and industry standards and ensure the security of their products. Products determined to be “Critical Network Equipment and Network Security Products” are required to go through testing by accredited evaluation centers prior to being marketed in China.

 

 

Penalties for Non-Compliance

Failure to comply with the Cyber Security Law carries penalties, ranging from making corrections to fines and confiscation of unlawful gains. At the end of the spectrum lies temporary suspension of operations, closing down of websites, and revocation of relevant operation permits and the business license. The CAC and other related governmental departments are also entitled to take technical measures and other necessary actions to intervene and stop the transmission of data which is imported from sources outside of PRC and is prohibited by PRC laws from being released or transmitted.     

 

                

Cross-Border Transfers

One of the most significant and controversial provisions of the PRC Cybersecurity Law restricts the cross-border transfer of personal information and important data collected or generated through operations in China (collectively, Local Data). Specifically, a network operator may transfer Local Data outside of China only if it has a business need to do so and passes a security assessment.

 

 

The Scope of Local Data

Local Data subject to the cross-border transfer requirements consists of “personal information” and “important data.” Notably, the definition of “personal information” is not explicitly limited to information pertaining to Chinese citizens.

 

 

Security Assessments for Cross-Border Transfers

If a network operator wishes to transfer Local Data outside of China, it must undergo a security assessment. Self-assessments generally suffice for this requirement and must consider, among other factors:

  • The legality, legitimacy, and necessity of the cross-border transfer.
  • The amount, scope, type, and sensitivity of the data.
  • If the transfer involves personal information, whether data subjects have consented to the transfer.
  • The data recipient’s security capability, measures, and environment.
  • The risks associated with the data being leaked, damaged, tampered with, or misused after the data transfer or subsequent re-transfer.
  • The risks to national security, societal and public interests, and the individual lawful rights and interests after the cross-border transfer.

 

 

Prohibited Cross-Border Transfers

Cross-border transfers of Local Data are prohibited in the following circumstances:

  • The transfer does not comply with state laws, administrative regulations, or departmental rules.
  • Data subjects do not consent to a transfer involving personal information.
  • The transfer poses risks to China’s national security or public interests.
  • The transfer could endanger China’s security of national politics, territory, military, economy, culture, society, technology, information, ecological environment, resources, and nuclear facilities.
  • Other circumstances where the Chinese government determines that the data involved in the transfer is prohibited from being transferred offshore.

 

 

Implications

Businesses operating in China should evaluate how the PRC Cybersecurity Law might impact their operations and amend their policies and procedures as necessary. Companies should pay close attention to their data transfer practices to meet the new restrictions on cross-border transfers. Companies should also understand the implications of data localization requirements and the ability of the government to access private and proprietary data stored and transferred in China.

 

 

China Automotive Roundup 2018

China Automotive Roundup 2018

According to the China Association of Automobile Manufacturers (CAAM), domestic vehicle sales increased 3% year-on-year in 2017, to 28.88 million units, a sales increase far lower than the 10% rise seen in 2016. The slower growth was due to higher taxes on smaller cars and subsidy adjustments on electric vehicles. Passenger car sales, led by Volkswage, increased 1.4% (among those SUV sales rose by 13.3%, to 10.25 million units), while sales of minibuses/multi-purpose vehicles plunged 20% and 17% respectively. Commercial vehicles recorded robust demand with sales increasing 14%, to 4.16 million units. In 2018 it is expected that vehicle sales will increase as much as 5% year on-year.

 

 

Whilst Government of China views its automotive industry, including the auto parts sector, as one of the country’s pillar industries, Electric cars remain a promising segment, as the government still provides substantial subsidies to manufacturers, while customers are offered incentive and favourable discounts for purchasing. State-owned institutions are encouraged to buy more new energy vehicles. The electric car market grew 53.3% in 2017, to about 780,000 units, while sales increased 111.5% in H1 of 2018

 

 

However, concerns over overcapacity are rising, as there are currently more than 200 electric-vehicle projects in China with investment of over CNY 1,026 billion and a potential capacity of more than 21 million units, while the government-set target aims at just 7 million units on the road by 2025. In order to guide the industry, the Chinese state is gradually reducing subsidies. Stricter rules are also set to raise the subsidy threshold, which will force automakers to increasingly convert themselves into hi-tech companies with core competencies. In this way, low-cost manufactures will leave the stage.

 

 

It seems that the Chinese car market is rather resilient in the light of the ongoing Sino-US trade dispute. Vehicle import and export volumes (1.25 million units and 1.06 million units respectively) are quite small compared to the industry output (29 million in 2017). The government has recently taken several measures to boost the automotive market. Since July 2018 import duties on vehicles have been slashed to 15% from 25%, while duties for car parts have been lowered to 6% from around 10%. The additional 25% tit-for-tat tariff is only imposed on products made in the USA. At the same time China announced it will ease limits on joint ventures within five years and open up the market to overseas carmakers. The rules will be loosened on electric cars this year, commercial vehicles by 2020 and passenger cars in 2022. All that should ensure a solid and steady performance of the domestic automotive market in the coming years. However, despite its resilience a major escalation of the current Sino-US trade dispute would surely impact the automotive business along with other sectors (e.g. potential deterioration of business and consumer sentiment).

 

 

New Energy Vehicles

Made in China 2025 is an initiative to upgrade the country’s industry from low cost mass production to higher value-added advanced manufacturing.  It prioritizes 10 sectors, including the auto sector (and NEVs). The initiative’s objectives are to sell one million units of domestically produced pure electric and plug-in hybrid cars in China by 2020, which should account for a minimum of 70% of the country’s market share. Moreover, it aims to sell three million domestic brand units by 2025, and account for a minimum of 80% of the country’s market share.

 

 

The NEV market in China is dominated by domestic brands including BAIC, BYD, and JAC.  A draft measure has been released for public comment that aims to set NEV production targets for both domestic and foreign automakers operating in the Chinese market.  Automakers that do not meet this target would need to purchase NEV credits from other automakers that exceeded it.

