China policy round-up: US-China three-day trade talks show seriousness, premier Li meets Elon Musk, small enterprises to enjoy lower tax rates

In this round-up, US-China extended the previously planned two-day trade talk to a third day, Li Keqiang met Tesla’s Elon Musk, and the state council rolled out lower tax rates for small and low profit businesses.

  • By Rebecca Feng
  • 11 Jan 2019
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Messaging by the US representatives were mostly positive during and after the meetings. The US Commerce Secretary Wilbur Ross told Reuters on Monday, the first day of the talks, that “there’s a very good chance that we’ll get a reasonable settlement that China can live with, that we can live with and that addresses all of the key issues.”

President Trump tweeted to reiterate the message.

“Talks with China are going very well!”

On Wednesday morning, the Chinese Ministry of Commerce issued a statement summing up the talks.

“US and China held broad, in-depth, and detailed discussions on structural and trade issues,” the statement said. “This lays the foundation for understanding and solving problems that concern both sides. The two countries agreed to remain in close contact.”

According to the statement issued by the US Trade Representative, officials discussed “ways to achieve fairness, reciprocity, and balance in trade relations between our two countries. The officials also discussed the need for any agreement to provide for complete implementation subject to ongoing verification and effective enforcement.”

“The talks also focused on China’s pledge to purchase a substantial amount of agricultural, energy, manufactured goods, and other products and services from the United States,” the statement added.

On Thursday, US Treasury Secretary Steven Munchin told reporters that Chinese vice premier Liu He would be travelling to Washington DC later this month to continue trade talks.


Li Keqiang sat down with Tesla’s chief executive Elon Musk on January 9.

Li congratulated Musk on breaking ground for the $5bn factory in Shanghai on Monday. According to the official statement, Li also mentioned that Tesla’s project is the first wholly foreign-owned electric auto project launched after China loosened controls on foreign investment in the new energy vehicles sector.


State Council will lower tax rates for micro and small businesses, according to a Wednesday statement.

Small and low-profit businesses with an annual taxable income of less than Rmb1m will have their tax calculated at 25% of their taxable income. Those businesses with an annual taxable income between Rmb1m to Rmb3m will calculate tax using 50% of their taxable income.

Regulators expect the adjusted tax incentives to cover 95% of corporate taxpayers, among whom 98% will be private businesses.

The value-added tax threshold on small taxpayers will also be raised from Rmb30,000 in monthly sales to Rmb100,000.

Further, local governments will have the discretion to reduce taxes and fees including land use and stamp duties by up to 50%.

Finally, the scope of tax incentives applied to investment in high-tech start-ups will be expanded to investments from venture capital firms and angel investors.

The measures will be in place for three years.


The central bank will roll out its newly-created targeted medium-term lending facilities (TMLFs) later this month, Yi Gang, governor of PBoC told reporters on January 9.

First announced on December 19, the new initiative will allow banks to borrow low-cost TMLF funding from the central bank for as long as three years to lend to private enterprises.


The state council meeting on Wednesday also urged local governments to issue bonds and use the early-released quotas as fast as possible to support their infrastructure projects in transport, hydropower, and environmental protection.


The Shanghai Stock Exchange (SSE) approved Citic Securities-owned CLSA’s UK subsidiary application to register as a currency conversion agency for global depository receipts under the Shanghai-London Stock Connect on January 9.

CLSA UK will be the fourth such institution, after CICC UK, Barclays and Haitong International UK.


The state council’s general office released new reform measures to boost innovation on Tuesday.

The new measures featured five areas – protection of intellectual property rights (IPR), commercialisation of research findings, innovations in financial technology, university management systems, and military and civilian integration.

Rules include encouraging technical personnel to participate in the process of commercialisation of their research findings, allowing regional stock markets to set up a science and technology innovation board, and giving universities more autonomy in recruiting talent.

  • By Rebecca Feng
  • 11 Jan 2019

GlobalRMB Panda Bonds league table

Rank Arranger Share % by Volume
1 Bank of China (BOC) 21.85
2 China Merchants Securities Co 14.67
3 Industrial and Commercial Bank of China (ICBC) 14.44
4 Agricultural Bank of China (ABC) 8.89
5 China Securities 7.41

Panda Bond Database

Pricing Date Issuer Country Size Rmb (m)
1 20-Jun-19 Maybank Malaysia 2,000
2 30-May-19 Portugal Portugal 2,000
3 17-May-19 Trafigura The Netherlands 540
4 16-May-19 CITIC Pacific China 1,000
5 15-May-19 Republic of the Philippines Philippines 2,500

Offshore RMB Bond Top Bookrunners

Rank Bookrunner Share % by Volume
1 Standard Chartered Bank 25.05
2 Credit Agricole 7.04
2 HSBC 7.04
4 Bank of China (Hong Kong) (BOCHK) 6.90
4 Bank of Communications Hong Kong Branch (BOCOM HK) 6.90

Latest Offshore RMB Bonds

Pricing Date Issuer Country Size Rmb (m)
1 22-May-19 Agricultural Development Bank of China (ADBC) China 3,000
2 16-Apr-19 ICBC Singapore Branch China 1,000
3 10-Apr-19 Bank of China Macau Branch (BOC Macau) China 4,500
4 15-Mar-19 Bank of Communications Hong Kong Branch (BOCOM HK) China 2,500
5 13-Mar-19 Daimler International Finance Germany 1,000