12th June 2024: Draft Rules on Implementing Registered Capital Management System

This episode contains segments on:

  • State Council adopted draft rules on implementing the management system for registered capital stipulated by the company law;
  • Foreign trade data in May;
  • China’s Provincial Business Environment Index 2023 Report

Also, listeners are invited to join an event in Beijing or online on 19th June on the European Parliament’s election results and its impact on EU-China relations.


We’d love to hear your feedback. Contact us at website@europeanchamber.com.cn.

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Read more:

State Council executive meeting on 7th June


China foreign trade data, May (GACC)



China’s Provincial Business Environment Index 2023 Report


European Chamber event: EU Elections 2024: How Will It Affect The International Landscape



RUI: Hello and welcome to China ShortCuts,

MARIANN: the European Chamber’s weekly catchup on China’s business landscape.

RUI: This episode was recoded on 12th June 2024.


RUI: At an executive meeting held on 7th June, the State Council adopted draft rules on implementing the management system for registered capital stipulated by the company law.

MARIANN: The meeting called for efforts to implement policies related to the registered capital management system. These include adjusting investment periods for existing companies and ensuring that shareholders fulfil their obligations for capital contributions.

The National People’s Congress Standing Committee passed a significantly revised version of the Company Law on 29th December 2023, which will enter into force on 1st July 2024.

The revised law offers new allowances with regard to supervisors and supervisory boards, as well as greater freedom to choose which personnel can serve as legal representative, which is a positive. However, it also reintroduces a five-year time limit on capital contributions, ending a ten-year period during which investors had the freedom to plan timelines for capital contributions based on their specific business needs.

The five-year time limit was likely intended to protect the interests of investors by combatting bad-faith actors who register unrealistically large sums of capital without the ability to fulfil the contributions. However, this limit applies to all limited liability companies and has a disproportionate impact on small- and medium enterprises that have limited resources to adapt to volatility. It is particularly unappealing to the China subsidiaries of European companies, which are increasingly reliant on re-investment of retained earnings in China instead of new capital injections from abroad for their operations in China.


RUI: China’s exports grew at the fastest pace in over a year in May, while the increase in imports slowed significantly after a strong rebound recorded in April.

MARIANN: In dollar-denominated terms, the total value of exports rose 7.6 per cent compared to the same period last year. In the first five months of 2024, the year-on-year export growth reached 2.7 per cent. China’s imports expanded 1.8 per cent year-on-year in May, with the total value reaching 219 billion US dollars – which was slightly more than two thirds of the country’s total value of exports in the same month. In the first five months of the year, imports grew at a somewhat faster rate than exports.

The European Union remained China’s second largest foreign trade partner after the Association of Southeast Asian Nations. The country’s total trade value with the EU reached 67 billion US dollars in May, with about two-thirds of this amount contributed by exports to the bloc.


RUI: On 5th June, the National Economic Research Institute released a report on the findings of its 2023 provincial business environment survey, identifying that private enterprises in China face more difficulties than their state-owned counterparts.

MARIANN: The survey, which was conducted in 2022 and 2023 among more than two thousand enterprises, found that in 23 out of 25 sub-indices, private companies scored significantly worse than SOEs. These included “legal environment for business operations” and “financial services and financing costs”. The Beijing-based think tank concluded that the findings indicated a certain degree of unequal competition between the two types of companies.

The report also highlighted the phenomenon of excessive competition, which it linked to overcapacity, and argued that overcapacity can lead to competition based purely on price. Other factors listed as potential causes behind excessive competition were past overinvestment and weak market demand.


RUI: At the beginning of June, the European Parliament held its once-every-five-year elections. Over 350 million citizens across the EU’s 27 member states cast their votes. According to provisional data, the European People’s Party is set to secure a quarter ofthe 720 members of the next European Parliament, and European Commission President Ursula von der Leyen has a strong chance of remaining in power during the next stage of the election process, when the new leaderships of the various EU institutions will be selected and appointed. The periodic elections and subsequent leadership appointments set the tone for political trends in Europe as well as the direction of the EU’s internal and external policies.

MARIANN: The 2019–2024 term saw remarkable developments on the EU’s views on and approach to China. An increasingly fraught trade and political relationship, together with emerging challenges and black swan events such as the COVID-19 pandemic and Russia’s invasion of Ukraine, have all contributed to a more assertive EU stance towards China, as well as a stronger political will to ensure reciprocity and reduce distortive practices in the European Single Market.

RUI: Join us in Beijing or online on 19th June for fresh insights from scholars and experts on the European Parliament’s election results, to learn what policy and leadership changes to expect, and how they will impact the outlook of EU-China relations.


MARIANN: Thanks for listening, and don’t forget to tune in again next week.

RUI: In the meantime, please find useful links in the episode notes.

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