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UPDATED: July 14, 2014 NO. 29 JULY 17, 2014

IN PLAIN SIGHT: Visitors stand before a private plane manufactured by a Gansu-based enterprise at the 20th China Lanzhou Investment and Trade Fair on July 6 (NIE JIANJIANG)

New Delisting Rules

China's securities watchdog on July 4 released a draft of proposed changes to the delisting regime for companies listed in Shanghai and Shenzhen.

The new rules allow more voluntary delisting and introduce a mandatory delisting mechanism for companies that have broken the law, according to the China Securities Regulatory Commission (CSRC).

Delisting was introduced into China's Company Law in 1993. The revised Securities Law in 2005 granted bourses the right to delist. Before this, this right belonged solely to the CSRC.

A total of 78 listed companies have been delisted so far, but few willingly, said CSRC spokesman Deng Ge.

The draft follows a May initiative by the State Council to improve the capital market, and will help to complete the basic functions of a capital market, Deng said.

Double Remedies

The Ministry of Commerce (MOFCOM) said it welcomes the ruling of the World Trade Organization (WTO), which found that the United States' failure to avoid double remedies in its punitive measures against certain Chinese products was against WTO rules.

MOFCOM spokesman, Yao Jian, said the ruling was consistent with China's standpoint, according to a statement released on July 9 on the ministry's website.

The WTO's Appellate Body's report, issued on July 7, rejected the appeal requested by the United States and upheld most of China's claims.

The report found that the United States failed to make duty adjustments to avoid double remedies in 25 countervailing and anti-dumping investigations against China in 2006 and 2012, which was inconsistent with WTO rules.

Yao urged the United States to cancel any countervailing measures targeting Chinese products imported to the United States before GPX legislation was enacted in 2012.

The GPX legislation authorizes the U.S. Department of Commerce to impose countervailing duties on goods from "non-market economy" countries and allows the application of a retroactive period starting from November 20, 2006.

Railway Fund

The Chinese Government on July 8 unveiled a guideline on the management of a fledgling railway development fund to attract private investment into the railway sector.

The China Railway Development Fund of the China Railway Corp. (CRC), will last for 15 to 20 years and could be extended if approved by the State Council, according to the guideline jointly compiled by the National Development and Reform Commission, the Ministry of Finance and the Ministry of Transport.

The announcement of the guideline came after Sheng Guangzu, CRC General Manager, said in April this year that China will increase railway fixed-asset investment to 720 billion yuan ($117 billion) in 2014.

According to a five-year plan from 2011 to 2015, 230,000 km of new railway lines will be built in central and western regions, with an investment of 1.85 trillion yuan ($296.19 billion).

As the guideline pointed out, the new fund will serve as a market entity for railway investment and financing. The CRC will represent government investment and be responsible for the daily management of the fund.

The fund must invest at least 70 percent of its capital in railway projects approved by the state, while the rest can be invested in business projects such as land development for higher returns.

Fair Competition

The State Council on June 8 unveiled guidelines to "promote fair market competition" and "safeguard normal market order."

The guideline is intended to enable the market to play a decisive role, bolster the government's role in allocating resources, and to address the problems of "incomplete market system, excessive government intervention and insufficient regulation," said the State Council guideline.

To achieve this goal, the State Council first urged a relaxation of market access, saying the government should not restrict any market access unless the investment activities are forbidden by law or harm the interests of a third party, the public interest or affect national security.

According to the guideline, market regulation will be strengthened and monopolies and unfair competition will be harshly penalized.

The State Council aims to establish a market regulatory system featuring sophisticated mechanisms and clearly defined rules and regulations by the end of 2020.

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