Changes in China’s 28 Economic and Trade Laws This Year

- KITA issued '2021 Major Change in China's Economic and Trade Laws' ...

China has implemented 28 economic and trade laws for consumer goods, environment, and intellectual property rights protection along with Civil Law -

As the 28 enacted and revised economic and trade laws in China come into effect from this year, many changes are expected and Korean companies are required to pay attention.

The Beijing Branch of the Korea International Trade Association (Chairman: Kim Young-ju) issued a report titled '2021 Major Change in China's Economic and Trade Laws' in cooperation with a Chinese law firm Jingdu on January 11. The report selected ▲enforcement of civil law, ▲reinforcement of consumer protection, ▲strengthening environmental management, ▲reinforcement of intellectual property rights protection, and ▲legislation of incomplete system as major changes this year.

China's first ’Civil Law’ came into effect on January 1. The Civil Law consists of 1,260 articles in seven parts, including the general provisions, real property, contracts, personality rights, marriage and family, inheritance, tort liability, etc. It reflects the will of the people and protects their rights and interests." It is actively reflecting social changes as it officially recognizes digital documents, including online contracts, in written form. In particular, it is the first to establish a mental damage compensation system for infringement of personality rights. It stipulates that in the event of serious mental damage caused by the breach of one party, a claim for liability for breach and compensation for mental damage can be filed.

On January 1, 2021, 'Cosmetic Supervision and AdministrationRegulations' implemented for stricter consumer product quality management. It consists of 80 articles, that are more than twice as many as the existing 'Cosmetic Hygiene Supervision Regulations' and stipulates more specific and strict management. When registering and reporting imported cosmetics, it is required to provide certificates related to production quality management of overseas production companies and proof that the product is sold in the country of origin and the country of production. If it is difficult to submit the reference regarding the country of origin because the item is produced for export to China, related research and experiment data conducted on Chinese consumers must be provided.

China is also actively stepping up for environmental protection. As the 'Announcement on Matters concerning the Complete Ban on Import of Solid Waste' enacted last year entered into effect on January 1, the import of all kinds of solid waste has been banned, and the export of solid waste generated from bonded areas in China to outside the bonded area is also restricted. This year, vehicle purchase tax is exempted on electric vehicles, plug-in hybrid (PHEV) vehicles, and fuel cell vehicles.

China's efforts to open up to the outside world through import expansion continue. Starting January 1, China has adopted provisional duty rates, that are lower than the most-favored-nation (MFN) tariffs, on a total of 883 imported commodities, including anticancer drugs, hearing aid, fuel cell circulation pump, etc. From July 1, the tax rate for 176 information and communication (IT) products will be further reduced.

Meanwhile, as the importance of biosafety has emerged in China during the COVID-19 crisis, the 'Biosecurity Law' is all set to come into force on April 15. It will upgrade biosafety to the level of national security and manage. If foreign species are brought to the country without permission, a fine of 50,000-250,000 yuan will be imposed along with confiscation.

The amended 'Patent Law' and 'Copyright Law', which are deeply related to intellectual property rights, one of the key issues in the US-China trade dispute, will take effect on June 1. Under the amended Law, the protection term of design patents is extended to 15 years from 10 years and the range of the maximum statutory damages is significantly raised from the current range of 10,000 to 1 million yuan, to 30,000 to 5 million yuan with the introduction of a punitive damage compensation system. The definition of works subject to copyright law has also been broadened from 'cinematographic works' to 'audiovisual works' meeting the changes of our time, so that online live broadcasting, online games, short clips, and animations are also protected.

Park Min-young, head of the Beijing branch of the Korea International Trade Association, said, “Foreign companies' access to the Chinese market is expanding as China has recently concluded on an investment agreement with the European Union (EU) and the institutional aspects of China are continuously being supplemented and materialized,” and added, “We hope that this report will serve as a guide to helping Korean companies cope with the changing business environment in China.”