 

 

Recreational Vehicles


China’s RV market has undergone significant changes over the past several years, including a national focus on the development of tourism, campgrounds and the RV industry. With a growing demand for RVs and a shift in consumers' travel preferences, tourism experts in China anticipate a surge of RV-related businesses in the coming years. According to the “2016 China Campground Industry Report”, there are total of 958 campgrounds in China, of which 489 are under construction. There were about 25,000 RVs in China by 2016. 33% of the campgrounds are located along the eastern part of China, for instance Shandong, Jiangsu, Shanghai, Zhejiang, Fujian and Guangdong), while another 22% are in western China, for instance Inner Mongolia, Gansu, Sichuan and Yunnan. There are currently around 80 RV manufacturers in China, of which 56 are active. It is predicted that the campground industry will hit a trillion RMB market ($145 billion USD) by 2020, which will also stimulate the RV industry’s development.

 


China has made a push in recent years to develop domestic tourism, including campgrounds and the RV industry. Campground development has received great support from the central government.  The China National Tourism Administration, together with 10 other ministries, released “Several Opinions on Promoting the Development of Self-Driving Tourism” on November 9, 2016. This set a target of building 2,000 campgrounds by 2020, and allows vehicles to tow trailers which are less than 2.5 tons.

 



However, the RV industry faces issues such as lack of standards and regulations, as well as the luxury car consumption tax challenge. China Customs does not have an HS code for RVs, so RVs are treated as automobiles upon import.  This means imported RVs have to pay the same high tariffs and duties as imported cars.

 

 

China’s Belt and Road Initiative:...

China’s Belt and Road Initiative: Heightened Debt Risks to Countries

The following article is reproduced here in it's entiety from the Center for Global Development

 

China’s Belt and Road Initiative – which plans to invest as much as $8 trillion in infrastructure projects across Europe, Africa, and Asia – raises serious concerns about sovereign debt sustainability in eight countries it funds, according to a new study from the Center for Global Development.

 

 

The study evaluated the current and future debt levels of the 68 countries hosting BRI-funded projects. It found that of the 23 countries that are at risk of debt distress today, in eight of those countries, future BRI-related financing will significantly add to the risk of debt distress. You can see the full list of countries, their external debt levels, and China’s portion of that debt in the new study here.

 

 

“Belt and Road provides something that countries desperately want – financing for infrastructure,” said John Hurley, a visiting fellow at the Center for Global Development and a coauthor of the study. “But when it comes to this type of lending, there can be too much of a good thing.”

 

 

According to the study, China’s track record managing debt distress has been problematic, and unlike the world’s other leading government creditors, China has not signed on to a binding set of rules of the road when it comes to avoiding unsustainable lending and addressing debt problems when they arise.

 

 

“Our research makes clear that China needs to adopt standards and improve its debt practices – and soon,” said Scott Morris, a senior fellow at the Center for Global Development and a coauthor of the paper.

 

 

The study recommends that China:

  • Multilateralize the Belt and Road Initiative: Currently, the multilateral development institutions like the World Bank are lending their reputations to the broader initiative while only seeking to obtain operational standards that will apply to a very narrow slice of BRI projects: those financed by the MDBs themselves. Before going further, the MDBs should work toward a more detailed agreement with the Chinese government when it comes to the lending standards that will apply to any BRI project, no matter the lender.

 

  • Consider additional mechanisms to agree to lending standards: Some methods might include a post-Paris Club approach to collective creditor action, implementing a China-led G-20 sustainable financing agenda, and using China’s aid dollars to mitigate risks of default.

 

 

In all eight highest risk countries, the proportion of external debt that is owed to China and its banks will rise, sometimes dramatically, under the Belt and Road Initiative:

 

 

  • Pakistan: Pakistan, by far the largest country at high risk, currently projects an estimated $62 billion in additional debt, with China reportedly financing roughly 80 percent of that. Big-ticket BRI projects and the relatively high interest rates being charged by China add to Pakistan’s risk of debt distress.

 

 

  • Djibouti: The most recent IMF assessment stresses the extremely risky nature of Djibouti’s borrowing program, noting that in just two years, public external debt has increased from 50 to 85 percent of GDP, the highest of any low-income country. Much of the debt consists of government-guaranteed public enterprise debt and is owed to China Exim Bank.

 

 

  • Maldives: China is heavily involved in the Maldives’ three most prominent investment projects: an upgrade of the international airport costing around US$830 million, the development of a new population center and bridge near the airport costing around US$400 million, and the relocation of the major port (no cost estimate). The country is considered by the World Bank and the IMF to be at a high risk of debt distress and is currently being buffeted by domestic political turmoil.

 

 

  • Lao, P.D.R. (Laos): Laos, one of the poorest countries in Southeast Asia, has several BRI-linked projects. The largest, a $6.7 billion China-Laos railway, represents almost half the country’s GDP, which led the IMF to warn that the project might threaten the country’s ability to service its debts.

 

 

  • Mongolia: Mongolia’s future economic prosperity depends on major infrastructure investments. Recognizing Mongolia’s difficult situation, China Exim Bank agreed in early 2017 to provide financing under its US$1 billion line of credit at concessional rates for a hydropower project and a highway project. If reports of an additional $30 billion in credit for BRI-related projects over the next five to ten years are true, then the prospect of a Mongolia default is extremely high, regardless of the concessional nature of the financing.

 

 

  • Montenegro: The World Bank estimates that public debt as a share of GDP will climb to a whopping 83 percent in 2018. The source of the problem is one very large infrastructure project, a motorway linking the port of Bar with Serbia that would integrate the Montenegrin transport network with other Baltic countries. The Montenegro authorities concluded an agreement with China Exim Bank in 2014 to finance 85 percent of the estimated US$1 billion cost for the first phase of the project, with the second and third phases likely to lead to default if financing is not provided on highly concessional terms.

 

 

  • Tajikistan: One of the poorest countries in Asia, Tajikistan is already assessed by the IMF and World Bank to be at “high risk” of debt distress. Despite this, it is planning to increase its external debt to pay for infrastructure investments in the power and transportation sectors. Debt to China, Tajikistan’s single largest creditor, accounts for almost 80 percent of the total increase in Tajikistan’s external debt over the 2007-2016 period.

 

 

  • Kyrgyzstan: Kyrgyzstan is a relatively poor country with significant new BRI-related infrastructure projects, much of it financed by external debt. China Exim Bank is the largest single creditor, with reported loans by the end of 2016 totaling US$1.5 billion, or roughly 40 percent of the country's total external debt. While currently considered to be at a “moderate” risk of debt distress, Kyrgyzstan remains vulnerable.

 

 

The full study, “Examining the Debt Implications of the Belt and Road Initiative from a Policy Perspective” can be found at: https://www.cgdev.org/publication/examining-debt-implications-belt-and-road-initiative-policy-perspective.

Revisions to the China Tax Law for forei...

Revisions to the China Tax Law for foreigners

This June, China’s Ministry of Finance has unveiled a series of Draft Amendments to its individual income tax (IIT) Laws. These proposed changes are aimed at easing the tax burden for lower-income earners in particular, while taking a tougher stance on both foreigner workers and high-income earners. Below are summarized parts of the Draft Amendments that may affect foreign in China.

 

 

The effects of the proposed changes are fourfold: 

  • raise the IIT threshold
  • consolidate income categories
  • introduce new deductible expenses
  • tighten the IIT’s overall application and enforcement

 

 

Already confirmed by the State Council, the Draft Amendments have now been published for public opinion and will undergo further revision before finally coming into effect on January 1, 2019.

 

 

If these proposals are enacted, foreign companies should pay special attention to changes affecting the timing of the tax levy on foreign employees, foreign labor costs, contract profitability, and budgeting requirements, as well as the rippling effects they have on withholding and tax equalizations.

Foreigners living and working in China will now be subject to the 183-day test—a rule that draws upon recognized international practices. This test deems a foreign individual who resides in China for 183 days or more in a year a ‘resident’ and subjects them to Chinese tax on their worldwide income.

 

 

How to tell the tax identity of foreign individuals?

Resident taxpayers

Foreign individuals reside in China ≥ 183 days (within a tax year)

Non-resident taxpayers

Foreign individuals reside in China < 183 days (within a tax year)

 

 

This new 183-day-test will replace the previous five-year-rule under which a foreign individual will be subject to Chinese tax on their worldwide income if they live in China for more than five years. Previously, IIT liability contained a well-known loophole whereby foreigners could ‘reset the clock’. The amendments in effect will make it harder for foreigners to avoid paying tax on their worldwide income tax liability by removing this loophole.

 

 

The graphic below is the CURRENT calculation of taxable income of foreign individuals. Once the Draft Amendments come into effect,  this Five Year Tax Rule is no longer valid. Under the new system, a foreign individual who resides in China for 183 days or more in a year a ‘resident’ and subjects them to Chinese tax on their worldwide income.

 

 

Deductibles

 

 

For resident taxpayers, the Draft Amendments propose raising the personal deduction on comprehensive income from RMB 3,500 to RMB 5,000 per month, raising the annual threshold to RMB 60,000 per year, to take effect from October 1, 2018.

 

 

Additionally, resident taxpayers will be allowed to deduct certain additional items from the comprehensive income. These additional deductible items are categorized as ‘additional itemized deductions for specific expenditures’, which include:

  • Education expenses for children
  • Expenses for further self-education
  • Health care costs for serious illness
  • Housing loan interest
  • Housing rent

 

 

For non-resident taxpayers, the RMB 5,000 per month standard deduction will also be applicable to them, to replace the current RMB 4,800 per month standard deduction.

 

 

However, the current deductible allowances applicable to non-resident taxpayers are no longer available. That is to say, the deductibles for non-resident taxpayers are very likely to be shrinking. If you don't know the current deduction and allowance, check the background below.

 

 

Background

Deduction 

Foreign individuals employed in China are eligible to a standard deduction of RMB 4,800. On top of this, there are a number of allowances that may be deducted off an individual’s income, including the mandatory Chinese social security payments for foreigners. Note: at the time of writing, not all Chinese cities have implemented social security for foreigners yet.

 

 

Permitted allowances

The Chinese Tax Bureau allows foreign staff to deduct certain “allowances” before calculating the tax burden on their monthly salary. This is something that should be discussed between an employee and employer as part of the discussion of an overall salary package. These include:

 

  • Allowances for housing, meals, relocation, and laundry expenses
  • Relocation expenses upon commencement or cessation of employment in China
  • Reasonable business travel expenses and two personal trips to the individual’s country of origin
  • Reasonable allowances for language training and children’s education
  • The tax authorities will only permit these allowances to be deducted if they are included in the employee’s contract. The employee needs to produce an official fapiao (receipt) every month for the expenses, in addition to meeting other conditions.

 

 

Tax brackets

For comprehensive income: The lower tax brackets have also been expanded—meaning the lower tax rates are now applied on a wider range of income levels, while the higher tax brackets remain the same. Practically, this means that more people can access lower IIT rates.

For example, under the old system, an individual with a taxable income (after deductions) of RMB 10,000 per month will be subject to 25 percent of tax resulting in RMB 1,495 levy every month. Assuming their taxable income remained consistent, in a year they would pay RMB 17,940 in IIT.

 

 

Under the new system, an individual with the same taxable income will be subject to a 10 percent tax rate and will only need to pay RMB 9,480 (RMB 790 x 12 months) levy every year. Under the new system, the taxpayer would pay little over half the previous tax amount and save RMB 8,460  per year.

 

 

The formulas for calculating an individual’s tax payable are:

Monthly taxable income = Monthly income – RMB 4,800 – Allowances

Tax payable = Monthly taxable income × Applicable tax rate – Quick calculation deduction

The final revision will be coming into effect on January 1, 2019. These proposals form part of larger series of tax reforms being implemented by the Chinese Authorities in order to boost consumption amid a slowing economy. Authorities have promised to cut taxes by more than RMB 800 billion in 2018, which will have the effect of reducing government revenue by over five percent.

Still in its infant stages of development, many of the details of the Draft Amendments are yet to be released—including details of the residency rules for expatriates and elaboration on the implementation and ongoing administration of many of the rules.

 

 

If the draft amendment survives the final rounds of scrutiny, the tax burden will be alleviated for the working class of Chinese citizens. The adoption of an annual levy system and the 183-day residence rule also marks a gradual shift towards more international tax practices.

 

Source: 中华人民共和国个人所得税法修正案(草案), KPMG Tax Alert

 

Craft Beer in China, a growing taste

Craft Beer in China, a growing taste

China has always been a huge consumer of beer (it is the world’s largest consumer and producer of beer), but tastes have recently been shifting away from masse produced beers, such as Snow, Qingdao and Budweiser to more premium and craft flavors. Sales volumes of cheaper Chinese beers have been falling—both Tsingtao and Yanjing posted losses in sales in 2016. However, demand for high-end beers is growing, and China’s market is ripe with opportunities for both domestic and foreign craft brewers.

 

 

China’s craft beer market

During the Olympics, in 2008, there was virtually no craft beer available in China: the industry can thank millennials and a growing middle class for its rise. According to McKinsey & Company, Chinese consumers are maturing and more willing to spend more on premier products, such as alcohol. Although the overall volume has decreased, the overall value of Chinese beer sales has actually risen slightly. Chinese millennial consumers are increasingly attracted to premium products and services, and are more and more likely to buy from local brands: consumers want to try something good, or better and are willing to pay a premium for such.

 

 

Crafting opportunities in China

Although China only comprises 2.5 percent of American craft beer exports in 2017 it has a burgeoning domestic craft beer industry, China—and the Asia-Pacific region, in general—is one of the fastest growing regions for craft beer. According to the Financial Times, 40 percent of all beer consumed in China was imported, which means that there is substantial room for growth for international brewers, particularly in the premium alcohol segment. Even Anheuser-Busch InBev (AB InBev), the maker of America’s top-selling beer Budweiser, has aggressively been expanding into China to capitalize on the market: The company purchased a stake in popular Shanghai-based craft brewer, Boxing Cat, which introduced Chicago-based Goose Island (which AB InBev bought in 2011) into China, and plans to launch a Goose Island brewery in the country.

 

 

China’s craft beer culture is still young and has primarily been driven by foreigners living and working abroad, which makes them the perfect target demographic for craft brewers first entering the Chinese market. However, craft beer is becoming increasingly popular among locals, particularly the worldly younger generations who seek out “trendy and high-quality” products.

 

 

Despite the influx of foreign and domestic brewers, competition is still relatively low. Ninety percent of consumers are still drinking mass produced industrial beer. Most consumers don’t know what craft beer is and haven’t tried it before; hence a lot of resources are spent an education and marketing.

 

 

Appealing to Chinese taste buds

For drinkers that are not as familiar with the bitter beers [like IPAs], Chinese consumers exhibit a preference for slightly fruitier, sweeter beers, like wheat beers and hefeweizens.  It’s an easier transition for first time drinkers, especially for a country of consumers that’s used to drinking beers that are much lower in alcohol content and have a whole lot less flavor.

 

 

Although flavor is perhaps the most important part of craft beer, the packaging is also important in appealing to Chinese consumers: Craft brewers often have creative and illustrative designs that stand out on store shelves, especially when compared to their domestic mass produced counterparts.

 

 

Challenges of the Chinese market

Because craft beer is relatively new and consumption is concentrated among foreigners, not many people outside of Tier 1 cities understand what it is, although the trend is starting to spread. There are also logistical challenges to consider when exporting to China. Craft beer is best served as fresh as possible to get the full impact of the flavor, which means that overseas brewers trying to export to China have to contend with the additional costs of shipping long distances, as well as the extended shipping time and lack of proper storage facilities. However China has seen improvements in storage and handling over the years, so a growing number of importers are investing in upgraded infrastructure that maintains cold-chain throughout the beer’s life cycle: being kept cold from when it leaves the brewery, to when it gets to the customers’ hands.

 

 

The future of craft beer in China

As consumer tastes mature and become more diverse, so will the number of local breweries that operate in China. As local craft beer becomes adopted by local consumers, there will be more options and opportunities to sample such beer—or create that desire to experiment with more than the domestic mass produced beer on offer in supermarkets.

 

 

For those wishing to conduct a little further research in this field, this list contains China’s top breweries.

 

 

China Web & Software development environ...

China Web & Software development environment

The sheer volume of information being generated in China is having a huge impact on how business operate in China. What was not possible to code and develop in China just 3 years ago, is now possibly, more efficient than coding and development in traditional locations such as the US and India. China’s ability to develop, search and hyperlinking technologies has risen exponentially. However, the challenge has now become one of attracting talent rather than searching for non-existent competencies or trying to develop technical expertise in-house.

 

 

The China's Developer Survey Report 2017, commissioned by Alibaba Cloud Developer Community (ACDC), surveyed over 7,032 developers in Mainland China. In this report, developers shared their preferences for software development, including their favorite OS, development environment, programming language, database, framework, and codebase. Among other things, you can find out about China's software development trends and practices in fields such as cloud computing, big data, artificial intelligence, blockchain, and security.

 

 

Top 25 trends of developers in China.

1. Windows is still the favorite OS

67.2% of developers prefer Windows, 20.3% prefer MacOS (OS X), while only 12.5% prefer Linux or other operating systems (OS). Some of the main motivations of using Windows include the familiarity of the OS and the availability of platform resources in China.

2. JavaScript is the most widely used development language

While SQL is the most popular development language worldwide, developers in China still prefer JavaScript and Java. Developers proficient in Java and Python paid significantly higher than peers.

 

 

3. WordPress and Discuz! are the top web applications used by web developers

Owing to the popularity of blogs and forums in Mainland China, Discuz! and WordPress are the heavy favorites among web developers.

 

 

4. 92.1% of developers in China are male

The developer community in China is heavily male dominated, with only 7.9% of developers are female. This number is slightly higher than the global average of 88.6% (2017 Stack Overflow Global Developer Survey).

5. Beijing is the most popular city for developers, followed by Hangzhou

Hangzhou, with the presence of Internet giants such as Alibaba, has transformed from being a fairly unpopular city to the second most preferred city for developers in China.

6. Front-end engineering is the most important skill for front-end developers

Developers with "front-end engineering" skills are highly employable in Mainland China. Front-end engineering mostly involves feasibility analysis and optimization of projects through detailed planning.

7. Eclipse is the most popular development environment

The top four integrated development environment (IDE) in China are Eclipse, Notepad++, Visual Studio, and Sublime Text. Major factors for deciding on a development environment include cost and ease of use.

8. MySQL is the most widely adopted database

The “Open Source” nature of MySQL makes it a popular choice among developers compared with more traditional databases such as SQL Server. Oracle is also a popular option, but its adoption is hampered by its price tag.

9. There is no preferred cloud deployment model among developers in China

Private, public, and hybrid cloud are all of equal importance in China. Instead of having preference on a single deployment model, developers in China focus on the coexistence of multiple alternatives for different applications.

10. Being a developer pays well in China

A typical developer in Beijing earns an average of RMB 9,240 (USD 1457) a month, which is higher than the city average. The monthly income for 32.2% of developers in China falls within the RMB 10,000 – RMB 20,000 range.

11. DingTalk is becoming increasingly popular among high-income developers

In China, there are no concrete distinctions between enterprise and social communication tools. Developers prefer to use social IM tools, such as DingTalk, QQ, and WeChat, as their primary communication tool. DingTalk users tend to be those from higher income levels.

12. 49.2% of China's developers have started using Big Data storage solutions

Hadoop HDFS offline storage and Hbase online storage are two popular alternatives to relational databases for data storage. More and more enterprises in China are embracing Big Data and its technologies, specifically in the IoT, finance, and e-commerce industries.

13. Developers in China are a relatively young workforce

A majority (56.7%) of developers in China have only 0-3 years of work experience. This suggests that the developer community in China is less experienced as compared with international peers (42% have 3-10 years of experience).

14. Computer vision, NLP, and voice recognition are the three hottest topics in AI among China's developers

Developers in China are facing a multitude of challenges when dealing with neuro-linguistic programming (NLP) and voice recognition. These challenges stem from the complex structure of the Chinese language, as well as limited resources for voice data.

15. 71.8% of China's developers have Bachelor's degree or higher

This result suggests that China's developer are better educated than their global peers on average. According to the 2017 Stack Overflow Global Developer Survey, only 56.6% of developers globally have bachelor or higher degrees.

16. Node.js is China's favorite code operating environment

Similar to developers from around the world, Node.js, AngularJS, and .NET Core are the three most preferred application framework and codebase in China.

17. React Native is the leading cross-platform solution for mobile development

From food delivery to bike renting, mobile applications have become a necessity in China. For mobile developers, React Native and jQuery Mobile are the two most popular cross-platform solutions in China.

18. GitHub is the preferred repository for source code

30.7% of developers use GitHub to host source codes, while 30.5% of developers use internal corporate tools. China-developed repositories are still not widely adopted, with Alibaba Cloud Code repository being used by only 10.2% of developers.

19. China developers prefer Git over SVN

When teamwork is required, China's developers would first choose Git (45.9%) as the version management tool, while SVN (38.9%) comes second.

20. Agile development is widely adopted by developers in China

45.6% of developers choose agile/scrum development models as their first choice, followed by the traditional waterfall development model (36.4%).

21. Ethereum is the most widely used blockchain product

Ethereum is popular among China's developers because it is open source and provides good support for new developers. Because Bitcoin transactions is suspended in China (as of 2018), many developers are still exploring other possibilities of using blockchain as a service.

22. Continuous integration is still not widely adopted in China

As many as 49.5% of developers have never used any development integration management tools. However, there is also a significant minority (31.8%) of developers who use Jenkins to automate software development processes.

23. Security is a big concern for developers in China

70% of developers in China are well aware of the importance of security for enterprises, with a strong emphasis on invasion detection and loophole scanning. However, enterprises in China do not invest enough on security.

24. Web development, front-end development, and mobile development are the largest fields for China's developers

In China, 52.7% of developers are working on web development-related projects. Emerging fields such as Big Data, cloud computing, and security are still in great need for experienced developers.

25. …and finally, China's developers are in many ways similar to their international counterparts

From denim jeans to generic brand T-shirts, the go-to attire for China's developers is pretty similar with developers from across the globe. Furthermore, the vast majority of developers in China are self-proclaimed introverts and have close affinity for computer games.

 

 

Search Engine Optimization for China

Search Engine Optimization for China

By Saurav Bhattacharyya for China Brain.

 

When you are looking at optimizing your online presence in China, there’s really only one search engine to worry about; Baidu, which until recently claimed almost 80% of the search share. Last year it took a small dip when Qihoo, a local security vendor and internet provider, launched its own search engine, 360 Search and gained around 15% market share but it still handles 60-70% of all web searches in China.

 

 

In the same way that Google dominates the search space in the United States, Baidu dominate the mainland China search market. A combination of government restrictions, local knowledge, language skills, and more than a little skill has seen Baidu emerge as the search engine of choice for the half a billion Chinese who use the internet regularly.

 

 

As a result, Baidu’s search engine is the cornerstone for companies looking to expand their businesses in China. But even if a company has a handle on how to negotiate and optimize their website for foreign search engines attempting to do the same for Baidu is not possible: Baidu is not Google, and optimizing your site for Baidu is a different process than optimizing for Google.

 

 

Basics

  • Domain Name. Baidu prefers domains that use a .cn top level domain (TLD). While there will be .com and .net sites ranked by Baidu, and especially as the search engine expands its reach, Baidu continues to favor .cn domains and they consistently rank higher
  • Hosting. Whereas other search engines don’t particularly care where your site is hosted (save for any impact on site speed, of course) Baidu wants your site hosted in China. While Hong Kong servers also count for this purpose and has the bandwidth to serve the mainland, Taiwan definitely does not.
  • Physical Address. Baidu favors sites that have a physical presence in China, or at least the semblance of a physical presence. This doesn’t mean that you need to open and staff a Beijing office or rent space in Shanghai. But you should make sure that you have local Chinese contact details on your site.
  • Censorship. The Chinese government enforces a strict censorship regime for all online activities in China. Baidu indexes sites in line with this policy so anything that violates the censorship regime will see a site either refused listing or de-indexed from Baidu’s database.
  • ICP License. Typical of China’s bureaucratic governance all websites should apply for an Internet Content Publishing (ICP) license. It is not difficult to obtain but generally takes around a month to secure when documents are all in order. Without an ICP license, ranking high on a Baidu is difficult.

 

 

Content

  • Language. Your site should present its content in Chinese, but be warned: not all Chinese is Chinese to Baidu. Baidu has a strong preference for Simplified Chinese (otherwise know as Mandarin) and while it will also index Traditional Chinese, it doesn’t rank dialects, Cantonese, or other foreign language sites (English, French, Spanish, or German) highly.
  • Meta-Tags. According to Search Engine Land Baidu’s ranking algorithm pays close attention to the meta-tags that Western search engines place less importance upon. A good web developer will help you get all these points right. These include:
    1. Title Tags. These should include your keyword and be written in the same style as per Google or another search engine. However, Baidu also encourages sites to put their brand or company name in every title, too, preferably at the end of the title.
    2. Meta-Descriptions. While a minor ranking factor for Google, Baidu ranks sites with relevant meta-descriptions that include the page or post’s keyword higher than those that ignore this meta-element. Make sure your meta-descriptions are well written to rank higher.
    3. Alt-Tags. Baidu prefers all images include an alt-tag that is relevant to the post and page it is published on. For businesses building a local Chinese site based on an existing English language site, these tags are so easily overlooked. Make it part of your initial site build to add these.
    4. H-Tags. Baidu treats h-tags similarly to other search engines. Every page should have at least a H1 tag, and H2 and H3 tags should be used to break up content without skipping any heading levels. Make sure your keywords are repeated in your H-Tags.
  • New Content. Baidu favors newer content over older content and so a useful optimization strategy is the regular creation and publication of new, fresh content. For business this could include hosting a blog, regularly adding press releases and media releases, and ensuring that content is engaging and is published on a regular schedule.
  • Unique Content. All search engine penalize duplicate content but Baidu is particularly harsh. Your content should be unique, not only on your site but also online. This means being aware of ‘scrapers’ and bots that take your content and republish it elsewhere on the web. Acting quickly to address instances of plagiarism will help avoid penalties from Baidu for duplicate content.
  • Anchor Text. Baidu pays close attention to your anchor text so for internal links (those directing users to another part of your site instead of an external URL) you should make sure you are aligning the anchor text with the nominated keyword for that page or blog post. This is good SEO practice for other search engines, too, but especially important for Baidu and in China more generally.
  • To the Top. Numerous China-based SEOs report that the Baidu crawlers are not as powerful as Google’s bots, and recommend placing important keywords near the top of the page. While this is a good strategy for Western search engines, too, it is especially important if Baidu’s crawler does not manage to make it to the bottom of your content before moving on.

 

 

Technical

  • Load Time/Speed. Speed is a ranking signal for most search engines, but for Baidu it is a very important signal. As a result you should aim to keep your page load times as low as possible. Having a local host and stripping the site of extraneous code (in particular anything that uses the Google API), heavy images, and unnecessary code will help here
  • Multiple Domains. Baidu penalizes sites that include multiple domains and sub-domains. Your Chinese site (.cn) should be only your Chinese site. Do not host your Taiwanese, Mongolian, or Vietnamese site on a sub-domain, or even on the same server. Stick to a single Chinese language or bi-lingual site with a single domain hosted in China.
  • Flash. While Google has had the ability to crawl and index Flash-based sites and Flash elements since 2008, Baidu does not crawl Flash and will not index Flash elements in its database. Avoid Flash altogether for your Chinese.
  • Baidu Webmaster Tools. Like other search engines, Baidu has its own Webmaster Tools package. It i worth registering with Baidu’s Webmaster Tools for, even if they remain less advanced than Google or Bing, they allow website owners to gather basic statistics, check sitemaps are correct, and check robots.txt films are in order. Find the (Chinese language only) Webmaster Tools here.

 

 

Link Building

  • Quantity Counts. Baidu is a little different to other search engines in that it considers the number of backlinks pointing to your site an important ranking factor in determining your site ranking. This, of course, opens the door to link farming and all sorts of black-hat SEO techniques that fail on Google but still work – to a certain extent – on Baidu. However, engaging in these sorts of practices is something you’ll do at your own risk: Baidu is constantly improving and while the end is not yet nigh for this sort of thing, it is growing closer every day.
  • Quality Counts. The quality of the backlinks pointing to your site continues to grow in importance on Baidu. As the search engine evolves, this is expected to only become more important, too. Hence, building quality backlinks to your website is going to be a key to achieving and maintaining a ranking for the keywords that you’ve identified as important for your Chinese language business activities.

 

 

Conclusions

Search engine optimization (SEO) should be seen and a progressive thing done over months, not a one time fix: its all about making small changes and refinements over time. Expect your site to progressively gain viewers and site search position for your main keywords.

 

 

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Saurav Bhattacharyya is Managing Director of China Web Designers, a Beijing based website localization and development company. Having lived and workied in China since 1997, he has an excellent understading of the China internet landscape and issues foreign companies, in particular, face when considering their on-line presence.

 

Guangdong-Hong Kong-Macao Greater Ba...

Guangdong-Hong Kong-Macao Greater Bay Area

Located in the Pearl River Delta of South China, the Guangdong-Hong Kong and Macao Greater Bay Area is an agglomeration of cities and special administrative regions which serve as a must path for the routes leading to countries along the Belt and Road. The area is adjacent to the Beibu Gulf Economic Zone, southeast Asia and the vast central China urban agglomeration as well. It is a major international land and maritime corridor linking the hinterland of China and facing the ASEAN countries.

 

 

The Guangdong-Hong Kong and Macao Greater Bay Area comprises cities of “9+2”, that is Guangzhou, Foshan, Zhaoqing, Shenzhen, Dongguan, Huizhou, Zhuhai, Zhongshan and Jiangmen as well as two SARs of Hong Kong and Macao. Yet the positioning of each city is different.

 

 

 

City or SAR VS Development Goal

Hong Kong  --    global financial center and logistics center

Shenzhen    --    international innovation service center

Guangzhou  --    three international strategic hubs

Dongguan   --     international manufacturing service center

Foshan        --     international industrial manufacturing center

Zhuhai        --     expanding bridgehead and the innovation plateau

Zhongshan  --     state-level advanced manufacturing base

Macao         --     world tourism leisure center

Huizhou      --      ecological tour of "green city", taking ecological responsibility of the Greater Bay Area

Jiangmen    --      state-level advanced manufacturing base

Zhaoqing     --      agglomeration area of upgrading traditional industries

 

 

Supported by advanced manufacturing, modern service and leading emerging industries, the area is positioned to become the world's innovation and development highlands, the most dynamic area in the world’s economy, the world famous high-quality living quarters, the world civilization exchange and mutual learning place and the demonstration zone of deepening reform in the country.

 

 

The Guangdong-Hong Kong-Macao Greater Bay Area is most likely to become a vital giant portal for the Belt and Road, for that the area is a geographical node closest to the market along the route among all the urban agglomerations in China, with the most convenient infrastructure, developed supply chain network and domestically leading position in electronics, construction, energy, finance, telecommunications etc.

 

 

Additionally compared with other domestic areas, the area is in a relatively high position in the international value chain, especially considering two free ports of Hong Kong and Macao and Free Trade Zone (Guangdong) including Qianhai, Nansha and Hengqin. For a long time ahead, the development of the Guangdong-Hong Kong-Macao Greater Bay Area is expected to be an important regional development priority in China. It is likely that four sorts of investment opportunities may be produced.

 

 

The first is connection of traffic infrastructure. Generally, the improvement of traffic technology facilities is the basis for free flow of resource elements. As the main direction of traffic construction in the area is building of cross-border transport infrastructure and improvement of the comprehensive transportation network connecting Hong Kong, Macao and the Chinese mainland, investors shall attach importance to the potential investment opportunities hidden in traffic infrastructure-related projects and programs.

 

 

The second sort of investment opportunities lies in construction of ports and shipping center. The Guangdong-Hong Kong-Macao Greater Bay Area is the key area of opening-up for the 21st Century Maritime Silk Road and Hong Kong is an international hub and shipping center. In the future, overall shipping routes planning, customs clearance facilitation level among the Chinese mainland, Hong Kong and Macao and cooperation strengthening between ports in the Pan-Pearl River Delta region are highly expectable thus investors are suggested seeking fortune in this regard.

 

 

The third may be found in regional function remolding and industrial gathering in the area. Investors are expected to explore the opportunities in the functional transformation of the area and the integration of resources brought about industrial agglomeration and industrial upgrading.

 

 

Lastly opportunities exists in upgrading of industrial cooperation. The Guangdong-Hong Kong-Macao Greater Bay Area represents a coordinated development mode after development of more monomer cities matures. Enterprises from the Chinese mainland, Hong Kong and Macao shall thus make mutual investment to jointly “go out”. Other investment opportunities may arise from the expansion of two-way flow of Renminbi, Hong Kong-centered science and technology exchanges and cooperation, intellectual property rights trade, and exhibition, commerce and traditional Chinese medicines with Macao.

 

 

China How To: hosting your website in...

China How To: hosting your website in China

Want to sell a product or target visitors in China, in which case you will need a China server for your website. Whilst there are hundreds of hosting platform with a data center in USA, Europe, and Asia, you have limited choices in China.

If you are looking to do business in China you really need to host your site locally to ensure speed of user access, Regulatory compliance, better search engine rankings and to ensure that your site is withing the Great Chinese Firewall.

Lastly be aware that hosting in China is more expensive than in another region.

 

 

 

 

The list below commprises the main hosting providers with data centers in China.

A word of Warning: Unfortunately most of the following mentioned sites are in the Chinese language. So be ready to use a translation tool if Chinese is not your language.

 

 

1. AWS

AWS (Amazon Web Services) has collaborated with a local partner to offer cloud services. Currently, AWS is available in the following locations.

  • Beijing
  • Ningxia

You won’t see all the products offered in China as you may see in AWS global. However, it got sufficient list of products to fit from small to enterprise level of applications.

If you are looking for a vast range of products and cost-effective solutions, then AWS would be a good choice.

 

 

2. Sino Hosting

One of the popular one out there offers shared hosting, VPS, and dedicated servers. Sino got servers in the following locations.

  • Shanghai
  • Beijing
  • Changsha
  • Hong Kong

You can get it started with shared hosting from less than $10 per month. Sino provides one-click software installation like WordPress, Joomla, Drupal, Magento, etc.

Support is available in English and provides ten days refund for shared hosting.

 

 

3. Alibaba Cloud

Need more coverage in Mainland China?

Probably Alibaba Cloud has got the highest number of data center locations in China.

  • Hangzhou
  • Shanghai
  • Qingdao
  • Beijing
  • Zhangjiakou
  • Shenzhen
  • Hong Kong

If you are not from China and need support on ICP application, then Alibaba Cloud would be a lifesaver.

Similar to AWS, Alibaba Cloud offers a full range of infrastructure services like CDN, VM, load balancer, database, backup, storage, etc

 

 

4. GZIDC

GZIDC provide a large number of hosting related services including the following.

  • Web hosting
  • Domain registration
  • Cloud services
  • Host rental
  • and much more…

Under cloud services, you can choose to host your applications in the following multi-line DC.

  • Guangdong
  • South and North China
  • Hong Kong

 

 

5. Western Digital

West is another popular offer all-in-one hosting solution. With more than 15 years in the industry, West has a good name in support and uptime.

 

 

6. HA Bang Net

Optimized Hosting for WordPress, HaBangNet server is located in Beijing.

The starter plan cost around $10 per month, and it comes with cPanel where you can install your favorite software like Joomla, WordPress, etc.

In starter plan, you get 5GB SSD storage, one free domain, 100GB bandwidth, etc.

 

 

7. Jinshan Cloud

Jinshan cloud is one of the top three public clouds in China. They got multiple products.

  • Server
  • Database
  • Object storage
  • CDN
  • Load balancing
  • Security-related
  • Video solution
  • Web application firewall

Jinshan is available with 19 data centers.

 

 

8. Tencent

Tencent cloud is trusted by more than 10,000 developers worldwide including popular products in China like QQ, WeChat.

 

Provisioning servers and other cloud services are easy with Tencent, and you pay for what you use.

If you are a startup or running existing business in a traditional data center, it would be worth to include Tencent in the list while moving the Cloud for lower cost.

 

 

9. Baidu Cloud

Baidu is not just a Google search competitor but also the Cloud. You can choose to host in Beijing, Guangzhou, Suzhou and Hong Kong.

Similar go to GCP, Baidu Cloud has many IaaS products like compute, networking, storage, database, big data, AI, etc.

 

 

10. UCloud

Ucloud has served more than 50,000 enterprise customers and got 21 global data center including 5 in China.

 

It has a function rich control panel to manage cloud services and recently container services. You can also use their pricing calculator to estimate the cost of required cloud services.

 

 

China How To: Registering staff for...

China How To: Registering staff for Social Welfare

Once you’ve set up your own company, you can start to hire Chinese staff, but to do that you’ll need to register them for China’s social welfare programs. Here’s an introduction to some of the rules concerning the recruitment of Chinese labor: whereas hiring foreign staff requires one to apply to the authorities to get them a work visa and work permit, and you are automatically eligible to hire Chinese as soon as you finish registering your employees’ social welfare accounts, as outlined below.

 

 

What are the Five ‘Insurances’ Plus the Housing Fund?

  • Pension: Cost to Company is usually 20% of the Employee’s salary, substantially lower in some cities and cost to the Employee is usually 8% of the Employee’s salary, uniform rate nationwide.
  • Medical Insurance: Cost to Company is usually between 7%-12% of the salary, substantially lower in some cities and cost to the Employee is usually 2% of the Employee’s salary, substantially lower in some cities.
  • Work-Related Injury Insurance: Cost to Company from 0.4%-3% of salary depending on the location and degree of danger of business engaged in and cost to the Employee ‘ No contribution required.
  • Unemployment Insurance: Cost to Company is usually 2% of salary but sometimes 1% and only 0.4% in Shenzhen and cost to the Employee is usually 1% of the Employee’s salary.
  • Maternity Insurance: Cost to Company from 0.5% of salary depending on location (no contribution at all in Dongguan). Cost to the Company.
  • Housing Fund: Contribution towards Housing Funds are mandatory and come from both the Company and the Employee determined by local Government, Housing Fund regulations apply to the Employees in all geographic regions of the country. Contributions must be calculated based on each Employee’s average monthly wage over the last year. The actual percentage differs per city or province.

 

 

Registering for your employees’ social welfare accounts

Go to your local Social Insurance Management Center to set up an account for your company. Each city will usually have one of these in each district. For the addresses of the first-tier Chinese cities, look towards the bottom of this article.

 

 

You will need the following documents to set up the account:

  1. The original copy of your company’s business license, and a photocopy 
  2. The original copy of your company’s organization code certificate, and a photocopy 
  3. A stamp by your company chop
  4. Company Registration Form of Social Insurance; you can get this at the center
  5. The company bank account number
  6. The company’s tax registration number
  7. A commitment letter of use social insurance card signed, which you can obtain at the center

You can now start employing Chinese staff!

 

 

Registering your employees onto the employment record

Next, you need go to the local Human Resource and Social Security Bureau to register your employees onto the employment record.

 

 

You will need the following documents:

  1. The original copy of your company’s business license, and a photocopy 
  2. The original copy of your company’s organization code certificate, and a photocopy 
  3. Your company’s official “chop” (aka stamp or seal)
  4. Completed registration form of employment record with your new employees’ names and a brief introduction of each of them. You can get this in the bureau and it should be completed in triplicate; one should be submitted with the above documents at the Human Resource and Social Security Bureau, one copy should be submitted when you return to the Social Insurance Management Center (see below), and one should be kept for your company’s files.

 

 

Registering the employees

Now you must actually register your specific employees. You will only need to do the above two procedures the first time you employ a Chinese person; the following procedure applies for each Chinese person you hire from then on. Return to the Social Insurance Management Center with the following documents to register the employee (or, if they already have a social insurance card, use the following documents to change their employer’s information to your company).

 

 

  1. Company Registration Form of Social Insurance 
  2. Employee Personal Information Registration Form; you can get this at the talent center in the district where the company is registered (for first-tier-city addresses, see bottom of article)
  3. A list of all the employees at your company
  4. The original copy of your company’s business license, and a photocopy
  5. The original copy of your local tax registration certificate, and a photocopy
  6. A spreadsheet showing how much your employees are paid, how much is paid into their insurance and housing fund, and any bonuses they have been paid
  7. Photocopy of insured employees’ ID cards

 

 

It takes about two months to get the new employee’s social insurance card ready, but they can begin working straight away and you will need to start paying into their social security account from their very first paycheck. 

 

 

Registering your employees with the housing fund

You can do this at any point in the process outlined above, or afterward. Go to the local Public Housing Fund Management Center (you can find addresses for the first-tier cities towards the bottom of this article) to set up a housing fund account. You will need the following documents, and it will take five working days to process: 

 

 

  1. Public Housing Fund Deposit Form, which you can get at the center 
  2. Your company’s business license and a photocopy 
  3. Your company’s organization code certificate and a photocopy 

 

 

Once the account is set up, you can place your employees’ personal accounts under your company account. The documents needed to do this are: 

 

 

  1. Personal Housing Fund Account Set-up Form, which you can get at the center
  2. A photocopy of the employee’s ID card

 

 

How to transfer your employees’ personal archives

Every Chinese citizen at birth is given a personal archive, which is stored at the same local talent center where their hukou is registered. When people move home from area to area – for study or for employment – their personal archives are transferred along with them, to the relevant talent center. 

 

 

In order for the employee to get a Personal Archive Transfer Letter, you should give them a letter (with your company’s official stamp or “chop”) stating that they work for your company, as well as a stamped copy of your company’s license. They will then take this to the talent center in which your company is registered (depending on the size of the city in which your business is registered, this will either be a city talent center or a district talent center). 

 

 

After the talent center has given them the Personal Archive Transfer Letter, the employee should take it and their ID card to the talent center where their personal archive is stored; the transfer will then be processed.

 

 

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